|
Executive summary
On 28 February 2023, Alberta Finance Minister Travis Toews tabled the province’s fiscal 2023/24 budget. The budget contains tax measures affecting individuals and corporations.
The Minister anticipates a surplus of CA$2.4b[i] for 2023/24 and projects further surpluses of $2.0b for 2024/25 and $1.4b for 2025/26.
The following is a brief summary of the key tax measures.
Detailed discussion
Business tax measures
Corporate income tax rates
No changes are proposed to the corporate tax rates or the $500,000 small-business limit.
Alberta’s 2023 corporate income tax rates are summarized in Table A.
Table A – 2023 Alberta corporate income tax rates1
| Alberta | Federal and Alberta combined | |
| Small-business tax rate2 | 2% | 11% |
| General corporate tax rate2, 3 | 8% | 23% |
1 The rates represent calendar-year-end rates unless otherwise indicated.
2 The corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% small-business corporate income tax rate.
3 An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a $100 million exemption to be shared by group members), effective for taxation years ending after 7 April 2022 (prorated for taxation years straddling this effective date).
Other business tax measures
The Minister also proposed the following business tax measure:
Agri-Processing Investment Tax Credit – Corporations in the agri-food sector will be entitled to a non-refundable tax credit of 12% on eligible capital investments in Alberta of at least $10 million made on or after 7 February 2023. Applications will be accepted starting in spring 2023, and more information will be made available once program regulations are brought forward. Corporations will be able to carry forward unused credits for a period of 10 years.
Personal tax
Personal income tax rates
The budget does not include any changes to personal income tax rates.
The 2023 Alberta personal income tax rates are summarized in Table B.
Table B – 2023 Alberta personal income tax rates
| First bracket rate | Second bracket rate | Third bracket rate | Fourth bracket rate | Fifth bracket rate |
| $0 to $142,292 | $142,293 to $170,751 | $170,752 to $227,668 | $227,669 to $341,502 | Above $341,502 |
| 10% | 12% | 13% | 14% | 15% |
For taxable income in excess of $227,668, the 2023 combined federal-Alberta personal income tax rates are outlined in Table C.
Table C – Combined 2023 federal and Alberta personal income tax rates
| Bracket | Ordinary income1 | Eligible dividends | Non-eligible dividends |
| $227,669 to $235,6752 | 43.32% | 27.85% | 36.92% |
| $235,676 to $341,502 | 47% | 32.93% | 41.15% |
| Above $341,502 | 48% | 34.31% | 42.30% |
1 The rate on capital gains is one-half the ordinary income tax rate.
2 The federal basic personal amount comprises two elements: the base amount ($13,521 for 2023) and an additional amount ($1,479 for 2023). The additional amount is reduced for individuals with net income in excess of $165,430 and is fully eliminated for individuals with net income in excess of $235,675. Consequently, the additional amount is clawed back on net income in excess of $165,430 until the additional tax credit of $222 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between $165,431 and $235,675.
Personal tax credits
This budget proposes changes to the following personal credits/amounts:
Charitable donations tax credit – The charitable donations tax credit rate on the first $200 of contributions will be increased from 10% to 60% effective in 2023.
Adoption expenses tax credit – A 10% non-refundable tax credit is available for certain agency, legal and administrative fees and travel-related costs incurred as part of the adoption process. The maximum allowable expenses for the credit are increased to $18,210 for 2023 to match the federal amount. The maximum amount will be indexed annually thereafter.
Other personal tax measures include the following:
The Alberta Government previously resumed the indexation of the personal income tax system, effective 1 January 2022. Personal income tax credit amounts and tax bracket thresholds are higher, by 2.3% in 2022 and 6% in 2023.
Other tax measures
Fuel tax
The Alberta Government has paused the collection of fuel taxes on gasoline and diesel until 30 June 2023. In July 2023, fuel tax rates for gasoline and diesel will once again be determined quarterly based on average oil prices.
Education property tax
To improve affordability in recent years, the government has limited the increase in the total education property tax requisition. The total requisition was frozen for 2020/21 and 2021/22 and increased by only 1.5% in 2022/23. As costs continue to increase due to high inflation, the government will freeze the education property tax requisition at the 2022/23 level of $2.5 billion for 2023/24.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), Calgary
Greg Boone
Dean Radomsky
Sanjaya Ranasinghe
Ernst & Young LLP (Canada), Edmonton
Dustin Burbank
- Hayat Kirameddine
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
