Taxes & Rebates - Frequently Asked Questions
Corporate Income Tax FAQs
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Please note: The Calgary office of Tax and Revenue Administration (TRA) will no longer accept mailed, couriered or hand delivered documents or payments effective September 1, 2009 - click here for more information.
INDEX
General corporate income tax FAQs
- Who has to file an Alberta Corporate Income Tax Return?
- What does a complete Alberta Corporate Income Tax Return include?
- What happens if you submit an incomplete Alberta Corporate Income Tax Return?
- How can I obtain a copy of the Alberta Corporate Income Tax Return?
- When am I required to file an Alberta Corporate Income Tax Return?
- When are tax payments due?
- How do I pay my Alberta corporate taxes?
Scientific research and experimental development FAQs
- What is the Alberta scientific research and experimental development (SR&ED) tax credit program?
- When does it come into effect?
- What happens if the corporation's taxation year straddles December 31, 2008?
- What is SR&ED?
- Who may claim the credit?
- Can corporations exempt from tax file an Alberta SR&ED claim?
- Can corporations exempt from filing returns in Alberta file an Alberta SR&ED tax credit claim?
- How much is the credit?
- What are the rules for associated corporations?
- How do I calculate the expenditures?
- What if a corporation spends more than $4 million on SR&ED activities?
- How is government assistance for SR&ED treated for Alberta purposes?
- Federal prescribed proxy and Alberta proxy amounts
- How do I claim the credit?
- When is the entitlement determined?
- When will payment for the credit be received?
- What is the effective date of the credit?
- Do I get interest?
- Is the credit taxable?
- Will any of the credit ever have to be paid back?
- Anti-avoidance provisions
- What happens if the Canada Revenue Agency (CRA) makes changes to my federal SR&ED claim?
- Can I object if I disagree with an assessment?
General corporate income tax FAQs |
Who has to file an Alberta Corporate Income Tax Return?
Generally, a corporation must file an Alberta Corporate Income Tax Return (AT1) for each taxation year during which it has a permanent establishment in Alberta. Paragraphs 4 to 6 of Information Circular CT-2, Filing Requirements, provide more information about “permanent establishments”.
Some corporations are exempt from filing an Alberta return if certain conditions are met. For more information, see Information Circular CT-2, Filing Requirements, paragraphs 2 and 3.
What does a complete Alberta Corporate Income Tax Return include?
A complete Alberta Corporate Income Tax Return consists of either an:
- AT1 and the applicable schedules, or
- Alberta AT1 RSI, only.
There is no requirement for a corporation to file a copy of its federal T-2 return package and its financial statements or General Index of Financial Information (GIFI) with Alberta Finance and Enterprise, Tax and Revenue Administration (TRA).
What happens if I submit an incomplete Alberta Corporate Income Tax Return?
If the AT1 you submit to TRA is not complete, you will be asked to provide the missing documents or information. Refund interest the corporation may be entitled to will not start until the required information is received by TRA.
How can I obtain a copy of the Alberta Corporate Income Tax Return?
To request a copy of the return, call the office of Tax and Revenue Administration (TRA). In the Edmonton calling area, dial 427-3044 to reach TRA. If you are an Alberta caller outside the Edmonton calling area use the toll-free service: dial 310-000, then enter (780) 427-3044. If you are located outside Alberta, call (780) 427-3044 to reach TRA; long-distance telephone charges will apply.
You may also request a return by email at: tra.revenue@gov.ab.ca.
Copies of the return and schedules are also available on our Internet site.
When am I required to file an Alberta Corporate Income Tax Return?
TRA must receive a complete AT1 return within six months from the end of a corporation's taxation year (the required filing date). You may send the return by mail, fax, courier or hand deliver it to TRA.
Your corporation's return will be considered filed on the date it is received by TRA. However, a late filing penalty will not be charged if:
- your mailed return is received within five working days after the required filing date, or
- your couriered return is received within one working day of the required filing date.
A faxed or personally-delivered return received after the required filing date will be considered late and a penalty will be charged.
When are tax payments due?
Generally, all corporations are required to make equal monthly instalments on Alberta tax, with any remaining balance due by the end of the second month after the corporation's tax year-end (the balance-due date).
A Canadian-controlled private corporation is exempt from paying installments and may defer payment of its taxes until the third month following the corporation's tax year-end if it meets certain conditions. For a complete list of the conditions and other related instalment rules please see Information Circular CT-2, Filing Requirements.
How do I pay my Alberta corporate taxes?
Your Alberta corporate taxes may be paid:
- at most financial institutions in Canada, if the payment is accompanied by an original Remittance Advice;
- by cheque or money order payable to the Minister of Finance and Enterprise delivered by mail, courier or in person to TRA at
Tax and Revenue Administration - Edmonton
MAIL:
Tax and Revenue Administration
Alberta Finance and Enterprise
9811 - 109 Street
Edmonton, AB T5K 2L5
between the hours of 8:15 a.m. and 4:30 p.m., Monday through Friday, except government holidays;
- by wire transfer; or
- using the internet payment services provided by major financial institutions in Canada or TelPay for Business.
