First Budget for Alberta’s New Government

Last week, Alberta’s new NDP government brought down their first provincial budget.

The good news in this budget: no provincial sales tax (PST).  Most of the bad news was actually in a bill introduced in June – the creation of four new tax brackets for Albertans with taxable incomes over $125,000.  These brackets became active October 1, 2015, so a blended rate is applicable for the 2015 tax year.  The full rates apply starting January 1, 2016.

The budget announced increases in:

• Locomotive fuel tax (4 cents/litre)
• Tobacco taxes ($5 per carton)
• Insurance rates (1% point increase in premiums)

The budget also introduced a new Alberta Child Benefit which will be implemented July 1, 2016.  This benefit will be $1,100 for the first child and $550 for the next three children, payable to low-income families.  Where family net income is between $25,500 and $41,220, a reduced benefit will be available.

In addition, the Alberta Family Employment Tax Credit, which pays a benefit to low-income working families with children will be enhanced.  Both the maximum benefit and the phase-out threshold will be increased starting July 1, 2016.

The budget also introduced the Alberta Job Creation Incentive Program which will provide grants of up to $5,000 to employers for each net new job created after January 1, 2016.

On the dividend taxation front, the increase in the provincial corporate tax rate for large corporations which was implemented July 1, 2015 should have resulted in a change in the provincial dividend tax credit.  However, no change was made in this budget.  The government indicates that a review is in progress and the results will be announced in the 2016 budget.