Canada: Legislation enacted, corporate tax rate reduced to 8% (Alberta)
Canada: Corporate tax rate reduced to 8% (Alberta)
Bill 35, that accelerates the corporate income tax rate reduction, received Royal Assent on 9 December 2020.
As a result, an accelerated reduction in the province's general corporate income tax rate to 8% (from 10%) effective 1 July 2020, and the province's new “innovation employment” grant are now law.
Corporate tax measures
- Corporate income tax rate: Bill 35 reduces Alberta's general corporate income tax rate to 8% (from 10%), effective 1 July 2020. Previously, the general corporate income tax rate was not scheduled to decrease to 8% until 1 January 2022.
- Extension of certain legislated deadlines: Bill 35 grants ministerial authority to temporarily extend certain tax filing deadlines, including for certain provincial scientific research and experimental development (SR&ED) claims and applications for an extension to file notices of objections.
- New “innovation employment” grant: Bill 35 introduces a new innovation employment grant, providing a refundable tax credit to certain small and medium-sized Alberta-based companies that invest in research and development (R&D) after 31 December 2020.
Individual (personal) tax measure
Bill 35 also accelerates a planned decrease in the provincial dividend tax credit rate on eligible dividends, as a result of the acceleration of the corporate tax rate reduction to 8%. As a result, the combined top marginal rate on eligible dividends for residents of Alberta in 2021 will increase to 34.31% (from 31.71%). This change was previously scheduled to come into effect 1 January 2022.
Read a December 2020 report prepared by the KPMG member firm in Canada
© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.