Please note: There is no process to transfer payments of Alberta corporate taxes made to Canada Revenue Agency in error.
For further information about payment of corporate taxes refer to paragraphs 17 through 19 of Information Circular CT-3, Alberta Corporate Tax Instalments.
For more detailed information relating to Alberta corporate taxes, see the CT series of information circulars.
Scientific research and experimental development FAQs |
What is the Alberta scientific research and experimental development (SR&ED) tax credit program?
Alberta’s scientific research and experimental development (SR&ED) tax credit program provides a refundable tax credit to corporations for SR&ED expenditures incurred in Alberta by the corporations. See Information Circular SRED-1, released in April 2009.
When does it come into effect?
The program comes into effect January 1, 2009 for SR&ED expenditures incurred in Alberta after December 31, 2008.
What happens if the corporation’s taxation year straddles December 31, 2008?
The program is effective for SR&ED expenditures incurred after December 31, 2008 in the straddle year. These expenditures will qualify for the credit.
Transitional rules reduce the corporation’s maximum expenditure limit proportionately by the ratio of the number of days in the straddle year in 2009 to 365.
What is SR&ED?
Alberta has adopted the federal definition of SR&ED. Under the Income Tax Act (Canada), scientific research and experimental development is a systematic investigation or search carried out in a field, science or technology by means of experiment or analysis.
Who may claim the credit?
A corporation with a permanent establishment in Alberta at any time during the taxation year and that carries on SR&ED activities in Alberta in the taxation year is eligible to claim the Alberta SR&ED tax credit. Individuals, trusts, partnerships and their partners are not eligible to participate in the program.
Can corporations exempt from tax file an Alberta SR&ED claim?
Generally, tax-exempt corporations are not eligible to claim the credit. However, public utility corporations that pay an amount to Alberta in lieu of taxes will be included in the regulations as eligible to make claims under the program.
Can corporations exempt from filing returns in Alberta file an Alberta SR&ED tax credit claim?
Corporations taxable in Alberta but currently exempt from filing an Alberta return will be required to file an Alberta return if claiming the Alberta SR&ED tax credit for a taxation year.
How much is the credit?
The SR&ED tax credit is limited to a maximum of $400,000 in a taxation year. The credit is based on 10 per cent of the eligible Alberta SR&ED expenditures to a maximum expenditure limit of $4 million.
What are the rules for associated corporations?
Associated corporations carrying on SR&ED activities in Alberta in a calendar year will be required to share the maximum expenditure limit of $4 million in the year. The maximum expenditure limit to be shared is determined using the number of days in the taxation year of the corporation with the longest taxation year.
This total expenditure limit is then allocated among all the associated corporations by filing an agreement with Alberta Finance and Enterprise, Tax and Revenue Administration (TRA). The maximum expenditure limit allocated to a particular corporation cannot exceed the product of $4 million and the ratio of the number of days in a corporation’s taxation year to 365 (or 366 in a leap year).
The Alberta SR&ED tax credit rules for associated corporations apply only to associated corporations claiming the Alberta SR&ED tax credit in a year.
How do I calculate the expenditures?
Only expenditures qualifying for the federal investment tax credit for scientific research and experimental development in the year will qualify for the Alberta SR&ED tax credit. The starting point in determining amounts eligible for the Alberta credit is the list of amounts that qualified for the federal investment tax credit. Adjustments must be made for government assistance received and proxy amounts (see below). However, any Alberta SR&ED tax credit received does not reduce the Alberta eligible expenditures.
Corporations with short taxation years will be required to reduce the maximum expenditure limit for the year by the ratio of the number of days in the taxation year to 365 (or 366 in a leap year).
A Guide and forms for this program are available on the Corporate Tax Forms page. See also: Information Circular SRED-1.
What if a corporation spends more than $4 million on SR&ED activities?
The maximum expenditure limit for the program is $4 million. The excess is not carried forward or back.
How is government assistance for SR&ED treated for Alberta purposes?
The federal investment tax credit returns a portion of the expenditures incurred by a corporation in its SR&ED activities. Amounts received by a corporation as a federal investment tax credit will be applied proportionately to reduce expenditures in Alberta that otherwise qualify for the Alberta SR&ED tax credit. This adjustment will be identified separately on the claim for the Alberta credit.
Federal amounts that qualify for the investment tax credit are reduced by any provincial tax credits for SR&ED. Where federal amounts have been reduced by the Alberta SR&ED tax credit, corporations can increase their Alberta expenditures by the amount of the Alberta SR&ED tax credit. The effect is that the Alberta SR&ED tax credit will not reduce Alberta expenditures eligible for the credit.
The Alberta SR&ED tax credit will be treated as government assistance for determining taxable income and will reduce expenses or amounts eligible for capital cost allowance according to the usual rules.
