Alberta is a province with a population of over four million people. The provincial government has been working hard to increase the revenue it collects from all levels of government, including municipalities, school boards and health authorities. As a result, Alberta Tax is one of Alberta’s most important sources of income for all levels of government because it provides funding for programs such as education and healthcare services. In this post, we will explain what is Alberta tax and the calculation method of those income taxes.
What is Alberta Tax?
Alberta Tax is a tax that the Government of Alberta collects. It is imposed on all individuals, businesses and organisations in Alberta. The tax you pay depends on your circumstances and where you live in the province.
Alberta Income Tax (AT) is calculated based on your employment income, investment income and other taxable sources such as interest, dividends, capital gains etc., which are reported to Revenue Canada at the T1 level (individuals) or T2 level (businesses).
Type of Alberta Tax
Alberta’s tax system comprises six types of taxes, including personal and corporate income tax. However, there are also some other types of taxes, such as fuel tax and education property taxes, that you may need to pay in Alberta.
In this article, we’ll cover the following Alberta taxes:
- Personal Income Tax
- Corporate income tax
- Fuel Tax
- Tobacco Tax
- Educational Property tax
- Freehold Mineral Rights Tax
- Insurance premium tax
Personal Income Tax
Alberta’s personal income tax system is a progressive scheme that taxes individuals and trusts based on their taxable income. Each province has its own version of the federal system, but all provinces use identical formulas to calculate taxable incomes and determine which rates apply to them.
Personal income tax rates in Alberta vary from 10% to 15%, with the combined federal and provincial tax rate ranging from 25% to 48%.
| Tax Rate | 2021 Tax Brackets | 2022 Tax Brackets | 2023 Tax Brackets |
| 10% | Up to $131,220 | Up to $134,238 | Up to $142,292 |
| 12% | $131,220.01 to $157,464 | $134,238.01 to $161,086 | $142,292.01 to $170,751 |
| 13% | $157,464.01 to $209,952 | $161,086.01 to $214,781 | $170,751.01 to $227,668 |
| 14% | $209,952.01 to $314,928 | $214,781.01 to $322,171 | $227,668.01 to $341,502 |
| 15% | $314,928.01 and up | $322,171.01 and up | $341,502.01 and up |
Corporate Income Tax
Corporate income tax is a tax on the profits of a corporation. The corporate income tax is imposed on all corporations, including incorporated and unincorporated businesses. There are two different types of corporate income tax:
- The flat rate (8%) applies to all corporations regardless of how much they earn in taxable income or where they operate their business activities
- The class-based approach applies only to certain industries and activities associated with these industries
Fuel Tax
A fuel tax is a tax on fuel used in vehicles. It is paid by the person who owns the vehicle and paid to the Alberta government. The fuel used in your vehicle becomes taxable when you fill up at a gas station or drive on public roads within Alberta.
You may also be required to pay this tax if you have registered your vehicle with Transport Canada (Canada). If so, it will be added to what’s owed after calculating Alberta provincial sales tax (PST) and other taxes such as GST/HST and GST/HST rebate cheques.
The Fuel Tax Relief Program provides Albertans and Alberta registered businesses with direct savings on the following kinds of fuel:
- Gasoline – 13 cents per litre
- Diesel – 13 cents per litre
- Designated gasoline – 4 cents per litre
Tobacco Tax
The tobacco tax in Alberta is levied on all tobacco products sold in the state, including cigarettes, smokeless tobacco, loose tobacco, and cigars.
- Cigarette – 27.5 cents per cigarette or tobacco stick
- Tobacco, loose – 41.25 cents per gram
- Tobacco without smoke – 27.5 cents per gram
- Cigars – 142% of the taxable price of the tobacco (minimum tax of 27.5 cents per cigar, maximum tax of $8.61)
Education Property Tax
The education property tax provides a stable and sustainable source of income for Alberta’s education system. The tax benefits all public and private school students and contributes to the cost of basic education, such as teacher wages, textbooks, and other classroom tools.
The funding for the Kindergarten through Grade 12 education system originates from two sources:
- General provincial revenues
- Education property taxes
By pooling education property taxes in the Alberta School Foundation Fund (ASFF), students receive an excellent education regardless of where they reside.
Freehold Mineral Rights Tax
Freehold mineral rights tax is a charge applied to the value of your property. It’s collected by the Alberta government and used to fund programs that benefit Albertans, like education or health care.
- An annual tax on mineral rights to petroleum and natural gas within provincial borders that the Alberta government does not hold.
- Revenue generated from freehold oil and gas properties is assessed.
