ALBERTA BUDGET ANNOUNCEMENT - 2015
Alberta Finance Minister Robin Campbell tabled a $248 million surplus budget for fiscal 2015-16 on March 26, 2015. While the budget has little direct impact on corporations, it does contain several tax measures which will significantly impact individuals, such as a distinctive new health care levy and considerable changes to personal income tax.
HIGHLIGHTS:
Fuel Tax Premiums
Fuel tax increases will affect Albertans across the board, adding to the cost of living and the cost of doing business in Alberta. Eligible users of marked fuel are also subject to these new taxes as the existing exemptions under the Tax Exempt Fuel User (TEFU) and the Alberta Farm Fuel Benefit (AFFB) are not being increased to offset these new costs. Fuel increases include:
• A fuel tax increase of 4 cents per litre of gasoline and diesel • A fuel tax increase of 2.9 cents per litre of propane
Personal Tax Rates
Income Tax Brackets
Alberta’s infamous flat income tax rate of 10% will be changing after January 1, 2016 for personal income tax rates.
• The 2015 Budget introduces two new personal tax brackets: taxable income over $100,000 and over $250,000.
• Those earning more than $250,000 a year will be taxed at 11%. For the next two years, that tax rate will jump half a percentage point each year. By 2018, high income earners will be paying 12%. In 2019, the rate will fall back to 11.5%.
• Similarly, taxes will go up by 0.5% a year for people within the $100,000 to $250,000 tax bracket, 10.5% in 2016, 11% in 2017 and 11.5% by 2018. • Those making under $100,000 will still pay a 10% tax.
Alberta Family Tax Credits
• Starting July 1, 2015, the Alberta Family Employment Tax Credit will increase to $754 for one child, to a maximum of $1,987 for four or more children.
• A new refundable tax credit aimed at supporting the working family in Alberta will also be introduced on July 1, 2016. The new Alberta Working Family Supplement (AWFS) will pay families with one child $1,100, plus an additional $550 per child to a maximum of three additional children. This equates to a maximum annual payment of $2,750 for a family with four children.
Health Care Premiums
Effective July 1, 2015, the Government of Alberta will reintroduce a health care premium called the Health Care Contribution Levy. This is a more extreme levy in comparison to a previous Alberta health care premium which was eliminated in 2008.
• The levy will not apply to people with taxable income of less than $50,000. • For those with more than $50,000 of taxable income, the levy will increase in $200
increments as income rises until reaching a per person maximum of $1,000 for those with taxable income above $130,800.
• The previous Alberta Health Care Insurance Premium was capped at $528 per person per year or $1,056 per family per year.
• The Health Care Contribution Levy will be paid through personal income tax and will be administered by the CRA.
This new levy will significantly impact families. For instance, if both spouses are earning above $130,000 per year, the levy will be $1,000 per person, totalling $2,000. This is almost double the old Alberta Health Care Insurance Premium in 2008 of $1,056.
Charitable Donations
Changes to tax incentives for charitable donations could influence an individuals choice to participate in community assistance in 2015. The budget proposes to reduce the Alberta donation credit down to a rate of 12.75%, from our current donation credit of 21%.
Corporate Tax Rates
Alberta general corporate tax rate remains at a 10% flat rate and the small business tax rate remains at 3%.
How MNP can help: Our teams of skilled tax advisors can work with businesses and their employees to offset the impact of the new tax rules by minimizing tax exposure and maximizing any tax benefits or opportunities that are available.
Tax Measures Affecting Specific Client Groups
MNP serves a diverse range of clients in diverse industries and sectors. Thankfully, the new budget put forward by Finance Minister Robin Campbell presents no changes specifically addressing the needs of our clients, minus the changes to personal income tax that will affect Albertans from every industry and sector.
ALBERTA BUDGET ANNOUNCEMENT - 2015
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Alberta Region Tax Contacts
CALGARY
Randy Bella 403.536.5536 Andrew Fleming 403.536.5589 Stew Henderson 403.648.4186 Dylan Hughes 403.537.7658James Meadow (Int’l Tax) 403.536.5548 Jeff Kawamura 403.263.3385 Douglas Ng 403.537.7682 Michelle O’Brien-Moran 403.317.2780 Jason Smith 403.537.8420
Jennifer Hanna (Int’l Tax) 403.537.7612
EDMONTON
Mark Bernard 780.453.5388
Kathy Bonazew (Int’l Tax) 780.9691454 John Hanson 780.733.8609 Glen Thompson 780.453.5374 Kevin Nitchke 780.969.1413 Brian Zrobek 780.969.1477
