President of Treasury Board and Minister of Finance, Travis Toews, delivered the 2020 Alberta budget on February 27, 2020. This year’s budget titled “A plan for jobs and the economy” focuses on getting Albertans back to work by restoring competitiveness, stimulating private investment, cutting red tape, and supporting trade interprovincially.
In Budget 2020, the government has reaffirmed its commitment to several measures initially announced in the Fall of 2019 and is encouraging investment in Alberta by businesses via corporate tax rate reductions, as summarized below.
Corporate Income Tax Measures
Alberta has continued with its plans to cut the corporate income tax rate. Effective January 1, 2020, the corporate income tax rate decreased to 10 percent from 11 percent. It is Alberta’s plan to continue reducing the corporate income tax rate as it has proposed annual decreases to this rate equal to 1 percent until January 1, 2022, when the general corporate income tax rate will become 8 percent. When the corporate income tax cuts are fully implemented, Alberta will have one of the lowest corporate tax rates in North America. These rate reductions are expected to benefit over 100,000 businesses in various sectors of the economy and, by 2022, add more than 55,000 jobs to the Alberta economy.
This year’s budget also proposes to eliminate the tourism levy exemption available to short-term rental properties with fewer than four bedrooms and to require suppliers of online short-term rentals (STRs) to collect the 4 percent tourism levy. With these proposed changes, online marketplaces, such as Airbnb, Vacation Rental by Owner, and HomeAway will be required to collect the tourism levy whenever they rent out properties in Alberta. To simplify the collection of the tourism levy by STR operators, online providers will be granted the ability to collect and remit the levy to the province on behalf of operators. In addition, operators using online marketplaces to rent their properties that do not collect the tourism levy on their behalf will be required to register with the province in order to be able to collect and remit the levy when they rent a property. These changes are expected to eliminate any unfair advantage that these online platforms may have over traditional STR providers (i.e., hotels) as a result of not having to charge the levy.
Budget 2020 also proposes that properties not listed through an online marketplace will be eligible for an exemption from the tourism levy where the operator’s gross revenues in Alberta are less than $5,000 annually, or the rental rate of the property is less than $30 per day or $210 per week.
The effective date for these proposed changes to the tourism levy is anticipated to be during the summer of 2020 and will be included in the legislation that is expected to be introduced in the Spring of 2020.
Vaping Products Tax
Alberta has reaffirmed its commitment to introduce a tax on vaping products by proposing a 20 percent tax on the retail sale price of all vaping products. Specifically, this new tax will apply to vaping devices and vaping liquids, including cannabis liquids. Vaping retailers located in Alberta and online suppliers of vaping products located outside of the province selling to Albertans will be required to collect and remit the tax to the province. Legislation for these proposed changes will be introduced in the Spring of 2020 and no effective date for the implementation of this tax has been announced at this time.
Further information on Alberta’s 2020 budget may be found on the province’s website at: https://open.alberta.ca/dataset/budget-2020
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirectTM line at 1-800-667-1600.