Tax and Revenue Administration Alberta Corporate Tax Act Special Notice Vol. 5 No. 18

Note: Due to the Government of Alberta reorganization in November 2004, where applicable, the web versions of our documents have been updated to change references from "Minister of Revenue" or "Provincial Treasurer" to "Minister of Finance". References to "Revenue Canada" or "Canada Customs and Revenue Agency" have been changed to "Canada Revenue Agency" to reflect that name change as well. The paper version of this document is available from Tax and Revenue Administration and if applicable, will be updated as time permits.

This Special Notice outlines the Alberta Government's response to federal resource tax changes that were effective January 1, 2003 and received Royal Assent on November 7, 2003. Amendments to the Alberta Corporate Tax Act will be brought forward in the 2004 spring session of the Alberta Legislature to implement the corporate resource taxation regime and the individual tax refund program as described below. All Alberta changes will be effective January 1, 2003, the same effective date as the federal changes.

Changes Affecting Corporations:

• Resource Allowance
  • Alberta will continue with its existing resource taxation regime until December 31, 2006. Corporations will be able to claim the full amount of the resource allowance for Alberta tax purposes.
  • After December 31, 2006, royalties will become fully deductible for both federal and Alberta purposes and the resource allowance regime will cease to exist.
    
    
• Royalty Tax Deduction ("RTD")
  • As has always been the case, royalties will remain fully deductible in Alberta. Corporations with royalties and crown payments in excess of their resource allowance will continue to be able to claim the RTD in respect of the difference.
  • With the expiry of the resource allowance regime and the return to full royalty deductibility after December 31, 2006, there will be no further need for this deduction. However, it is expected that some corporations will still have unused amounts available to carry forward to future years.
  • A December 31, 2013 expiration date will be set on all RTD carry forwards. This provides a full seven year carry forward from the December 31, 2006 sunset date. This carry forward period is consistent with the business loss carry forward provision.
    
    
• Alberta Royalty Tax Credit ("ARTC")
  • ARTC will be paid on eligible royalties, whether they are deductible or non-deductible.
  • ARTC will not be taxable for Alberta corporate tax purposes.
    
    
• Processing of 2003 Alberta Corporate Income Tax Returns
  • Alberta Finance, Tax and Revenue Administration ("TRA"), will process the 2003 AT1 - Alberta Corporate Income Tax Returns based on the above rules, with the effective date of January 1, 2003.
  • Corporations which have filed their 2003 AT1 returns on a basis other than the above rules are requested to write and provide TRA with the amended information. TRA will review their requests and process reassessments accordingly.

Changes Affecting Individuals and Trusts:

• Alberta's policy framework for individuals and trusts will be similar to that for corporations. However, the Alberta personal income tax refund claim process will be administered by TRA rather than the Canada Revenue Agency ("CRA").
• This program will provide a refund of Alberta personal income tax paid to the CRA on Royalty Credit for Individuals and Trusts ("RCIT") benefits that are not taxable for Alberta purposes and on any additional tax paid resulting from the difference between the Alberta and the federal resource taxation regimes.
• To ensure that TRA has the ability to verify applications under the program, the program will incorporate a slight delay in the timing of claims. For example, individuals will be required to first file their personal income tax returns in respect of the 2003 year with CRA. They will then be able to file their RCIT and personal income tax refund claims with TRA. A copy of their personal income tax returns will be required in order to validate and process the refund claim.
• TRA will develop a form for the refund process in the near future. The form will be posted on this website and will be included in the applicable year's mail out of the RCIT claim forms to potential RCIT recipients.