Corporate Tax

Alberta Profit: Lowered Company Tax Price Beginning July 1, 2020 | Bennett Jones LLP

On June 29, 2020, the Alberta government introduced the Alberta Recovery Plan, which, among other things, aims to reduce Alberta’s general corporate tax rate to 8% effective July 1, 2020.

The previously announced “job creation tax cut” in Alberta (Law 3) has already lowered the Alberta business rate from 12% to 11% on July 1, 2019 and from 11% to 10% on January 1, 2020. The current 10% tax rate should be reduced to 9% on January 1, 2021 and to 8% on January 1, 2022. The government has therefore accelerated the planned reductions by a year and a half. As a result, Federal-Alberta’s combined general corporate tax rate will immediately decrease from 25% to 23%. As summarized in the table below, Alberta will now have the lowest general corporate tax rate in Canada by a large margin:

province Current provincial rate Current federal provincial combined rate
Alberta 8th% 23%
Ontario 11.5% 26.5%
Quebec 11.5% 26.5%
Northwest Territories 11.5% 26.5%
British Columbia 12% 27%
Manitoba 12% 27%
Nunavut 12% 27%
Saskatchewan 12% 27%
Yukon 12% 27%
New Brunswick 14% 29%
New Scotia 14% 29%
Newfoundland & Labrador 15% 30%
Prince Edward Island 16% 31%

In support of the rate cuts, the government said:

“The most effective way to create new jobs is to make Alberta a magnet for new business investment with the most attractive tax rates in Canada. The job creation tax cut is estimated to have a positive impact on more than 100,000 businesses, of which 75% Are small businesses. “

“The job creation tax cut is critical to recovery in Alberta to ensure our province has a competitive job creation tax system.”

“When Alberta corporate income tax hits eight percent, British Columbia corporate income tax will be 12 percent higher, 50 percent higher.”

“Alberta will be one of the most competitive economies in North America, with the lowest corporate tax rate in Canada by far and the seventh lowest compared to any American nation.”

“These [tax rate] Investments are expected to increase by $ 4 billion per year through 2023 and 55,000 jobs to be created by 2022. Our economy has changed, but the basic benefits of tax cuts remain. “

“As employers work to recover from COVID-19, they can be assured that Alberta is by far the best place in Canada to settle down and bring jobs and prosperity.”

“Investors can rest assured that Alberta is serious about being the most competitive jurisdiction for investing and doing business.”

Although not announced, Alberta’s tax credit on dividends paid on income taxed at the general corporate tax rate (creditable dividends) is also expected to be adjusted to reflect the accelerated reduction. The Alberta small business tax rate remains at 2%.

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