Taxation Info-Guide (Alberta)

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This Info-Guide is a document designed to help you navigate through different government programs, services and regulations and identify those of interest. Although many questions will be answered in an Info-Guide, the list is, by no means, exhaustive. The selected items provide a helpful overview of the programs, services and regulations in a related area. This blended product of both federal and provincial information is developed to answer a growing demand for strategic information by business people. Municipal and other non-government information could be included, depending on the content and region.

TABLE OF CONTENTS

Taxation Introduction
Financial Assistance
Information Services
Management Services
Regulations


TAXATION INTRODUCTION

Income Taxes
Taxes on Sole Proprietorships and Partnerships
Sole proprietorships and partnerships can deduct the same expenses from taxable income as corporations can. These expenses must relate to the generation of business income. However, your business income, or share of the business income, in a partnership, is taxed personally. You may have to pay your income tax by instalments. You may also need to make instalment payments for Canada Pension Plan contributions on your own income. Remember to budget for these payments. For more information, to obtain tax guides, or to open an installment account, contact the Canada Revenue Agency.

Corporate Taxes
Corporate income tax rates vary depending on the type of business and its net income. As of January 2013 the combined federal / provincial corporate income tax rate is 25% for general businesses and 14% for small businesses. Alberta does not have any provincial capital or payroll taxes, which are common in many other provinces and U.S. states.

Different forms of income, such as interest, royalties, income from foreign subsidiaries, capital gains and dividends, are treated differently, making corporate business taxes complicated and constantly changing. The following are a few tax tips to remember:

  1. Depending on when you start operations, your corporation may have a taxation year other than the calendar year.
  2. Corporate taxes must be paid by monthly instalments, based on either a tax payable estimate for the year or the tax paid the previous year.
  3. You should open a corporate tax instalment account with Canada Revenue Agency as soon as your business operations begin.
  4. Corporate residents in Alberta must submit income tax returns separately to the federal and provincial governments.
  5. Corporate assets such as buildings, vehicles and equipment are not deducted from income in the same way as other expenses.

For CRA filing dates see the Summary of important dates for businesses

For an overview and comparison of tax rates visit the Alberta Advantage website.

More information including Alberta corporate tax rates, small business deduction rates, fuel tax, tobacco tax and hotel room tax rates, and other services, publications and forms can be obtained by visiting the Alberta Treasury Board and Finance website.

Take advantage of our seasonal Guest Advisor Program. You can speak to accountants, financial representatives, lawyers, business management consultants, and business coaches. 
Also, c
heck out our upcoming webinar: Sole Proprietorship or Incorporation?

Municipal Taxes
Business owners pay property taxes at the municipal level. Some municipalities also collect a local business tax. For more information, contact the local municipal authority or council in the area your business is located.

FINANCIAL ASSISTANCE

Scientific Research and Experimental Development (SR&ED) Program - Canada Revenue Agency
The SR&ED program is a federal tax incentive program to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada that will lead to new, improved, or technologically advanced products or processes. The SR&ED program is the largest single source of federal government support for industrial research and development.

Claimants can apply for SR&ED investment tax credits for expenditures such as wages, materials, machinery, equipment, some overhead, and SR&ED contracts.

For further information, please call 1-800-959-5525 or visit the SR&ED website.

INFORMATION SERVICES

Finance and Taxation Information for Enterprises - Statistics Canada
Statistics Canada maintains financial and taxation information on incorporated enterprises operating in Canada.

For further information, please call 1-800-263-1136 or visit the website

Forms and Publications -- Internet Ordering Service - Canada Revenue Agency

If you would like to order a paper copy of one of Canada Revenue Agency's forms or publications, please complete their on-line Order form.

