On February 27, 2020, Travis Toews, Alberta’s Finance Minister, released the province’s 2020 budget. While not many tax changes were introduced, there were a few notable items. Here is what we think you should know:
The Alberta 2020 Budget projects a surplus of $706 million in 2020 after deficits of $6.8 billion and $2.7 billion in 2020 and 2021.
Corporate Income taxes
Good news for businesses: there are no changes to the corporate income tax rates. The Alberta general rate will fall by 1% per year from 10% in 2020 to 9% in 2021 to 8% in 2022, and so on. The small business rate, which applies to the first $500,000 of active business income, remains at 2% through 2022.
Personal Income Taxes
The personal income tax rate will remain the same, and the previously announced measures of freezing the Alberta basic personal exemption were included in previous releases.
Vaping Product Tax
The 2020 Alberta Budget proposed a 20% tax on the retail price of all vaping devices and liquids, including cannabis liquids. Vaping and cannabis retailers are going to be required to collect and remit this new tax. Online retailers with sales to Albertans will also be subject to this tax. Additional details on the implementation, effective dates, and reporting of the tax will be provided when the legislation is introduced.
As proposed in the 2019 budget, the 4% Alberta tourism levy is now being extended to short-term rentals offered through online marketplaces like Airbnb, VRBO, Homeaway, etc.
There are exemptions for properties where the rental rate is less than $30/day or $210/week, however. An exemption is also available if the operator has a gross revenue of less than $5,000 in the year from these short-term rentals. The tourism levy will be collected by the online marketplaces and remitted to the government on behalf of the operators.
Education Property Tax
For the 2020-2021 year, the education property tax will be increasing by 3.1%.
The residential/farmland rate will increase from $2.56 to $2.65 per $1,000 of equalized assessment and the non-residential rate increases from $3.76 to $3.88 of equalized assessment. Equalized assessments are an adjusted assessment by the municipality for the entire property base of a particular municipality. If the increase could be applied to a single residential property, the increase from $2.56 to $2.65 on a $300,000 property would add a total of $24 to the annual property tax bill.