- Annually based on calendar year output collected in March of the subsequent calendar year. The payment is due on April 25th.
- As shown on the estate fee simple Certificate of Title, each proprietor of a petroleum or natural gas mineral right is subject to this tax.
Insurance Premiums Tax
The insurance premiums tax is a tax that the insurance company pays to the government. It’s paid on the insurance premium and usually collected monthly or quarterly.
The Alberta government sets rates for these taxes, which are then used to fund various programs in our province, including health care and education.
Insurance Premium taxes rates are,
- Life, accident and sickness insurance – 3%
- Other insurance – 4%
How to Calculate Income Tax in Alberta?
Calculating your income tax in Alberta is a complicated process. First, it’s essential to understand that you can only deduct certain expenses from your income and that you have to report all of your income, even if it’s not taxable.
First, you need to figure out how much money you make. Your gross income is the total amount of money you earn in a given year.
Once you know how much money you made, calculate your taxable income by subtracting any non-taxable expenses from your gross income. This will give you a taxable amount that needs to be reported on your taxes.
Or your total tax bill is calculated by adding up the income with allowances and subtracting those with the tax deductions.
Other Tax Programs in Alberta
There are also some other tax programs in Alberta which not mentioned above,
Alberta Indian Tax Exemption
The Alberta government recognises that many First Nations people and communities in the province do not want to be called Indians or Indian bands. These terms have been used to represent their legal meaning in the federal Indian Act where applicable.
Eligible consumers are exempt from paying Alberta taxes on fuel and tobacco bought in Alberta as personal property on reserve. The exemption is only available to eligible Indian customers through retailers who are registered with the Alberta Tax and Revenue Administration.
The federal Certificate of Indian Status card (status card) or Temporary Confirmation of Registration document will be the only acceptable evidence of eligibility for tax-exempt purchases made on reserve in Alberta beginning October 4, 2021. Any version of the status card, including expired cards, will be recognised.
Health Cost Recovery
The Health Cost Recovery Program is controlled by Alberta Health and governed by the Crown’s Right of Recovery (President of Treasury Board and Minister of Finance) Regulation, which the Tax and Revenue Administration handles.
The legislation contains a provision for the Crown to recover the costs of health services given to victims of automobile accidents from automobile insurers. Automobile insurers must report the premiums for third-party liability insurance written in the calendar year and remit to TRA an amount reflecting their proportionate share of the total anticipated Crown cost of health services related to automobile accidents for each calendar year.
Conclusion
It is never too early or too late to start preparing your income tax return. You can even do it yourself if you know some basic accounting principles and which forms you need to file with the CRA. We hope that this article has been helpful in explaining the different types of Alberta tax, what they are and how you can manage your own.
FAQ – What is Alberta Tax?
How much are GST and PST in Alberta?
The GST and PST are not taxes. They’re both provincial taxes, meaning the Alberta government collects them. They do not collect income tax. That is why it’s important to understand that they have different names: The GST refers to the federal Goods and Services Tax (GST), while the PST refers to the Provincial Sales Tax (PST).
The GST is applied at various rates across Canada; however, each province has its own sales tax system with different rules about what you can buy subject to these taxes being charged on them in addition to any other direct costs incurred during their production or sale process such as labour wages etcetera!
Is Alberta’s tax higher than Ontario’s?
Yes. Alberta’s tax is higher than Ontario’s tax.
The province of Alberta currently has a flat income tax rate of 10%, with an additional 5% for those who earn more than $500,000 per year. Non-income taxes include sales taxes that vary from place to place within the province (such as Edmonton) and property taxes on real estate owned by small businesses such as hotels or restaurants. The overall combined provincial/municipal tax rate comes out at 13%.
Which province has the lowest tax in Canada?
Alberta is the lowest tax province in Canada. It has a personal income tax rate of 10%, which is the lowest in all of Canada. The corporate income tax rate in Alberta is 8%. The fuel sales tax (which includes gasoline, diesel and aviation fuel) is 3% on top of that for a total combined sales tax rate exceeding 15%.
Why doesn’t Alberta have sales tax?
Alberta takes pride in being the only Canadian province without a provincial sales tax, instead depending on bitumen revenues. This attitude, known as the “Alberta tax advantage,” can be traced back to 1936, when a new Social Credit government implemented a 2% sales tax suggested by a taxation committee.
Who doesn’t pay taxes in Alberta?
If you’re not paying taxes in Alberta, there are a few reasons
- You’re not earning enough money to be paying taxes
- You don’t own any property in Alberta
- Your business is registered outside of the province and pays no income tax on its profits or sales made within Alberta