For further information, please call 1-800-959-2221, visit the Web site at
http://www.cra-arc.gc.ca/formspubs/menu-e.html

Guide for Canadian Small Businesses - Canada Revenue Agency
The Guide for Canadian Small Businesses provides useful information on a broad range of issues, such as how to set up a business, the GST / HST, excise taxes and duties, importing / exporting, payroll deductions, and income tax. The guide is targeted primarily at new and prospective small businesses. It provides a comprehensive overview of tax and customs related information that established small businesses may also find useful.

For a copy of the guide, please call 1-800-272-9675, see the PDF document Guide for Canadian Small Businesses or visit the CRA website

Selecting Professional Services - Canada Business service centres
The use of professional services is essential to the success of a small business. They can provide knowledge and expertise in the areas in which you may have little. They may also round out your management team to ensure your business is operating efficiently. As an entrepreneur, there are four main areas of professional services with which you may consult: accountant, lawyer, banker and insurance broker.

For further information, see the document Selecting Professional Services The Business Link has a seasonal “Ask the Expert Guest Advisor Program” that connects you with Business management consultants, business coaches, lawyers, accountants, and financial representatives who volunteer their time to discuss your business concerns.

Check out our Learning @ The Link Small Business Webinars beginning February 18th.

Services of the Income Tax Rulings Directorate - Canada Revenue Agency
The Income Tax Rulings Directorate is the centre of income tax expertise within the Canada Revenue Agency (CRA), issuing advance income tax rulings and technical interpretations on which clients can rely.

For further information, see Services of the Income Tax Rulings Directorate.

MANAGEMENT SERVICES

New Employer Visits - Canada Revenue Agency
Personalized visits to new employers help them to understand withholding procedures and to solve any source deduction problems they may have.

For further information, please call 1-800-959-5525 or see Employer Visits Program.

Social Insurance Number (SIN) - Human Resources and Social Development Canada
The Social Insurance Number (SIN) is a unique nine digit number used in the administration of various Canadian government programs. Every person who works in Canada is required to have a Social Insurance Number.

For further information, please contact your local Service Canada Centre, or check the government listings in your telephone directory.

REGULATIONS

Business Number (BN) - Canada Revenue Agency
The Business Number (BN) replaces the many numbers businesses need to deal with government, thus helping reduce costs and increase competitiveness. At the Canada Revenue Agency (CRA), they use the BN for four major business accounts:

  • corporate income tax
  • import / export
  • payroll deductions
  • goods and services tax / harmonized sales tax (GST / HST)

The BN increases government efficiency and helps it deliver one-stop service at Business Windows. This program contains information about which accounts a business may need and how to complete a request for a Business Number.

For further information, please call 1-800-959-5525 or visit the Website at http://www.cra-arc.gc.ca/bn

Payroll Deductions
As an employer, you are responsible for deducting Canada Pension Plan contributions, Employment Insurance premiums and income tax from remuneration or other types of income you pay.

For further information, please call 1-800-959-5525.

Excise Taxes and Excise Duties - Canada Revenue Agency
When certain goods are manufactured in Canada, excise tax is payable at the time the goods are delivered to the purchaser. When certain goods are imported, excise tax is payable by the importer, at the time the goods are imported.

Excise duties are charged on spirits, beer, and tobacco products manufactured in Canada. The Excise Act sets out the rates of duty for these goods.

For further information, please call 1-866-330-3304, or visit the Website

Goods and Services Tax and Harmonized Sales Tax - GST / HST - Canada Revenue Agency
The goods and services tax (GST) is a multi-stage tax that applies to most transactions throughout the production and marketing process. A quick method of accounting for the GST is available for small businesses with annual worldwide GST included sales of $200,000 or less including sales of associated businesses. You have to apply to the Canada Revenue Agency to use this method. If you do use this method, you have to continue using it for at least a year. Certain businesses cannot use this method, for example you cannot use this method if you are a lawyer, accountant or bookkeeper. There are other exceptions as well. For more information on the quick method, see the CCRA guide RC4058, Quick Method of Accounting for GST/HST

For further GST information, please call 1-866-959-7797 or visit the CRA Website

GST and the Indian Act - Canada Revenue Agency
Under Section 87 of the Indian Act, the personal property of an Indian or Indian band situated on a reserve and their interests in reserve lands are not subject to tax. The application of the GST/HST is consistent with the provisions of that Act. For further information, please call 1-800-959-5525 or visit the CRA website.

