On Feb. 28, 2023, Alberta Finance Minister Travis Toews delivered the Alberta 2023 Budget and Fiscal Plan (the 2023 budget). Alberta put forth a fiscal framework to manage Alberta’s unique economic and revenue volatility, with the goal of paying down maturing debt. Consistent with Alberta’s commitment to balance annual budgets, the 2023 budget forecasts a surplus of $2.4 billion for the 2023-24 fiscal period.
Alberta Budget 2023
Income tax measures
The 2023 budget emphasized the value of Alberta’s low tax environment relative to its provincial peers. No changes were proposed to Alberta personal or corporate income taxes.
Resumed indexation of personal income tax system
Due to a budget deficit in 2019, Alberta announced it would freeze indexation of its personal income tax brackets and personal tax amounts (annual non-refundable tax credit received by individuals). Indexation serves as a tool to combat the effects of inflation. As a result of the combined impact of the indexation freeze and increased taxpayers’ income due to inflation, taxpayers moved into higher tax brackets and a smaller percentage of their taxes were reduced by the credit. Now that Alberta’s budget is balanced, it will restart indexation of the personal income tax system effective Jan. 1, 2023.
Resuming indexation should result in tax savings for individual Albertans.
Alberta child and family benefit
The Alberta child and family benefit (ACFB) provides financial assistance to middle and lower income families with children under the age of 18. In the 2023 budget, the government confirmed that Alberta will index the ACFB starting Jan. 1, 2023. This will increase the amount of the ACFB families receive and increase the maximum income amount allowing more families to access the benefit.
More families will be eligible for the ACFB and all eligible families will receive additional financial assistance.
Adoption expenses tax credit
Alberta offers a tax credit to assist Albertans with growing their families through adoption. In 2023, the maximum allowable expenses under the adoption expenses tax credit will be increased to $18,210 from the current amount of $13,550 and will be indexed for years thereafter.
Families looking to adopt can utilize this credit and offset a greater portion of qualifying expenses.
Agri-processing investment tax credit
In an effort to capitalize on employment, growth and diversification opportunities in the agri-food industry, Alberta is introducing a new agri-processing investment tax credit (APITC). The APITC is a non-refundable tax credit equal to 1 per cent of certain eligible capital investments of at least $10 million made on or after Feb. 7, 2023. The APITC will be eligible for a 10-year carryforward period. Applications will be accepted starting in spring 2023. More information on types of eligible expenditures and how to apply will be made available once regulations are brought forward.
Certain businesses in the agri-food industry eligible for this tax credit can benefit from significantly subsidized capital purchases as they work to expand their operations.
Other tax measures
Alberta fuel tax relief
To help with higher costs of living associated with escalating prices of oil, Alberta has paused the collection of fuel taxes from Jan. 1, 2023 until at least June 30, 2023. Beginning on July 1, 2023, at the earliest, the government will reinstate collection efforts. In July 2023, the fuel tax relief program (first introduced in April 2022) will resume. The fuel tax rate will be based on the quarterly average price of West Texas Intermediate (WTI) from a predetermined pricing scale. Depending on the WTI price, the fuel tax can be anywhere from 13 cents/litre to zero cents/litre.
In the short term, Albertans will receive a break from fuel taxes. For the remainder of the year and as the price of oil increases, the fuel tax rate will decrease to help offset the rising costs of living in Alberta.