Tax and Revenue Administration Alberta Corporate Tax Act Information Circular CT-19R1

CT-19R1 / April 1999

ALBERTA CORPORATE TAX ACT INFORMATION CIRCULAR:
ALBERTA POLITICAL CONTRIBUTIONS TAX CREDIT

This Information Circular discusses the Alberta Political Contributions Tax Credit available to corporations. The topics discussed include:

• Overview of the Tax Credit
• Calculation of the Tax Credit
• The Election Finances and Contributions Disclosure Act
• For Further Information

OVERVIEW OF THE TAX CREDIT

1. Section 24(2) of the Alberta Corporate Tax Act (the "Act") allows a corporation to reduce taxes otherwise payable if it has made a political contribution during the taxation year to one or more of the following:

   a) a registered Alberta candidate;

   b) a registered Alberta constituency association; or

   c) a registered Alberta political party.

2. To be eligible for the Alberta Political Contributions Tax Credit, the contributions must conform to the standards of the Election Finances and Contributions Disclosure Act which is briefly discussed in paragraphs 7 to 15. Corporations will list contributions on the AT1 Schedule 8. Official receipts should not accompany the AT1 Schedule 8, but must be retained by the corporation and, if requested, made available to Tax and Revenue Administration.
   
   
3. Contributions to a federal election or a federal political party are not allowed as deductions for Alberta tax purposes.

CALCULATION OF THE TAX CREDIT

4. The tax credit is calculated as follows:
   
   

   AGGREGATE AMOUNT OF CONTRIBUTIONS	TAX CREDIT
   Not exceeding $150	75% of contributions
   $150 - $825	$112.50 plus 50% of the amount contributed in excess of $150
   Over $825	the lesser of: (i)  $750; and (ii) $450 plus 33 1/3% of the amount contributed in excess of $825.

5. The tax credit claimed may not exceed the amount of tax payable after claiming the Alberta Small Business Deduction, the Alberta Manufacturing and Processing Profits Deduction and the Alberta Foreign Investment Income Tax Credit. Political contributions may not be carried forward to a subsequent year.
   
   
6. If the corporation is a member of a partnership at the end of the partnership taxation year, it may claim its proportionate share of any qualifying political contributions made in that year by the partnership. This claim is made in the corporation's taxation year in which the taxation year of the partnership ended. The corporation must include a copy of federal form T5013 to verify its proportionate share of eligible contributions.

THE ELECTION FINANCES AND CONTRIBUTIONS DISCLOSURE ACT

7. Only certain segments of the Election Finances and Contributions Disclosure Act ("EFCD Act") are discussed below as they relate to eligibility of political contributions for purposes of the tax credit. The EFCD Act itself should be consulted when interpreting and applying the law.
   
   
8. A "registered candidate" is a person who is registered under the EFCD Act and who:

   a) in relation to an election of a member of the Legislative Assembly:

   (i) is a member of the Legislative Assembly;

   (ii) is nominated as a candidate for an electoral division;

   (iii) is nominated by a constituency association of a registered party as the official candidate of that party in an electoral division; or

   (iv) declares himself to be an independent candidate in an electoral division; or

   b) in relation to an election under the Senatorial Selection Act:

   (i) is nominated as a candidate;

   (ii) is nominated by a registered political party for endorsement as the official candidate of that party; or

   (iii) declares himself to be an independent candidate.

9. A "registered constituency association" is the association or organization registered under the EFCD Act and endorsed by a registered party or an elected independent member of the Legislative Assembly as its official association in an electoral division.
   
   
10. A "registered party" is a political party registered under the EFCD Act.
    
    
11. Once a corporation is satisfied that the recipient of a contribution is bona fide, it is the responsibility of the corporation to ensure that the amount of the contribution does not exceed the limitations, as set out below. The maximum contribution allowed by the EFCD Act does not relate to the amount which yields the maximum political contributions tax credit.
    
    
12. In the following discussion, the term "contribution" implies that the contribution is made to a registered party, a registered constituency association or a registered candidate.

    The EFCD Act imposes the following limitations upon political contributions:

    a) Contributions cannot exceed:

    (i) in any calendar year:

    (a) $15,000 to each registered party; and

    (b) $750 to any registered constituency association and $3,750 in total to the constituency associations of each registered party; and

    (ii) in any campaign period (defined as "the period commencing with the issue of a writ for an election and terminating two months after polling day"):

    (a) $30,000 to each registered party less any amount contributed, under clause (a)(i) above, to the party in that calendar year; and

    (b) $1,500 to any registered candidate and $7,500 in total to the registered candidates of each registered party.

    b) If writs for two or more by-elections bear the same date and provide for the same polling day, all the by-elections are deemed to be one election for the purposes of a campaign period.

    c) Contributions to a registered constituency association may be made at any time except during a campaign period.

    d) Contributions to a candidate may only be made during a campaign period.

13. The EFCD Act does not apply to campaigns carried out or conventions held in relation to the leadership of a registered party or in relation to constituency association nominations for endorsement of official party candidates.
    
    
14. A portion of the price paid by a corporation for admission to a fund-raising function which is sponsored by a registered candidate, registered constituency association, or registered party may be considered as a contribution subject to limitations set out in the EFCD Act.
    
    
15. Corporations associated under subsection 256(1) of the federal Income Tax Act are considered as a single corporation for purposes of the EFCD Act.

FOR FURTHER INFORMATION

16. Enquiries concerning the calculation of the Alberta Political Contributions Tax Credit should be directed to the Tax Services Division of Tax and Revenue Administration at (780) 427-3044 or 310-0000/427-3044 (Alberta toll free).
    
    
17. Enquiries concerning the interpretation and application of the Election Finances and Contributions Disclosure Act should be directed to:

    THE OFFICE OF THE CHIEF ELECTORAL OFFICER
    100 11510 KINGSWAY AVE
    EDMONTON AB T5G 2Y5
    (780) 427-7191