2021 Alberta Budget Highlights

On Thursday, February 25, 2021, Alberta Minister of Finance and President of the Treasury Board Travis Toews tabled Budget 2021: Protecting Lives and Livelihoods. The Alberta Government announced a $18.2B deficit and does not anticipate balancing the budget before 2022-2023. 

This budget was developed using three fiscal anchors: 

1. Net Debt to GDP Ratio must remain below 30 percent;
2. Align per-capita spending to comparative provinces; 
3. Re-establish a plan to balance the budget post-pandemic.

A. Personal Tax Measures 

The budget does not introduce any new personal tax measures. 

Personal Tax Rates 

No new personal income tax rate changes have been announced in this year’s budget.  

When Alberta accelerated the reduction of the general corporate tax rate, the dividend tax credit on eligible dividends was adjusted to preserve integration of the Alberta taxes.  

The top marginal personal income tax rate for Alberta is 15 percent for 2021 on income in excess of $314,929. The top combined federal and Alberta marginal rates for 2021 are as follows:  

B. Corporate Tax Measures 

The budget does not introduce any new corporate tax measures. 

Corporate Tax Rates 

No new corporate income tax rate changes have been announced in this year’s budget.  As previously announced, Alberta accelerated the timing of the phased reduction of the general corporate tax rate to eight percent in July 2020 (originally scheduled to decrease from 12 percent to eight percent by 2022). 

Innovation Employment Grant 

As announced last summer as part of Alberta’s Recovery Plan, the Alberta portion of the Scientific and Experimental Development (SR&ED) tax credit was replaced with a new Innovation Employment Grant (IEG), which is available to small and medium-sized firms that invest in research and development (R&D) after December 31, 2020. 

The program provides an eight-percent payment for eligible R&D spending carried out in Alberta, up to the corporation’s base level of spending (based on the prior two-year average). For entities that have accelerated their R&D spending beyond the base level, the payment increases to 20 percent of the incremental spending. 

C. Other Tax Measures 

Property Taxes 

Education property tax revenue was set to increase 3.4 percent, as previously announced in Budget 2020. However, in response to the pandemic, the tax revenue will now remain frozen at 2019 levels for 2021-2022. Municipalities have been encouraged to adopt a similar approach. 

The Government also implemented several property tax changes to encourage investment in the oil and gas sector. These incentives include: 

• Beginning in the 2022 property tax year, new wells and pipelines will not be subject to property taxation until 2025; 
• The well drilling equipment tax will be eliminated beginning in 2021; 
• Lower producing wells will be further depreciated, resulting in lower assessed values, beginning in 2021; and  
• The previously implemented 35-percent assessment reduction for shallow gas wells and associated pipelines will continue through the 2023 tax year. 

Tourism Levy  

The Government confirmed the tourism levy of four percent on short-term rentals offered online will become effective April 1, 2021. This measure was initially announced in Budget 2019. Amendments to the Tourism Levy Act were passed in spring 2020, with supporting regulations made in fall 2020.   

The new levy comes into effect upon expiry of the general tourism levy abatement provided for the period from March 1, 2020 to March 31, 2021.  

As initially proposed, a new exemption was introduced for properties that are not listed on any online marketplace, where the purchase price of the rental is less than $30 per day or $210 per week, or the operator has annual gross revenue from the rental of temporary accommodation in Alberta of less than $5,000.  

Online marketplaces will be authorized to collect and remit the tourism levy on behalf of operators. Those operators offering short-term rental through online marketplaces who do not collect and remit these levies will be required to register with Alberta’s Tax and Revenue Administration, collect the tourism levy from their customers, file an online return and remit the levy to the Government. 

Vaping Products Tax 

No advancements were made toward the 20-percent tax on the retail sale of vaping products initially proposed in Budget 2020 – this is currently on hold.  

Indirect Tax

Although widely speculated, Budget 2021 does not introduce a sales or indirect tax in Alberta.