2012 Alberta Budget Report
February 09, 2012
Highlights
- Deficit of $1.3 Billion for 2011-12 Fiscal Year
- Deficit of $886 Million for 2012-13 Fiscal Year
- Balanced Budget Projected for 2013-14 Fiscal Year
- Surplus of $5.2 Billion Projected for 2014-15 Fiscal Year
- No New Taxes or Tax Increases
Overview
“Investing In People"
On February 9, 2012, the Honourable Ron Liepert, Minister of Finance, presented his first budget. Alberta continues its relatively strong economic performance, and is relying on this performance to boost tax revenues without any new taxes or tax rate increases. The Minister stated that the economy will grow by 3.8% this year. This growth has been achieved despite a worldwide economic slowdown.
The projected deficit for the 2011-2012 fiscal year, originally budgeted to be $3.4 billion, is now forecast to be significantly lower at $1.3 billion. The deficit will decline further to $886 million for the 2012-2013 fiscal year and the government is still forecasting a balanced budget for the 2013-2014 fiscal year. A surplus of $5.2 billion is projected in the 2014-2015 fiscal year.
Government revenue is expected to grow by 4.6% in 2012-2013 and at an average rate of 10.4% during the following two years. In his speech, the Minister recognized the historical reliance on resource revenues and the need to stabilize government revenues for long term sustainability, but is committed to keeping Alberta’s low tax rate advantage.
The budget spending will be targeted to three priority areas: investing in families and communities; securing Alberta’s economic future and advancing world-leading resource stewardship. As part of this focus, significant new investments will be made through the new Ministry of Human Services and Ministry of Seniors. As of April 1, 2012, the maximum monthly income benefit to disabled adults under the Assured Income for the Severely Handicapped program will rise by $400 and monthly income exemptions will double effective April 1, 2012.
The following is a summary of the more important items of interest to our clients.
Alberta Budget Projections
| In Millions $ |
Original
Estimate
2011/2012 |
Revised
Forecast
2011/2012 |
Estimate
2012/2013 |
Revenue
Operating and Program Expenses
Debt Servicing Costs
|
35,787
(38,593)
(588) |
38,499
(39,308)
(509) |
40,263
(40,618)
(531) |
| Deficit |
(3,394) |
(1,318) |
(886) |
| Capital Investment |
2,737 |
2,315 |
2,218 |
| Sustainability Fund Year End Balance |
5,292 |
7,462 |
3,730 |
| Note that the original estimate for 2011-2012 has been restated to the basis of accounting used for 2012-2013. |
Personal Tax Measures
Personal Tax Credits
It was confirmed today that personal tax credits for 2012 will
be indexed by 1.8%. The maximum tax credit amounts and actual Alberta tax
credits for 2011 and 2012 are set out below.
Alberta Non-Refundable Tax Credit Block |
| |
2011 |
2012 |
Maximum
Amount |
Alberta
Tax
Credit |
Maximum
Amount |
Alberta
Tax
Credit |
| Basic personal amount |
$16,977 |
$1,698 |
$17,282 |
$1,728 |
| Spousal amount |
16,977 |
1,698 |
17,282 |
1,728 |
| Eligible dependant amount |
16,977 |
1,698 |
17,282 |
1,728 |
| Age amount |
4,731 |
473 |
4,816 |
482 |
| Infirm dependant amount |
9,827 |
983 |
10,004 |
1,000 |
| CPP contributions |
2,218 |
222 |
2,307 |
231 |
| EI premiums |
787 |
79 |
840 |
84 |
| Pension income amount |
1,307 |
131 |
1,331 |
133 |
| Disability amount |
13,095 |
1,310 |
13,331 |
1,333 |
| Disability supplement |
9,827 |
983 |
10,004 |
1,000 |
| Tuition and education amounts |
Variable |
Variable |
Variable |
Variable |
| Adoption expenses |
11,611 |
1,161 |
11,820 |
1,182 |
| Medical expenses |
Variable |
Variable |
Variable |
Variable |
| Medical expenses (other dependants) |
Variable |
Variable |
Variable |
Variable |
| Caregiver amount |
9,827 |
983 |
10,004 |
1,000 |
| Interest on student loans |
Variable |
Variable |
Variable |
Variable |
Donations and gifts
- first $200
- over $200 |
200
75% of
income |
20
Variable |
200
75% of
income |
20
Variable |
| In general, credit amounts are multiplied by 10% to arrive at the deduction from Alberta tax. In the case of donations and gifts over $200, the credit rate is 21%. |
Business Tax measures
SR&ED Tax Credit Enhanced
The Alberta Scientific Research and Experimental Development (SR&ED) tax credit program provides a tax credit to corporations with a permanent establishment in Alberta for eligible expenditures incurred after December 31, 2008. The credit is worth 10% of a company's eligible SR&ED expenditures in Alberta up to a $4 million expenditure limit, for a maximum credit of $400,000, and it is refundable for all companies. Associated companies must share the $4 million limit.
