Tax and Revenue Administration Alberta Corporate Tax Act Special Notice Vol. 5 No. 29

Vol. 5 No. 29 / July 2009

ALBERTA CORPORATE TAX ACT SPECIAL NOTICE:
Bill 37 - Alberta Corporate Tax Amendment Act, 2009

NOTE: This special notice is intended to explain legislation and provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this special notice and governing legislation, the legislation takes precedence.

Bill 37 – the Alberta Corporate Tax Amendment Act, 2009 – received Royal Assent on June 4, 2009.  Except as noted below, changes are effective June 4, 2009.

Major changes to the Alberta Corporate Tax Act (the Act) include the following:

Functional Currency

Where a corporation has elected federally to use functional currency reporting:

• the election is deemed to have been made for Alberta purposes as well,
  
  
• all amounts payable must be paid in Canadian currency, and
  
  
• the corporation’s tax payable for the year must be converted to Canadian dollars in accordance with the regulations currently under development.

The changes related to functional currency are effective for taxation years that begin after December 13, 2007.


Alberta Royalty Tax Credit (ARTC)

The treatment under the Act of certain financing arrangements, generally known as farm-out’s, has been clarified.  The Act has been amended to ensure that participants in these arrangements are not denied ARTC benefits in situations where wells were disposed of on rig release dates rather than finished drilling dates.  This amendment applies to dispositions after April 7, 1986.

Scientific Research and Experimental Development (SR&ED)

A number of clarifying amendments were made, and include:

• rewording of the variable F in the calculation of the SR&ED credit for clarification purposes only.
  
  
• new recapture provision to deem 10 per cent of the negative amount resulting from the calculation of the eligible expenditures of a qualified corporation arising from receipt of the federal investment tax credit for the immediately preceding year to be an amount owing to Alberta.
  
  
• clarification of the normal assessment period related to SR&ED assessments as three years, for a corporation eligible for the small business deduction – or four years, in any other case – after the day of mailing of the first assessment  of the Alberta SR&ED tax credit for the year.
  
  
• reassessments related to SR&ED made beyond the normal reassessment period are limited to the SR&ED tax credit the corporation is entitled to.

The changes related to SR&ED are effective January 1, 2009.


Other Changes

• If Alberta reassesses a corporation as a result of a federal assessment action before the corporation files information under section 36.2 on that action, the duty to file information under the section no longer applies to that particular assessment action.
  
  
• It is the corporation’s responsibility to file the necessary documents with the court when it indicates in a notice of objection that it wishes to proceed directly to court and receives the Minister’s consent to do so.
  
  
• New collection measures include the ability for the Minister to seize joint bank accounts in proportion to ownership for amounts in default.