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Alberta Dividend Tax Credit

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Alberta -> Alberta dividend tax credit

Alberta Dividend Tax Credits

Alberta Personal Income Tax Act s. 21

Alberta and other provinces provide a personal non-refundable dividend tax credit for income from Canadian dividends.

Alberta Enhanced Dividend Tax Credit for Eligible Dividends

Alberta's enhanced dividend tax credit for eligible Canadian dividends is stated as a portion of the Federal gross-up on the dividends.  The Federal gross-up was reduced each year until 2012.  The Alberta portion of the gross-up was increased each year, in order to keep the dividend tax credit at 10% of the taxable dividend.  The amount included in taxable income is the actual dividend plus the gross-up.  Alberta's October 2015 Budget announced that, since the July 1st corporate tax increase means that Alberta's tax on eligible dividends is no longer fully integrated, the dividend tax credit for eligible dividends would be reviewed, with the results of the review to be announced in Budget 2016.  However, the Alberta 2016 budget indicated that the dividend tax credit would remain at 10% of the taxable grossed-up dividend.  In order to be fully integrated, the enhanced dividend tax credit rate would have to be 12.02% of the taxable dividend.

 

     Alberta Dividend Tax Credit Rate for Eligible Dividends     

Year Gross-
up %
Portion of
Gross-up
% of Grossed-up
Dividend
% of Actual
Dividend
2012 and later 38% 69/190 = 36.316% 10% 13.8%
2011 41% 141/410 = 34.390% 10% 14.1%
2010 44% 18/55 = 32.727% 10% 14.4%
2009 45% 29/90 = 32.222% 10% 14.50%

For marginal tax rates and thresholds for the current and prior years, federally and for each province and territory, see the Tables of Marginal Tax Rates.

Alberta Dividend Tax Credit for Non-Eligible Dividends

S. 21 of the Alberta Personal Income Tax Act specifies the dividend tax credit as a percentage of the gross-up amount.

The Alberta 2016 Budget indicated that the non-eligible dividend tax credit rate would be reduced effective January 1, 2017 to correspond to the reduction in the small business tax rate from 3% to 2%.  The Alberta 2017 Budget indicated that the non-eligible dividend tax credit rate will be revised effective January 1, 2017, and that the result will be that "Income earned in a small business and flowed out to shareholders will continue to be taxed at a minimum of 10%, Alberta's lowest personal income tax rate."  Alberta's Bill 15, Tax Statutes Amendment Act, 2017 was tabled in May 2017, and revised the dividend tax credit rate to 54/359ths of the gross-up amount.

The Federal 2016 Budget announced that the gross-up rate for non-eligible dividends (also know as regular dividends, or small business dividends) would be not be revised further after 2016, and the Federal tax credit rate for these dividends would remain at 2016 rates.  See the article on the non-eligible dividend tax credit for more information.

The rates for non-eligible dividends are reflected in the following table.  The rounding of the 2016 dividend tax credit rate of 3.08% has been confirmed.

     Alberta Dividend Tax Credit Rate for Non-Eligible Dividends

Year Gross-up
Rate
%of
Gross-up
% of Grossed-up
Dividend
% of Actual
Dividend
2017+ (2) 17% 15.04% 2.19% 2.557%
2016 (1) 17% 21.22% 3.08% 3.61%
2014/2015 18% 20.3% 3.1% 3.66%
2009 - 2013 25% 17.5% 3.5% 4.375%
2008 25% 22.5% 4.5% 5.625%
2007 25% 27.5% 5.5% 6.875%
2006 25% 30% 6.0% 7.5%
2005 25% 32% 6.4% 8%

(1) The Alberta Personal Income Tax Act defined the dividend tax credit for 2016 and later years by indicating that the references to s. 121 of the Federal Income Tax Act are revised as follows:

bullet"21/29" for 2016 is to be read as "73/344"
bullet "20/29" for 2017 is to be read as "187/870"
bullet"20/29" for 2018 is to be read as "9/40", and
bullet"9/13" for the 2019 and subsequent taxation years is to be read as "13/55"

The Alberta Personal Income Tax Act defined the dividend tax credit for non-eligible dividends for 2009 to 2013 by indicating that the reference to 2/3 in the Federal Act should be replaced by 7/40 (17.5%) for the Alberta credit.  The Alberta government announced on December 20, 2013 that the tax credit would change from 7/40 of the dividend gross-up amount to 13/64 of the gross-up amount beginning in the 2014 tax year.  It was also noted that the rate to be used in line 6152 of the Alberta provincial worksheet would be 3.1% in 2014.

(2) Alberta's Bill 15, Tax Statutes Amendment Act, 2017 was tabled in May 2017, and revised the dividend tax credit rate to 54/359ths of the gross-up amount.

For marginal tax rates and thresholds for the current and prior years, federally and for each province and territory, see the Tables of Marginal Tax Rates.

See our tables of non-eligible dividend tax credit rates for all provinces and territories.

Revised: May 24, 2017

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