On February 25, 2021, Alberta Finance Minister, Travis Toews, announced the 2021 Alberta Budget. Many of the Budget measures are meant to drive the province's investment in health care and long-term economic recovery. Below is a summary of some of the tax and other measures that were included in the Budget.
Innovation Employment Grant
Starting January 1, 2021, small and medium-sized businesses that invest in research and development (R&D) can receive a payment of up to 20 per cent of qualifying R&D expenditures.
The Innovation Employment Grant (IEG), provides an 8 per cent payment on a corporation's base level R&D spending in a year. The base level spending is calculated as the average R&D spending of the corporation in Alberta over the previous two years. Corporations that spend over their base level will be eligible for a payment of 20 per cent on the incremental amount. Startup businesses moving to Alberta could receive the 20 per cent payment on their entire first year qualifying R&D spending.
The IEG applies on up to $4 million in qualifying expenditures made in Alberta on an annual basis. The expenditure limit is phased out between $10 million and $50 million in taxable capital.
In order to claim the IEG, eligible corporations must complete and file a new Schedule 29 to the Alberta Corporate Income Tax Return (AT1), in addition to the AT1 for the respective taxation year.
Did you know Crowe MacKay has a dedicated Scientific Research & Experimental Development (SR&ED) tax incentive team? Contact your advisor to learn more on how we can assist you in maximizing your business' R&D returns.
Enhanced COVID-19 Business Benefit
Commencing in mid-April, the Enhanced COVID-19 Business Benefit will provide up to $10,000 to eligible small and medium businesses most affected by the pandemic and ongoing public health restrictions.
Businesses can use these funds at their discretion to help offset the costs of re-opening and implementing public health measures including:
- physical barriers
- purchasing personal protective equipment and disinfecting supplies
- paying rent and employee wages
- replacing inventory
- expanding online business or e-commerce opportunities
The Benefit will provide funding to businesses that have experienced a revenue reduction of at least 60% and payments will be calculated based on 15% of the business' monthly revenue, up to a maximum of $10,000.
To be eligible for the Enhanced COVID-19 Business Benefit, applicants must:
- be a business, cooperative or non-profit organization with fewer than 500 employees
- demonstrate a revenue reduction of at least 60%
- report the levels of provincial and federal support received, to ensure that no more than 80% of revenue was covered by these other supports
Corporate Income Taxes
The Budget includes no changes to the corporate income tax rate. As of July 1, 2020, Alberta's corporate income tax rates are as follows:
|Alberta||Combined Federal and Alberta|
*On the first $500,000 of active business income
Personal Income Taxes
Alberta's basic personal and spousal tax credit amounts remains at $19,369 in 2021. The Budget includes no changes to the personal tax brackets or rates.
Other Tax Measures
The Alberta Government also made the following announcements:
- Education property tax revenue will remain frozen for 2021-22.
- As announced in a previous Budget, the Tourism Levy will apply to short-term rentals offered through online marketplaces, effective April 1, 2021. The online marketplaces will be authorized to collect and remit the levy on behalf of operators.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.