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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 Dividend Tax Credit for Eligible Dividends

Alberta's dividend tax credit for Canadian eligible 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.

The Alberta 2019 Budget announced that the dividend tax credit for eligible dividends will be adjusted as of January 1, 2021 and January 1, 2022 to correspond with the reductions in the general corporate tax rate.  Their June 29, 2020 Recovery Plan indicates that the dividend tax credit rate for eligible dividends will be adjusted January 1, 2021 corresponding with the acceleration of the general corporate income tax rate reduction.  The legislative change for this is included in Bill 35, Tax Statutes (Creating Jobs and Driving Innovation) Amendment Act, 2020, which received Royal Assent December 9, 2020. See the Alberta 2020 Recovery Plan for more information.

 

     Alberta Dividend Tax Credit Rate for Eligible Dividends 
Year Gross-
up %
Portion of
Gross-up
% of Grossed-up
Dividend
% of Actual
Dividend
2021 + 38% 227/770 = 29.481% 8.12% 11.2%
2012 - 2020 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 fraction 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 2017 Federal Fall Economic Statement announced that the gross-up rate for non-eligible dividends (also know as regular dividends, or small business dividends) would be reduced to 16% for 2018, and to 15% for 2019 and later years.  See the article on the non-eligible dividend tax credit for more information.

The current and past Alberta rates for non-eligible dividends are shown in the following table.  The 2018 rate was announced on December 19, 2018, with no mention of the 2019 rate.  However, Bill 10, Alberta Personal Income Tax Amendment Act, 2019 revised the rate for 2019 and later years to 149/890 x the gross-up, or 2.18% of the taxable dividend.  Tables of marginal tax rates have been revised, as have all affected tax calculators.

     Alberta Dividend Tax Credit Rate for Non-Eligible Dividends
Year Gross-up
Rate
%of
Gross-up
% of Grossed-up
Dividend
% of Actual
Dividend
2019+ 15% 16.74% 2.18% 2.507%
2018 16% 15.66% 2.16% 2.506%
2017 17% 15.04% 2.19% 2.557%
2016 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%

The Alberta Personal Income Tax Act defines the dividend tax credit for non-eligible dividends as a fraction (149/890 for 2019) of the gross-up.  The result is always rounded to 4 decimal places to arrive at the rate for taxable dividends used on the Alberta tax return.  For 2019 the result is 0.0218, or 2.18%.

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: August 29, 2021

 

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