The 2017 Alberta budget, tabled on March 16th, did not contain any new corporate tax measures and only minor tweaks to two personal tax credits; however, it did confirm 2017 changes announced in the 2016 budget. We would be happy to arrange a meeting to discuss how these measures may apply to your situation, assist you with the preparation and filing of your tax returns, and discuss tax planning opportunities.
Personal Tax Changes
Dividend tax credit
The provincial dividend tax credit will be adjusted as a consequence of federal tax changes in order to maintain the minimum 10% tax rate on income earned in an incorporated small business and distributed to shareholders as dividends.
Political contribution tax credit
The Alberta political contribution tax credit has been extended to cover contributions to party leadership elections and nomination races.
Corporate Tax Changes
Corporate tax rates
The 2017 budget confirmed that the small business tax rate will be reduced from 3% to 2% effective January 1, 2017, with the resulting combined federal and Alberta small business tax rate being 12.5%.
Capital Investment Tax Credit
This credit was announced in the 2016 budget and the 2017 budget provided further details. The credit will be in place for two years, has a total budget of $70,000,000, and offers a 10% non-refundable tax credit on eligible expenditures of corporations in manufacturing, processing, and tourism. The maximum annual expenditure limit is $5,000,000 per corporation.
Alberta Investor Tax Credit
This credit was also announced in the 2016 budget and the 2017 budget provided further details. The credit will be in place for three years and equity investment in eligible businesses will be eligible for a 30% tax credit. Eligible businesses are those that undertake research and development or commercialization of new technology, produces, or process; as well as those involved in interactive digital media, digital animation, video post-production, or tourism.
Eligible corporations must apply to be enrolled and the program is set up on a first-come-first-serve basis up to the maximum total credit available credit pool of $30,000,000 per year.
Individual claims are refundable with a maximum of $60,000 per year per person. There is no limit on a claim by a corporate investor but the credit is non-refundable for corporate investors.