Alberta tabled the budget on February 25, 2021. Highlights:
- No new tax increases
- Focus on economic recovery and growth programs
- Much discussion around the competitive advantage that Alberta has over other provinces and many states. Lowest corporate tax rate at 23%, lack of PST and no provincial health premiums.
- Working to make per capita spending comparable to other provinces
- Key spending initiatives to diversify the economy in energy, agriculture and forestry, tourism, finance and fintech, aviation, aerospace and logistics, and technology and innovation.
- New initiatives and credits announced
- Innovation employment grant- basically there is an 8% grant on a corporation’s base level R&D spending in a fiscal year. The base level is calculated as the average R&D spending in Alberta over the previous two years. If you spend more dollars than your base level R&D, these dollars receive a 20% grant. Start-ups and those companies moving to Alberta qualify for the 20% grant on their entire first year R&D spending. There is a cap of $800,000 maximum refund and as businesses exceed $10 million of taxable capital, their amount of grant available becomes less. Those with taxable capital over $50 million will not receive the Innovation employment grant.
- Froze education property tax portion for 2021. It was set to increase by 3.4%
- Property tax on oil and gas properties- there is no property taxes on new wells and pipelines in 2022 to 2025 to encourage new investments; elimination of well drilling equipment tax in 2021; lower producing wells will be further depreciated lowering their value and therefore a lower assessed value in 2021; and the 35% assessment reduction for shallow gas wells and associated pipelines will continue through to 2023
- Tourism levy will apply to short-terms rentals eg AirBnB effective April 1, 2021
These were the major highlights in the budget, however the underlying message was that a tax reckoning is coming calling for a review of the “appropriateness and efficiency of Alberta’s revenue structure and tax system.” This budget does not say what those measures will be so we will have to wait for these changes to be announced by the government.
