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Tax Requirements for Corporations Operating in Alberta

Question:

What are the tax requirements for corporations operating in Alberta?

Facts:

Corporations operating in Alberta are required to pay federal and provincial corporate tax on taxable income. GST registration is also required unless the corporation qualifies as a small supplier and WCB premiums are required for employers operating in non-exempt industries. Additionally, special taxes are levied on corporations with petroleum and natural gas mineral rights in Alberta as well as insurance providers.

Discussion:

Corporate Tax

Corporations operating a permanent establishment in Alberta at any point in a tax year are required to file a corporate tax return with CRA and Alberta’s Tax and Revenue Administration within six months of the tax year-end. Calculated on worldwide active business income, the combined federal and provincial corporate tax rates for Alberta Corporations are as follows:

  • Income of a Canadian Controlled Private Corporation (CCPC) below $500,000 – 11.00%.
  • Income of a CCPC above the small business limit – 23.00%.
  • Income of non-CCPCs – 23.00%.
  • Investment income – 46.67%.

Taxes owing are due three months after year-end, however, if the total tax payable was greater than $3,000 in the prior-year installment payments are payable monthly or quarterly.

GST

Unless selling exempt products and services, corporations operating in Alberta with worldwide taxable income exceeding $30,000 are required to register for GST. Registrants charge 5% on taxable supplies and can claim input tax credits (ITCs) for purchases and operating expenses used in a business’s commercial activities. Where taxable income is less than $30,000, registration is not required but can be done voluntarily. GST must be charged on all taxable sales and GST ITCs can be claimed once registered.

The filing dates for GST returns are determined by the business’s annual taxable income and can be annual, quarterly or monthly.

Freehold Mineral Tax

Corporations with petroleum and natural gas mineral rights in Alberta are required to pay the Freehold Mineral Tax. The tax is assessed on revenues earned in a calendar year derived from the right, is calculated in the subsequent year and is due by April 25th of that year.

Insurance Premiums Tax

The insurance Premiums Tax is levied on all insurance providers. Tax rates are 3% on contracts of life, accident and sickness insurance, and 4% on all other contracts. An insurance premiums tax return must be filed each year with the Tax and Revenue Administration and is due and payable on the 75th day following the taxation year-end.

WCB

Workers’ compensation insurance coverage is legally required in Alberta for most employers. Where required, an account must be established with WCB Alberta within the 15-day period following the hiring of the first worker.  Premiums are determined using industry, prior claims, and other relevant historical information.


If you would like to discuss your corporate tax requirements as a business operating in Alberta, please contact a member of the EPR tax team by completing the contact form below. Our tax experts can advise on the best structure to reduce or minimize the impact of the taxes.

Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. EPR Maple Ridge Langley, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.


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