Tax Considerations

Competitive Advantages:

  • No employer or employee-paid payroll taxes.
  • Low workers’ compensation premiums for major industries.
  • No provincial retail sales tax.
  • Highest basic personal exemption among all provinces.
  • Lowest number of personal income tax credits.

Rated by the CFIB in its 2013 Small Business Provincial Tax Index as Number 1 in Canada in Overall Index Scores (10 is best, 0 is worst)

Province 2013 Rank 2013 Score 2009 Rank 2009 Score Change from 2009 to 2013
Alberta 1 8.53 1 7.98 0 0.55
British Columbia 2 7.01 3 6.30 1 0.71
Saskatchewan 3 6.98 2 6.32 -1 0.66
Newfoundland & Labrador 4 6.17 6 5.45 2 0.72
Manitoba 5 5.90 7 5.24 -2 0.66
Prince Edward Island 6 5.67 5 5.60 -1 0.07
New Brunswick 7 5.65 4 5.72 -3 -0.07
Quebec 8 5.50 9 4.10 1 1.40
Ontario 9 5.22 8 5.08 -1 0.14
Nova Scotia 10 3.97 10 4.02 0 -0.05

Alberta has one of the most competitive business tax environments in North America.

  • The combined federal/provincial corporate income tax rate in Alberta is 27 per cent.
  • By comparison, the combined effective average federal/state corporate income tax rate in the U.S. is 39 per cent.
  • The Government of Alberta’s general corporate income tax rate is 12 per cent and the Government of Canada rate is 15 per cent.
  • The combined federal/provincial corporate income tax rate for small businesses in Alberta is 14 per cent. In 2017, Alberta’s small business income tax rate will be reduced from three per cent to two per cent.
  • The low income tax rates combined with no provincial capital taxes or taxes on financial institutions, no payroll taxes, no sales tax, and a publicly funded health-care system makes Alberta’s tax environment very competitive.

Effective January 1, 2017, the small business tax rate in Alberta will reduce from 3% to 2%, reducing the corporate tax rate (combined federal/provincial) for small business from 14% to 13%.

Low Personal Taxes

  • Alberta’s personal tax advantage results from a low single rate tax system, no general sales tax, and the lowest gasoline tax among the provinces.
  • Albertans pay low personal income taxes, with the lowest top marginal income tax rate and the highest basic and spousal tax credit amounts in Canada.
  • As provided in the following examples, in Alberta, a two-income family of four:
    • Earning $100,000 pays $3,800 less in total taxes than in Ontario and about $2,300 less than in British Columbia.
    • Earning $200,000 pays $8,300 less in total taxes than in Ontario and about $20,100 less than in Quebec.

Top Marginal Personal Income Tax Rates 2016

Province Federal Provincial Combined
British Columbia 33% 14.7% 47.7%
Alberta 33% 15.0% 48.0%
Saskatchewan 33% 15.0% 48.0%
Newfoundland & Labrador 33% 15.3% 48.3%
Manitoba 33% 17.4% 50.4%
Prince Edward Island 33% 18.37% 51.37%
New Brunswick 33% 20.3% 53.3%
Quebec 27.56% 25.75% 53.31%
Ontario 33% 20.53% 53.53%
Nova Scotia 33% 21.0% 54.0%