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.

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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

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