Federal prescribed proxy and Alberta proxy amounts
The federal prescribed proxy and the Alberta proxy amounts are used to approximate SR&ED overhead expenses incurred. Federally, a corporation may claim overhead expenses using the proxy method or the actual overhead expenses incurred. Whichever method is chosen for federal purposes, the same method must be used for the Alberta claim for the year. In either case, the inclusion in eligible expenditures must be based on amounts incurred in Alberta.
How do I claim the credit?
Corporations may claim the credit by filing a form with TRA. The filing deadline for the form is 18 months after the corporation’s tax year-end. The deadline cannot be extended; nor can expenditures be added to the form after the filing deadline. Amounts must be described on the form before the deadline to qualify for consideration for the credit.
If the form claiming the Alberta SR&ED tax credit is not filed with TRA within 18 months after the corporation’s taxation year-end the corporation will lose its entitlement to the Alberta SR&ED tax credit.
As stated above, amounts are not eligible for the Alberta SR&ED tax credit unless they are also eligible for the federal investment tax credit. The claim for the Alberta credit is subject to the same filing deadline and requirements as the claim for the federal credit. If the federal claim is not filed within the timelines provided in the Income Tax Act (Canada), no amounts will qualify for a tax credit in Alberta, regardless of the timing of the Alberta claim.
A Guide and forms for this program are available on the Corporate Tax Forms page.
When is the entitlement determined?
A claim for the Alberta credit will be reviewed by TRA after the Canada Revenue Agency (CRA) reviews and assesses the corporation’s claim for a federal investment tax credit for the same expenditures. If a federal claim is not filed and accepted by CRA, the corporation is not entitled to an Alberta SR&ED tax credit. Similarly, if an expenditure amount is not accepted as an SR&ED expenditure for federal purposes, it will not qualify for the Alberta credit.
When will payment for the credit be received?
Payment of the Alberta credit will be linked to CRA’s review and assessment of amounts eligible for the federal investment tax credit for SR&ED. TRA will use the federal assessed information to determine the amount to which a corporation is entitled. Any credit payable will be applied to any outstanding taxes payable by the corporation for the year first and then to any other debts owing by the corporation to the Crown. The balance, if any, will be paid to the corporation.
What is the effective date of the credit?
If the Alberta SR&ED tax credit entitlement is used to reduce taxes payable in the taxation year to which the claim has been made, the credit is deemed to have been paid as an instalment of tax on the balance due-date for the corporation’s taxes for that year.
The remainder of the credit entitlement is used to reduce taxes payable for other years or other amounts owing to the Crown or paid to the corporation. To calculate interest on this amount, the credit is deemed to be a payment made by the corporation on the date on which the Alberta SR&ED claim was received by TRA.
Do I get interest?
The Alberta SR&ED tax credit will be treated as an instalment of tax made on the balance due-date, but only to the extent of tax payable by the corporation for that taxation year. The interest on this instalment will offset interest otherwise payable on the unpaid amount of tax.
The SR&ED tax credit will be applied first to pay outstanding balances of other years or other debts due the Crown effective on the day the application for the SR&ED tax credit was received by TRA. Any excess will be refunded to the corporation with interest. Interest will start from the day the application of the SR&ED tax credit was received by TRA.
Is the credit taxable?
The Alberta SR&ED tax credit will be treated as government assistance for determining taxable income and will reduce expenses or amounts eligible for capital cost allowance according to the usual rules.
Will any of the credit ever have to be paid back?
Corporations that received an Alberta SR&ED tax credit on the acquisition of a property are subject to recapture of the Alberta SR&ED tax credit on the disposition of that property. Property is considered to be disposed of if it is sold, converted to commercial use, or physically removed from Alberta. The recapture is based on the sale price received, or the fair market value at the time the property is disposed of, depending on the circumstances and the level of expenditures in the year the property was acquired in comparison to the maximum expenditure limit.
Anti-avoidance provisions
If a corporation enters into transactions or arrangements to increase its Alberta SR&ED tax credit for the year, TRA may apply an anti-avoidance provision to reduce or disallow the credit.
What happens if the Canada Revenue Agency (CRA) makes changes to my federal SR&ED claim?
Any change to the federal qualifying expenditures will require adjustment of the Alberta claim if a portion of those expenditures relate to Alberta. The Act requires a corporation to notify TRA of any changes that have been made federally to the corporation’s SR&ED claim.
Can I object if I disagree with an assessment?
Corporations cannot file an Alberta objection to the SR&ED expenditures that have been determined federally and form the basis for a corporation’s Alberta SR&ED tax credit claim.
However, Alberta objections may be filed where the issue involves the portion of the federal SR&ED expenditures that have been incurred in Alberta, the Alberta proxy amount, the Alberta portion of a recapture, calculation of the Alberta interest or other Alberta SR&ED issues.
If you have any questions about the SR&ED program, please contact us by mail, email or telephone at:
MAIL: |
Tax and Revenue Administration Alberta Finance and Enterprise 9811 - 109 Street Edmonton, AB T5K 2L5 |
| PHONE: | (780) 427-3044 - Monday to Friday, 8:15 a.m. to 4:30 p.m. |
| FAX: | (780) 422-3770 |
| EMAIL: |
