and Revenue Administration
Corporate Tax Act
Special Notice Vol. 5 No. 44
||February 2, 2016
||Alberta Treasury Board and Finance, Tax and
|For more information:
5 No. 44 / February 2016
BILL 4 - CORPORATE TAX AMENDMENTS
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 4, An Act to Implement Various Tax Measures and to Enact the Fiscal Planning and Transparency Act, received Royal Assent on December 11, 2015. The bill included various amendments to the Alberta Corporate Tax Act (the Act), as explained below.
Application of the Income Tax Act (Canada)
Section 2 has been amended effective December 11, 2015 (the date of Royal Assent) to clarify that definitions in the Income Tax Act (Canada) apply for Alberta purposes when such federal definitions are used in the Act or in a federal provision that has been adopted by the Act.
Qualifying Environmental Trusts
Section 5.1, which imposed tax on Qualifying Environmental Trusts (QETs), and Part 5.1 implementing the special QET tax regime, have been repealed and all legislative provisions in respect of the taxation of QETs have been moved to the Alberta Personal Income Tax Act (APITA) effective for taxation years ending after December 31, 2013. The QET tax is administered by the Canada Revenue Agency.
Section 26.92 of the Act in respect of the Alberta QET tax credit has been updated to reference the APITA, but otherwise remains unchanged. The Alberta QET tax credit is administered by Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA) as part of the corporate income tax program.
Political Contributions Tax Credit
Sections 24 and 24.1 have been amended effective December 11, 2015 to repeal outdated and transitional provisions in respect of political contributions made prior to January 1, 2004. The provisions in respect of contributions made on or after January 1, 2004 remain unchanged.
Electronic Suppression of Sales Device
In 2013, the federal government introduced administrative penalties in relation to electronic suppression of sales (ESS) software or devices. Section 37.2 has been added to the Act effective December 11, 2015 in order to impose a comparable penalty for Alberta purposes on every person in respect of whom a ESS penalty has been assessed under the respective section of the Income Tax Act (Canada). For the penalty under section 37.2 to apply, the person must have been a resident of Alberta or had a permanent establishment in Alberta at the time the federal penalty was assessed.
Consistent with the federal penalties, the penalty for the possession or use of ESS software or an ESS device is $5,000 on first instance and $50,000 if the action is repeated. The penalty for manufacturing or making available ESS software or devices ranges from $10,000 to $100,000, depending on the circumstances.
Security on Amounts in Controversy by Large Corporations
Under the Act, the President of Treasury Board and Minister of Finance (the Minister) is entitled to collect 50 per cent of any taxes, interest and penalties in controversy (under dispute) by a large corporation. Section 55(3.1) allows the Minister to accept adequate security for payment of amounts in controversy for or on behalf of a corporation while an objection or appeal of the corporation remains outstanding. Section 55(3.1) has been amended effective December 11, 2015 to clarify that security provided by a large corporation is limited to being in respect of the portion of the amount in controversy that the Minister is not otherwise entitled to collect.
For additional information on the special rules for the filing of notices of objection by a large corporation and legal action that may be taken on amounts in controversy by a large corporation, see Information Circular CT-8, Objections and Appeals.
Tax Benefits Disallowed
Section 72.12 has been added to parallel the comparable federal provision denying a tax benefit from a tax shelter under certain circumstances. This amendment comes into force in the same manner as the respective federal section.
Communication of Tax Information
Consistent with the federal Income Tax Act, section 77(5) has been amended effective December 11, 2015 to include “telephone number” to the types of taxpayer information that the Minister may share with an employee or agent of the federal or another provincial government for the purposes of statistical research and analysis.
Electronic Communication of Information
Various sections of the Act, including 82 and 84, have been updated effective December 11, 2015 to enable TRA to communicate electronically with taxpayers, as well as to clarify the date an electronic transmission is presumed to be sent to and received by a taxpayer.
TRA’s proposed process is to send an email to taxpayers, who can then view and print their notices of (re)assessment using Tax and Revenue Administration Client Self-Service (TRACS), a secure online system for authorized taxpayers to conveniently conduct business with TRA. Adequate notice will be provided to taxpayers before this proposed process is implemented. Additional information on the various services available on TRACS, such as accessing financial information and viewing account balances is provided on our website at http://finance.alberta.ca/tracs/index.html.
Consistent with changes made by the federal government to the Income Tax Act (Canada) in recent years, consequential amendments have been made throughout the Act to replace, for example, the words “mailed” or “mailing” with the words “sent” or “sending”, respectively, in order to encompass a broader range of forms of communication.
Insurance Premiums Tax
Section 87 has been amended to increase Alberta’s insurance premiums tax rates.
For taxation years that begin after March 31, 2016, the insurance premiums tax payable in respect of business transacted in Alberta is:
- 3 per cent of the amount of premiums under contracts of accident and sickness insurance, and life insurance; and
- 4 per cent of the amount of premiums under any other contract of insurance.
For taxation years that begin before April 1, 2016 and end after March 31, 2016, the insurance premiums tax payable in respect of business transacted in Alberta is:
- in respect of contracts of accident and sickness insurance, and life insurance,
- 2 per cent of the proportion of the amount of premiums receivable during the year that the number of days before April 1, 2016 bears to the number of days in the year, and
- 3 per cent of the proportion of the amount of premiums receivable during the year that the number of days after March 31, 2016 bears to the number of days in the year.
- in respect of other contracts of insurance,
- 3 per cent of the proportion of the amount of premiums receivable during the year that the number of days before April 1, 2016 bears to the number of days in the year, and
- 4 per cent of the proportion of the amount of premiums receivable during the year that the number of days after March 31, 2016 bears to the number of days in the year.