Canada: Carbon levy, small business tax reduction | KPMG | GLOBAL

Canada: Carbon levy, small business tax reduction in Alberta

Canada: Carbon levy, small business tax reduction

Legislation containing measures announced in Alberta's 2016 budget received first reading on 24 May 2016 (Alberta has a majority government). The proposed legislation would:


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  • Introduce a carbon levy effective 1 January 2017
  • Reduce Alberta's small business corporate income tax rate by one third, from 3% to 2%, effective 1 January 2017 
  • Amend the individual (personal) income tax to allow a carbon rebate for certain lower and middle income individuals  

The legislation does not include adjustments to the dividend tax credit rate for dividends paid out of income that is taxed at the small business rate (other than intangible dividends), consequential to the reduction of the small business corporate tax rate. The 2016 Alberta budget announced that the dividend tax credit would be lowered, effective 2017. This adjustment is expected to be included in a future bill.


Read a June 2016 report [PDF 48 KB] prepared by the KPMG member firm in Canada: Alberta Small Business Tax Rate Decrease - Legislation Receives First Reading 

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