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Reduced Corporate Tax Rate in Alberta

The Alberta government recently accelerated its plans to cut the general corporate tax rate from 10% to 8%, bringing the combined general corporate rate down to 23%. The rate reduction came into effect on July 1, 2020. Rates for Canadian-controlled private corporations and individuals remain unchanged.

With the reduction, Alberta becomes the province with the lowest combined general corporate tax rate in Canada (for comparison, British Columbia's combined rate is 27% and Ontario's combined rate is 26.5%). The reduction also makes Alberta more competitive in North America by bringing the rate lower than the top marginal corporate income tax rates in U.S. jurisdictions like North Dakota (25.31%), Arizona (25.9%), Florida (25.458%) and Colorado (25.63%). Corporations entitled to the small business deduction would generally have a further reduced rate of 11% on the first $500,000 of active business income in Alberta.

The move should cause businesses considering departure to remain in Alberta and may incentivize other businesses to relocate from jurisdictions with higher general corporate tax rates. Cross-border planning opportunities are available for businesses with operations in Canada and the United States.

Contact a member of our Tax Group to discuss tax planning opportunities available for businesses in Alberta.