Alberta Personal Income Tax Changes

tax

On June 30, 2015, the Alberta government passed Bill 2, An Act to Restore Fairness to Public Revenues.

The bill has created a progressive personal income tax rate structure for higher income earners. Effective for 2015 and subsequent tax years, four new tax brackets and rates will be introduced:

  • Taxable income of $125,000 to $150,000 will be taxed at 10.5%.
  • Taxable income of $150,000 to $200,000 will be taxed at 10.75%.
  • Taxable income of $200,000 to $300,000 will be taxed at 11%.
  • Taxable income over $300,000 will be taxed at 11.25%.

 

On August 7, 2015 the CRA published an October 1, 2015 edition of the T4127, Payroll Deductions Formulas for Computer Programs that reflects the new rates commencing with the 1st pay date in October 2015.  Since employees in these income tax brackets have been taxed at a lower rate for the first nine months of this year, a prorated tax rate will be applied for the remaining three months commencing with the first payroll in October. (The Option 2 tax rates will not be prorated.) Effective October 1, 2015, the rates for Option 1 are as follows:

Alberta Provincial Tax   rates and brackets coming into effect October 1, 2015

On first $125,000 of taxable income

10%

On next $25,000, from $125,000 to $150,000

12%

On next $50,000, from $150,000 to $200,000

13%

On next $100,000, from $200,000 to $300,000

14%

On taxable income above $300,000

15%

The Alberta government has also made available a Question and Answer document related to these tax changes.

ALBERTA’S MINIMUM WAGE TO INCREASE OCTOBER 1, 2015

As part of the Alberta government’s plan to increase the Alberta minimum wage to $15.00 by 2018, the government has announced the following minimum wage increases, which are scheduled to come into effect on October 1, 2015.

  • The regular hourly minimum wage will increase from $10.20 to $11.20.
  • The liquor server rate will increase from $9.20 to $10.70. The liquor server rate is scheduled to be eliminated in 2016.

 

More information can be obtained from the Alberta government website.

To read about the changes in the Alberta corporate tax rates, click here.

Thanks to Janet Crawford of KWB Chartered Accountants for providing this content.

If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.

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