Alberta Budget 2019 – How Does it Affect Taxpayers? Quick Fact Sheet
On October 24, 2019 the Alberta Government introduced its first budget. Below are some highlights about how it impacts you as a taxpayer. The government has not changed any personal or corporate tax rates however it did change the following:
- Revises the eligible dividend tax credit rates for 2021 and 2022
- Temporarily suspends the indexation of personal income tax brackets and personal tax amounts
- Eliminates the education and tuition tax credits
- Eliminates five business tax credits
The province announced that Alberta corporate tax rates would drop 1% per year until it reaches 8% in 2022. Below is an illustration of the tax rates:
|Year||Alberta||Federal and Alberta|
|December 31, 2018||12%||27%|
|December 31, 2019||11.5%||26.5%|
|December 31, 2020||10%||25%|
|December 31, 2021||9%||24%|
|December 31, 2022||8%||23%|
Note that the small business income tax rate on the first $500,000 on active business remains at 2% and 9% federally for the tax years 2019 and 2020.
Personal Taxes on Eligible Dividends
The dividend tax credit rate for eligible dividends will be adjusted on January 1, 2021 and January 1, 2022; this was expected because of the previously announced reductions to the province’s general corporate tax rate. This will increase the personal taxes on eligible dividends after 2020.
Personal Income Tax Brackets and Personal Amounts
The indexation of Alberta’s personal income tax brackets and personal tax amounts (this is used for the province’s non-refundable tax credits) will be suspended, starting 2020 until economic and fiscal conditions improve. Therefore, the tax brackets and personal amounts for 2020 will be the same as for 2019.
Education and Tuition Tax Credits
Alberta will eliminate its education and tuition tax credits effective 2020. Unused credits can be carried forward for use after 2019.
Business tax credits
- Eliminates Scientific Research and Experimental Development (SR&ED) Tax Credit
- Alberta Investor Tax Credit
- Community Economic Development Corporation Tax Credit
- Capital Investment Tax Credit
- Interactive Digital Media Tax Credit
Chopek & Associate* helps small to medium sized business owners and individuals, like you! To learn how you can best optimize your tax impacts, BOOK with their office today!