Information for Aboriginal People

For information about tax and customs benefits and requirements under the Canadian Indian Act, see Information for Status Indians. For examples of how the Indian Act exemption applies to employment income and other related income, see the Indian Act Exemption for Employment Income Guidelines.
For further information contact Canada Revenue Agency at 1-800-959-5525.

Income Tax Returns: T1 General - Canada Revenue Agency
All individuals use the T1 General return to report income and determine their income tax obligations under the laws of Canada and of all provinces and territories, except Quebec (Quebec residents must use a separate provincial return for their provincial income taxes.)

Non-incorporated self-employed individuals, sole proprietors and partners can also use the T1, along with supplementary guides, to determine their personal income tax obligations.

For further information, please call 1-800-959-5525, or visit Income Tax Returns - T1 General Income Tax and Benefit Return

Income Tax Returns: the T2 Corporate Income Tax Return and the T2 Short Return - Canada Revenue Agency
The T2 Corporation Income Tax Return is an eight-page return that serves as a federal and provincial/ territorial corporation income tax return. Exceptions: corporations located in Quebec, Ontario or Alberta. If the corporation is located in one of these provinces, it has to file a separate provincial corporate return.

The T2 Short is a two-page return designed for small, non-taxable corporations with a gross annual income of $500 000 or less. Two categories of corporations are eligible to use the T2 Short.

For further information, please call 1-800-959-5525, or visit Income Tax Returns - the T2 Corporate Income Tax Return and the T2 Short Return

Corporation Internet Filing - Canada Revenue Agency
Corporation Internet Filing is the newest electronic tax-filing option; it streamlines the tax-filing process, provides the filer with an immediate confirmation of receipt and results in faster refunds.

For more information, please call 1-800-959-5525 or visit the CRA Website

Objections and Appeals - Income Tax Act / Excise Tax Act - Canada Revenue Agency
The Income Tax Act provides for a formal objection process for taxpayers who disagree with an income tax assessment. The Excise Tax Act provides a similar process for persons who disagree with a GST/HST or excise tax assessment.

If you do not understand or agree with an assessment or reassessment notice, you should first call or visit the Client Services Section of your tax services office or write to the tax centre that processed your return. The Canada Revenue Agency (CRA) resolves many problems with assessments in this way.

For further information, please call 1-800-959-5525, or see Objections and Appeals - Income Tax Act/Excise Tax Act .

Tax and Revenue Administration - Alberta Finance
Tax and Revenue Administration is responsible for the administration of the Alberta Corporate Tax Act, Fuel Tax Act, Tobacco Tax Act, Tourism Levy Act, as well as the Health Cost Recovery programs. The Alberta Corporate Tax Act contains provisions for determining the Alberta income tax of corporations, the Alberta Royalty Tax Credit for corporations, the Alberta Royalty Credit for individuals and trusts and the Insurance Corporations Tax. Fuel tax, tobacco tax and tourism levy provisions are contained in the respective acts.

For further information, please call Edmonton 780-427-3044, (call 310-0000 then enter 780-427-3044 for Alberta toll-free) orCalgary 403-297-5200, (call 310-0000 then enter 403-297-5200 for Alberta toll-free) or visit the TRA Website

Municipal Taxes
In addition to a property tax levy, a municipality may impose a business tax, a special tax, or a local improvement tax. As well, the Municipal Government Act (MGA) provides for taxes within a business revitalization zone (BRZ) and for a tax on well drilling equipment.

For further information contact your local municipal office. If you want to read the MGA visit the Alberta Queen's Printer Web site at http://www.qp.gov.ab.ca/catalogue

Related Reading

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.