Corporations
operating in Alberta are required to file Alberta
corporate tax returns in addition to filing with
Canada Revenue Agency (CRA).
Tax and Revenue Administration (TRA), Alberta Finance,
administers the Alberta
Corporate Tax Act that provides for the
calculation of:
- Alberta corporate
income tax for corporations with a permanent establishment
in Alberta, including Alberta deductions and credits
such as the Alberta Royalty Tax Deduction, the
Alberta Small Business Deduction, the Alberta
Foreign Investment Income Tax Credit and the Alberta
Political Contributions Tax Credit;
- Alberta Royalty
Tax Credit (ARTC) for corporations that pay eligible
Alberta crown royalties;
- Alberta Royalty
Credit for Individuals and Trusts (RCIT) that
pay eligible Alberta crown royalties; and
- Insurance Corporations
tax payable by corporations carrying on the business
of insurance in Alberta.
Please note that
as announced by the Alberta government on September
21, 2006, (Energy
Minister confirms end of Alberta Royalty Tax Credit
Program) Alberta will discontinue its ARTC
and RCIT programs for corporations, individuals
and trusts effective January 1, 2007. See Special
Notice Vol. 5 No. 21, Discontinuance
of Alberta Royalty Tax Credit (ARTC) and Royalty
Credit for Individuals and Trusts (RCIT) Programs.
Background
Corporate income tax
has been levied by the province since the 1940s.
All incorporated businesses with a permanent establishment
(e.g., office, mine, farm, oil well, etc.) in Alberta
at any time in a taxation year pay income tax on
the portion of their taxable income allocated to
Alberta. The Alberta calculation of taxable income
parallels the federal calculation, although taxpayers
may claim different discretionary deductions such
as capital cost allowances for federal and provincial
purposes. The allocation of income among provinces
is generally standardized across the country.
Small
Business Deduction Canadian-controlled
private corporations not in an associated group
may claim a small business deduction on active business
income (i.e., non-investment income) up to the small
business threshold of $400,000. Canadian-controlled
private corporations in an associated group share
the maximum small business threshold. For more information
about the small business deduction, see information
circular CT-17R4,
Alberta Small Business Deduction.
On September 20, 2006,
the Alberta government announced, among other changes,
that an increase in the small business threshold
to $500,000 will be phased in by 2009. For more
information, please read Government
enhances corporate dividend tax credit and small
business income threshold.
Alberta
Royalty Tax Deduction Crown
royalties are paid by companies to the provincial
government for the right to extract natural resources
owned by Albertans. Responding to federal
resource tax changes that came into effect January
1, 2003, Alberta amended its Corporate Tax Act.
See Special
Notice Vol. 5, No. 18, "Alberta Response to
Federal Resource Tax Changes" for details.
Alberta
Royalty Tax Credit (ARTC)
The Alberta Royalty
Tax Credit (ARTC) is a royalty program administered
through the income tax system. It returns a percentage
of a specified amount of Alberta crown royalties
paid in a year on conventional oil and gas production.
Both the percentage, or credit rate, and the specified
amount have varied over time.
Under the program's
current parameters, the credit rate reflects fluctuations
in quarterly oil and gas prices. Maximum benefits
range from $500,000, calculated at 25 per cent of
eligible royalties up to $2 million when the reference
price exceeds $210, to $1.5 million or 75 per cent
of eligible royalties when the price is $100 or
less.
This program
will be discontinued effective January 1, 2007,
as noted above.
Insurance
Corporations Tax
The Insurance Corporations
Tax is payable by insurance companies for business
transacted in Alberta during the year. The
rates are two per cent on premiums for life, accident
and sickness insurance, and three per cent on premiums
for other types of insurance.
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