Wealth Strategies: Alberta Budget details - Increased taxes
Milestone Wealth Management Ltd. - Apr 16, 2015
The Alberta provincial budget was announced on March 26, 2015. The recent decline in the price of oil has led to the government projecting a provincial budget deficit of approximately $5 Billion, as the article excerpt below notes. This somewhat...
The Alberta provincial budget was announced on March 26, 2015. The recent decline in the price of oil has led to the government projecting a provincial budget deficit of approximately $5 Billion, as the article excerpt below notes. This somewhat tougher budget is sure to be met with some opposition, as one would expect. There are several important changes, specifically higher income taxes for higher income earners, the return of health care premiums for some and higher gasoline taxes.
Albertans will pay more to get married, go camping, have a drink, go for a drive or do pretty much anything else as the province fights to get out from under the collapse in oil prices.
The 2015-16 budget tabled Thursday increases taxes and fees virtually across the board and runs the largest deficit in Alberta’s history at $5 billion.
The government is retooling its tax take so that the wealthy will pay more. It’s also bringing in a health-care levy, boosting the gasoline tax by four cents a litre and increasing sin taxes on cigarettes and booze.
“This has been one of the hardest budgets to develop in many years and has required tough decisions,” Finance Minister Robin Campbell told reporters before he introduced the 2015-16 budget in the legislature Thursday.
“We’re going to get off of oil.”
Premier Jim Prentice has billed the document as transformational and necessary to make up for billions in lost oil revenue and to insulate the province’s day-to-day spending from roller-coaster swings in energy prices.
The premier has also said he needs a mandate to implement the budget and is expected to call an election soon.
The budget details $1.5 billion in hikes and new levies and outlines a new tax model.
We have taken the liberty to dissect the tax rate increases and lay them out in an easy format to understand.
Looking at the changes to Alberta’s individual tax rates, two new tax brackets will commence in 2016. Specifically:
- Income from $100,000 - $250,000 will increase to 10.5% (from 10% flat) for 2016, 11.0% for 2017 and 11.5% for 2018 and beyond;
- Income above $250,000 will increase to 11.0%, 11.5% and 12.0% respectively.
From a personal tax rate perspective this means beginning in 2016:
- Income from $44,000-$88,000 would be taxed at 32%,
- $88,000 -$100,000 at 36%,
- $100,000-$136,000 at 36.5%,
- $136,000- $250,000 at 39.5% and lastly,
- $250,000 plus at 40%.
For 2017 and 2018, the three highest tax brackets are each increased by 0.5% each year.
Here are some additional tax increases to note:
- The gasoline tax is effective immediately with 4 cents/L hitting your pocket book.
- Alberta Health Care premiums will be added for families with income in excess of $50,000 with a maximum ceiling of $1,000/year, though this will merely be added to tax returns as opposed to being paid quarterly as it once was.
Corporate taxes will remain the same, as will oil and gas royalties.