On February 25, 2021, the Alberta government released their 2021 budget. The following are highlights of the key tax measures.
Personal tax measures
No personal income tax rate changes were announced in this year’s budget. The current personal combined income tax rates for 2021 are outlined below:
|
Personal (combined) federal and A.B. top marginal tax rates |
|
|
 |
Rate |
|
Interest/regular income |
48.0% |
|
Capital gains |
24.0% |
|
Eligible dividends |
34.3% |
|
Other-than-eligible dividends |
42.3% |
Corporate tax measures
No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2021 are outlined below:
|
 |
Small business corporations |
General corporations |
||
|
 |
Rate |
Threshold |
Non-M&P |
M&P |
|
Federal |
9.0% |
$500,000 |
15.0% |
15.0% |
|
A.B. |
2.0% |
$500,000 |
8.0% |
8.0% |
|
Combined |
11.0% |
$500,000 |
23.0% |
23.0% |
Other tax measures
Property tax assessment review
The government decided not to implement comprehensive changes at this time from their review of the property tax assessment model for regulated oil and gas properties such as wells and pipelines.
In the interim, the government implemented four assessment and tax incentives to help encourage new investment in the oil and gas sector and improve the viability of existing assets. These incentives include:
- Beginning in the 2022 property tax year, new wells and pipelines will not be subject to property taxation until 2025.
- The well drilling equipment tax will be eliminated beginning in 2021.
- Lower producing wells will be further depreciated, resulting in lower assessed values, beginning in 2021.
- The previously implemented 35 per cent assessment reduction for shallow gas wells and associated pipelines will continue through the 2023 tax year.
Education property tax
Due to the pandemic, the government will continue to freeze the education property tax revenue at 2019 levels to lessen the burden on Albertans and Alberta businesses.
Tourism levy
The current tourism levy abatement – which was set to expire on December 31, 2020 – has been extended to March 31, 2021.
Effective April 1, 2021, the tourism levy will be extended to short-term rentals offered through online marketplaces, such as Airbnb, HomeAway and Vrbo. Online marketplaces will be authorized to collect and remit the tourism levy on behalf of operators. If online marketplaces do not collect on the operator’s behalf, the operator will be required to register, collect and remit the levy to the government. Amendments to the Tourism Levy Act were passed in spring 2020, with supporting regulations made in fall 2020.
One of the amendments removed the existing exemption for establishments with fewer than four bedrooms available for rent separately. In its place, a new exemption was introduced for properties that are not listed on any online marketplace, where the purchase price of the rental is less than $30 per day or $210 per week, or the operator has annual gross revenue from the rental of temporary accommodation in Alberta of less than $5,000.
Next steps
Contact your Baker Tilly advisor to learn more about how we can help navigate the complexities of the Canadian tax system.
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