Alberta to increase corporate and personal income tax rates
On June 18, 2015, the Alberta NDP government introduced a bill to restore fairness to Alberta’s tax system. There are two major changes to Alberta’s tax legislation with the introduction of this bill. The new bill will increase the province’s corporate tax rate and eliminate the flat income tax. Bill 2: An Act to Restore Fairness to Public Revenue (“Bill 2”), currently passed after its first reading, will increase the tax rate on large corporations from 10% to 12% effective July 1, 2015.
Alberta currently has a flat tax rate of 10% for personal income tax. Bill 2 will also introduce a more progressive personal income tax system with new brackets, affecting those who with a taxable income greater than $125,000. The new tax rates for personal income tax are as follows with the new rates beginning to be implemented on October 1, 2015:
| Taxable Income | Tax Rate |
| Less than or equal to $125,000 | 10% |
| Greater than $125,000 but less than $150,000 | 12% |
| Greater than $150,000 but less than $200,000 | 13% |
| Greater than $200,000 but less than $300,000 | 14% |
| Greater than $300,000 | 15% |
With the new brackets for personal income tax and increase in the corporate income tax rate, Alberta is attempting to create a tax system similar to the ones that exist in other provinces in Canada. Even with these tax rate increases fully implemented, the Alberta government asserts that the province will still maintain an approximate $8.9 billion (2016) tax advantage in comparison to other provinces in Canada.[1]
However, even with all these changes to the tax system, there are no current plans to amend probate tax in Alberta and the small business tax will remain the same at three percent for corporations with a taxable income not greater than $500,000.
Cornelia Yeung
TaxChambers LLP
[1] Alberta Treasury Board and Finance, Bill 2 – An Act to Restore Fairness in Public Revenue, 2015 (June 19, 2015), online: Alberta Treasury Board and Finance <http://www.finance.alberta.ca/ministry/legislation-spring-2015-Act-to-Restore-Fairness-in-Public-Revenue.html>.