Albertans are facing big changes to their corporate and personal tax framework in the back-end of 2015, making tax planning accountants in Calgary even more valuable as the year wraps up. Albert’s NDP government recently introduced Bill 2 in hopes of diverting more funding into the province’s resources and infrastructure. Optimistically named “An Act to Restore Fairness to Public Revenue,” this new Bill outlines progressive, graduates tax increases for big earners and corporations.
Who is affected?
Alberta residents with an income over $125,000 but under $150,000 will pay a 12% provincial tax, up a full two points from its previous position. This graduated increase peaks at 15% for those making over $300,000 annually. These changes are expected as of October 1st of this year.
Corporate income taxes will be drastically affected as well. The general manufacturing and processing corporate tax rate rose from 10% to 12% as of July 1st, and consequently the Canadian-controlled private corporate rate on investment income will be influenced.
Small business owners can breathe a sigh of relief; for now, their tax rate will remain locked at 3%.
Why is this change happening now?
Many critics have questioned the efficacy of a mid-year tax change. How will the government be able to collect with the changes coming so late into 2015? The federal government would have needed to be notified by April 15th according to some.
Though the changes will be complicated and contentious at first, Joe Ceci, the President of the Treasury Board and Minister of Finance, remains optimistic. “We are asking high-income earners and profitable corporations to contribute fairly to rebuilding our province,” he says, citing the Bill’s utility as a means of reducing Alberta’s vulnerability to boom-bust cycles. In total, the proposed changes to the personal income tax system will yield an estimated $800 million in additional revenue, while corporate tax increases will produce anywhere from $350-550 million more.
What should I do to ensure tax compliance?
Many people struggled to file their personal or corporate taxes correctly even before these changes were proposed – how will they do now that the province is giving them a moving target for tax compliance? Though a full primer to help you prepare for these changes is beyond the scope of a singe article here, expert advice is available through Edison Wen tax planning accountants in Calgary. Visit our website for our online contact form, or call 403-891-6772 now for all the help you need with your corporate or personal taxes!