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Corporate income tax

By BOMCAS LTD.

Overview

Since the 1940s, all incorporated businesses with a permanent establishment (e.g., office, mine, farm, oil well, etc.) in Alberta at any time in a taxation year pay income tax on the portion of their taxable income allocated to Alberta.

Tax and Revenue Administration (TRA) administers the Alberta Corporate Tax Act that provides the calculation of Alberta corporate income tax, including the Alberta small business deduction and tax credits.

The Alberta calculation of taxable income parallels the federal calculation, although taxpayers may claim different discretionary deductions such as capital cost allowance for federal and provincial purposes.

Deduction and tax credits

Small business deduction

Canadian-controlled private corporations not in an associated group may claim a small business deduction on active business income (i.e., non-investment income), up to the small business threshold of $500,000. Canadian-controlled private corporations in an associated group share the maximum small business threshold.

For more information about the small business deduction:

Scientific Research and Experimental Development Tax Credit

Bill 20, the Fiscal Measures and Taxation Act, 2019 received Royal Assent on December 5, 2019, and Alberta’s Scientific Research and Experimental Development Tax Credit (SR&ED) is being eliminated. For more information, see Special Notice Vol. 5 No. 54, Budget 2019 Elimination of Corporate Tax Credits.

Alberta’s Scientific Research and Experimental Development Tax Credit (SR&ED) program provides a refundable tax credit to corporations for SR&ED expenditures carried out in Alberta by the corporations.

More information and forms:

Foreign Investment Income Tax Credit

A corporation may be entitled to claim an Alberta Foreign Investment Income Tax Credit if it received foreign investment income and is entitled to claim a foreign tax credit under the federal Act relating to foreign income or profits tax paid on income from foreign non-business sources. Foreign investment income is income earned outside Canada that is not reasonably attributable to the carrying on of the corporation’s business. See the following schedule:

Other tax credits

Bill 20, the Fiscal Measures and Taxation Act, 2019 received Royal Assent on December 5, 2019, and the Alberta Investor Tax Credit, Community Economic Development Corporation Tax Credit, Capital Investment Tax Credit, and Interactive Digital Media Tax Credit are being eliminated. For more information, see Special Notice Vol. 5 No. 54, Budget 2019 Elimination of Corporate Tax Credits, or the Budget 2019 Tax Plan (PDF, 7.5 MB).

Together with Alberta Economic Development, Trade and Tourism, Tax and Revenue Administration administers the following tax credits:

Who has to file

Unless it is exempt, a corporation is required to file an Alberta corporate income tax return (AT1) if it had a permanent establishment in Alberta at any time during the taxation year.

To determine if your corporation is exempt, complete the Exemption Criteria section in AT100, Preparing and Filing the Alberta Corporate Income Tax Return (PDF, 312 KB).

Additional information on who is not required to file, who is exempt and the definition of a permanent establishment are outlined in Information Circular CT-2, Filing Requirements.

How to file

Returns are due within 6 months from the end of a corporation’s tax year end.

Net file

Using certified software, taxpayers or service providers can use net file to electronically submit an Alberta corporate income tax return, including reassessments or amended returns. Net file provides the user with immediate receipt confirmation, faster processing and the convenience of filing from anywhere.

There is no access code or registration required.

Net file is available Monday to Saturday, 07:00 to 24:00 MST and on Sunday 17:30 to 24:00 MST.

Net file eligibility

To file a corporate income tax return (AT1) using net file, the corporation must meet all of the following criteria:

Net file of returns by corporations

For returns for taxation years ending after December 31, 2017, any corporation whose gross revenue exceeds $1 million is required to net file its Alberta AT1 Returns.

The following are exceptions where the corporation is not required to net file:

  • an insurance corporation defined in subsection 248(1) of the federal Income Tax Act,
  • a non-resident corporation,
  • a corporation reporting in functional currency as defined in subsection 261(1) of the federal Income Tax Act, or
  • a corporation that is exempt from taxation under section 35 of the Alberta Corporate Tax Act and section 149 of the federal Income Tax Act.

Net file of returns by tax preparers

For returns for taxation years ending after December 31, 2017, a tax preparer is required to net file AT1 Returns in circumstances where the tax preparer accepts consideration to prepare more than 10 returns.

