and Revenue Administration
Corporate Tax Act
||February 3, 2016
||Alberta Treasury Board and Finance, Tax and
|For more information:
CT-24 / February 2016
NOTE: This information circular 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 information
circular and governing legislation, the legislation takes precedence.
ALBERTA CORPORATE TAX ACT
QUALIFYING ENVIRONMENTAL TRUSTS
This information circular provides an overview of the administrative processes set out in the Alberta Corporate Tax Regulation (the Regulation) for Qualifying Environmental Trust (QET) tax and the Alberta QET tax credit. The topics discussed are:
- A QET is a special kind of trust under the federal Income Tax Act (the federal Act) that is maintained solely for the purpose of accumulating funds to finance the future reclamation of a qualifying site, such as an oil sands mine or a pipeline, in Canada. A QET enables a corporation to claim a tax deduction in the year for amounts set aside for future reclamation. Corporations required to prefund reclamation may use QETs for this purpose so that contributions to the trust are tax deductible.
- A QET resident in Alberta is required to pay Alberta tax on its trust income for the year at Alberta’s corporate tax rate. A corporation that is a beneficiary of the QET also is required to report and pay tax on its share of the QET’s income for the year. To offset this second level of tax on the QET’s income, the corporation may apply for a refundable Alberta QET tax credit equal to the corporation’s share of the amount of Alberta tax paid by the QET.
- Alberta’s QET tax regime is effective for taxation years ending after December 31, 2013.
- Tax to be paid by a QET is imposed under the Alberta Personal Income Tax Act (the APITA), which is administered by the Canada Revenue Agency.
- Every QET resident in Alberta at the end of a taxation year must file a return and pay tax equal to its income for the year for the purposes of Part XII.4 of the federal Act multiplied by the applicable Alberta corporate tax rate for the respective taxation year.
- As the QET tax is administered by the Canada Revenue Agency, a QET resident in Alberta should follow the federal income tax laws and policies for filing returns and making payments in respect of the QET tax.
- The taxation year of a QET is the calendar year.
- A corporation that is a beneficiary of a QET may apply for an Alberta QET tax credit for a taxation year equal to the amount of Alberta tax paid by the QET on the corporation’s share of the QET’s income for the particular year. The Alberta QET tax credit is administered by Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA).
- A corporation entitled to an Alberta QET tax credit applies for the credit by making a claim for the credit on line 087 of form AT1, “Alberta Corporate Income Tax Return”. For further information on completing line 087 of the AT1 return, refer to Part 1 of the AT1 Guide. For further information on filing the AT1 return, refer to Information Circular CT-2, Filing Requirements.
- In addition to the AT1 return, a corporation that applies for an Alberta QET tax credit for a taxation year will not be entitled to the credit unless it also submits to TRA a letter or statement from the respective QET specifying for the particular year:
- the amount of trust income subject to Alberta tax as reported by the QET under the APITA;
- the amount of Alberta tax paid by the QET for its relevant taxation year;
- the corporation’s share of the QET’s income subject to Alberta tax; and
- the corporation’s share of the Alberta tax paid by the QET on the corporation’s share of the QET’s income subject to Alberta tax.
The QET should issue such a letter or statement to each beneficiary corporation. The letter or statement should be sent to TRA by the corporation when the respective AT1 return is filed.
A corporation that applies for an Alberta QET tax credit must file an AT1 return for the year. The filing exemptions otherwise provided for in the Alberta Corporate Tax Act do not apply to a corporation that is claiming an Alberta QET tax credit.
For a corporation that is a member of a partnership, the Alberta QET tax credit to which the corporation is entitled will also include the aggregate total of each amount that can reasonably be considered to be the corporation’s share of the relevant tax credit in respect of the partnership. For this purpose, the relevant tax credit in respect of a partnership is the amount that would, if the partnership were a person and its fiscal period were its taxation year, be the Alberta QET tax credit of the partnership for its taxation year that ends in the particular year.
A corporation that is entitled to an Alberta QET tax credit is deemed to have made a payment for the particular year on account of its tax payable equal to its Alberta QET tax credit for the particular year. The Alberta QET tax credit is a refundable credit, but will be first applied, effective as of the corporation’s balance-due day, against the corporation’s Alberta tax payable for the particular year. Therefore, the amount of the Alberta QET tax credit to which the corporation is entitled will reduce the amount upon which a late-filing penalty is calculated.
Any remaining balance of the Alberta QET tax credit in excess of the corporation’s tax payable for the particular year will be applied against other amounts owing by the corporation. Other amounts may include interest, penalties, or tax from another taxation year, or any other amount owing to the Crown. Remaining balances are applied effective the later of the corporation’s balance-due day for the particular year and the day on which the corporation’s application for the Alberta QET tax credit was received by TRA. Any further remaining balance will be refunded to the corporation.