The government carried out an internal review of the SR&ED program in 2011 and invited stakeholders to make written submissions about the program. It was determined that from an overall perspective, the program is working as intended. However, one change will be implemented as a result of consistent stakeholder feedback. Currently, the federal SR&ED investment tax credit associated with expenditures in Alberta reduces the eligible expenditure base used to calculate the Alberta credit in the following year. In order to increase the effectiveness of the credit and to reduce administrative complexity, this grind of the Alberta SR&ED tax credit will be eliminated effective for tax years ending after March 31, 2012, enhancing the program by approximately $25 million annually.
Other measures
Education Property Taxes
In 2012, education property tax rates will be frozen at 2011 levels. The residential/farm rate will be $2.70 per $1,000 of equalized assessment and the non-residential rate will be $3.97 per $1,000 of equalized assessment.
HOW ALBERTA COMPARES
The following chart compares top personal and corporate tax rates and sales taxes for all provinces and territories, as announced to February 9, 2012.
| |
Top 2012
Personal Rates
% |
2012 Corporate Rates |
2012
Provincial
Sales
Tax
% |
General
% |
M&P
% |
Small Business
% |
| BC |
43.70 |
25.00 |
25.00 |
13.50(1) |
7.00(4) |
| Alta. |
39.00 |
25.00 |
25.00 |
14.00 |
- |
| Sask. |
44.00 |
27.00 |
25.00 |
13.00 |
5.00 |
| Man. |
46.40 |
27.00 |
27.00 |
11.00 |
7.00 |
| Ont. |
46.41 |
26.50(2) |
25.00 |
15.50 |
8.00(5) |
| Qué. |
48.22 |
26.90 |
26.90 |
19.00 |
9.50(6) |
| NB |
43.30 |
25.00 |
25.00 |
15.50 |
8.00(5) |
| NS |
50.00 |
31.00 |
31.00 |
15.00 |
10.00(5) |
| PEI |
47.37 |
31.00 |
31.00 |
12.00 |
10.00(6) |
| Nfld. |
42.30 |
29.00 |
20.00 |
15.00 |
8.00(5) |
| Yukon |
42.40 |
30.00 |
17.50 |
15.00(3) |
- |
| NWT |
43.05 |
26.50 |
26.50 |
15.00 |
- |
| Nunavut |
40.50 |
27.00 |
27.00 |
15.00 |
- |
- The small business rate is expected to be reduced to 11% on April 1, 2012.
- The general business rate will be reduced to 26% on July 1, 2012.
- The tax rate for M&P profits eligible for the small business deduction is 13.5%.
- As part of the HST (combined rate is 12%). A referendum held last year resulted in a vote to move back to the PST. The HST rate will remain at 12% until the PST is re-implemented at 7% (a transition date has not yet been announced).
- As part of the HST (combined rates are 15% in Nova Scotia and 13% in Ontario, New Brunswick and Newfoundland & Labrador).
- Provincial sales tax applies on GST. Effective combined rate is 14.975% in Québec and 15.5% in Prince Edward Island.
The information in this publication is current as of February 9, 2012.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
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