The following are exceptions where the tax preparer is not required to net file:

  • a type of return for which the tax preparer has applied for and received permission from TRA to file by another method,
  • a type of return that TRA does not accept by electronic filing, or
  • a return for the following types of corporations:
    • an insurance corporation defined in subsection 248(1) of the federal Income Tax Act,
    • a non-resident corporation, or
    • a corporation reporting in functional currency as defined in subsection 261(1) of the federal Income Tax Act.

Net file certified software

The return must be generated and submitted using TRA-certified tax return preparation software.

For a list of certified software offering net file capability, see Software Certified for AT1 Net File Return Format for 2008 and Subsequent Taxation Years.

Refer to each software product for specific system requirements, instructions, and procedures on preparation and submission of returns in net file format.

Paper

How to pay

If you have a February tax year end with an amount owing, instruct the payment to be applied to the same tax year end date on your tax return. For example, if your Tax Year End Date is February 29, 2020, ensure that the payment is instructed to be applied to February 29, 2020 as well.

Remittance due dates

Instalment payments are due the last day of each month, and the remaining balance, if any, is due as follows. If the due date falls on a weekend or holiday, then the due date is the next business date.

Canadian Controlled Private Corporations (CCPCs)

  • on or before end of the third month following the taxation year

Other corporations

  • on or before the end of the second month following the taxation year

CCPCs exempt from instalments

  • total tax is due by the end of the third month following the taxation year end

Other corporations exempt from instalments

  • total tax due by the end of second month following the taxation year end

See Information Circular CT-3, Alberta Corporate Tax Instalments, for more information.

Making payments

Maintain your account in TRACS

TRA Client Self-Service (TRACS) is a secure online system for authorized clients to conveniently conduct business with TRA. You can do the following tasks in TRACS:

  • confirm receipt and completion of submitted returns
  • view status of prior assessments, financial details and notices of assessment and reassessment
  • access financial information and view account period balances
  • update address and contact information
  • delegate account access to other employees or authorized individuals
  • set up direct deposit for corporate income tax refunds

For more details, instructional videos and to log in to your TRACS account, see TRACS information.

How to apply for direct deposit

Direct deposit is a convenient, reliable, and secure way to receive a refund from TRA.

Step 1: Register for TRACS (TRA Client Self-Service)

Step 2: Sign up for direct deposit in TRACS

  • Log in to your TRACS account and select ‘Manage Direct Deposit’.
  • Enter your banking and contact information and submit.
  • For an instructional video, see TRACS videos.

Publications

Information circulars

These documents discuss procedural matters and administrative policies and practices for programs administered by TRA. They are updated as necessary and a revision number assigned.

Cross-program information circulars

Corporate income tax information circulars and SR&ED Tax Credit Guide

Interpretation bulletins

These documents explain legislation and provide specific information related to Alberta Corporate Income Tax. Interpretation bulletins are updated as necessary and a revision number assigned.

Special notices

These documents are used to announce changes to the legislation administered by TRA, or changes to administrative policies and practices carried out by TRA. These notices are time-specific, and meant to be transitory in nature. The information may eventually be incorporated into other publications, such as information circulars or web content.

Certified software for corporate income tax returns

Form instructions

Trouble opening or completing fillable PDF forms?

Fillable PDF forms do not open properly on some mobile devices and web browsers. If the form doesn’t open, or you can’t complete the form, or you see a “please wait” message, follow these steps to complete and save fillable forms from Tax and Revenue Administration (TRA):

  1. Right-click on the form link and select “Save Target As” or “Save Link As”, and save the form to your computer.
  2. Launch Adobe Reader.
  3. Open the PDF from within Adobe Reader. You can now fill and save your form.

Electronic signatures allowed

In order to reduce the necessity for taxpayers and tax preparers to meet in person, TRA will recognize electronic signatures. This administrative measure applies to all prescribed forms administered by TRA. To add a digital signature, the form must first be downloaded or opened as a PDF.

To submit your forms

Complete your forms and submit them to TRA.

Forms

AT1: Alberta Corporate Income Tax Return and Schedules

Scientific Research and Experimental Development Tax Credit forms (SR&ED)

Election forms

Other forms

Original Source: https://www.alberta.ca/corporate-income-tax.aspx