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Positive Business Climate
Alberta, one of Canada's western provinces, has been blessed with an abundance of
natural advantages which have formed the foundation of its thriving economy. The Alberta
government has built on this by engineering an economic plan and creating a positive
business climate that encourages investment, creates diversity and allows businesses to
compete successfully around the world. The result is one of the most vibrant and
competitive economies in North America.
From a business perspective, Alberta has consistently ranked ahead of other
jurisdiction in both Canada and the United States. For example, independent studies by
KPMG have demonstrated that the cost of doing business is about 10% lower in Alberta than
in the United States.
Overall, Alberta's open and positive business environment consists of:
- a low overall tax regime
- streamlined regulations to improve the competitiveness of Alberta companies
- no provincial sales tax - the only province in Canada without one
- a modern infrastructure of transportation, utilities, education and health
- a highly skilled and productive workforce
- an abundance of natural resources and low cost utilities
- it is the law in Alberta to have a balanced provincial budget, demonstrating to
investors the responsible, business-like attitude of the government here
- research and development spending that is among the highest per capita in Canada
As a result, Alberta has had the fastest growing economy in Canada over the past five
years, averaging 4.6% in real economic growth. Highlighting Alberta's success in the past
year are:
- over $54 billion in international exports of goods and services (2000)
- manufacturing shipments of $35.3 billion (1999)
- over $52 billion in major capital project in the works or recently completed (1999/2000)
- creation of 35,000 new jobs (2000) and 219,000 between 1995 and 2000.
Competitive Corporate Taxes
- Albertans benefit from the lowest overall taxes in Canada.
- Alberta is the only province that does not have a provincial retail sales tax.
- Alberta has a competitive corporate tax rate for manufacturers.
As of April 1, 2001, the combined federal/provincial corporate income tax rate is
41.62% for general businesses, 35.62% for large manufacturers and processors, and 18.12%
for small businesses.
Alberta does not have any general capital or payroll taxes, which are common in many
other provinces and U.S. states.
Comparison of Corporate
Income Tax Rates
*7.1% represents the average state corporate income tax rate
Rates known as of October 2000.
- With recent tax changes, Alberta will have one of the most competitive business tax
environments in North America. The combined federal/provincial corporate income tax rate
will be less than 30% by 2004.
- The Government of Canada is reducing its general corporate income tax rate from 28% to
21% (same as the current manufacturing and processing rate).
- Alberta's Small Business tax rate will fall from its current level of 6% to 3% by April
1, 2003.
- The small business threshold (the amount of income eligible for the small business tax
rate) will be doubled from $200,000 to $400,000 by 2002.
Provincial and State Corporate
Income Tax Rates
- Quebec's rate includes the Youth Fund surtax.
- Alberta's general and manufacturing & processing rates will be reduced to 13.5% as
of April 1, 2001.
- Washington has a business occupation tax in lieu of an income tax, which is based on
gross revenue sales (0.138% to 3.3% according to the type of business).
- Applies to subchapter "c" corporations. Flow through subchapter "s"
corporations are taxed at 1.5%.
- Tax rates vary annually to balance the budget.
- Effective rate as of December 31, 1999 on taxable income of $200,000.
Alberta's General and Manufacturing tax rates will decline in each of the next four
years, to reach 8% by April 1, 2004. As a result, Alberta will then have the lowest
general tax rate.
Canadian rates known as of January 2001.
U.S. rates known as of December 1999.
Source: Alberta Economic Development
Note: Comparing corporate income tax rates between the U.S. and Canada must be approached
cautiously. Methods to derive taxable income against which corporate income tax rates are
applied can vary between jurisdictions.
Provincial Capital and Payroll
Tax Rates (%)
- Manitoba has a $3 million exemption level and the higher rate applies to paid-up capital
in excess of $10 million.
Rates known as of October 2000
Source: Alberta Treasury
Low Personal Taxes
The overall tax burden on individual Albertans is by far the lowest of any province in
Canada.
Alberta's provincial personal taxation rates are among the lowest in Canada. As of
January 1, 2001, Alberta switched to a new single rate of tax on personal income of 10%.
A two income Alberta family of four, earning $60,000 per year, pays about $1,100 less
in taxes than in Ontario, and $3,600 less than in Quebec.
A two income Alberta family of four, earning $100,000 per year, pays more than $1,900
less in total provincial taxes than in Ontario, and more than $8,700 less than in Quebec.
Comparison of
Provincial and Federal Taxes by Province: Two Income Family of Four - $60,000
Source: Alberta Treasury, January 2001
Including all income, consumption, and property taxes
Comparison of
Provincial and Federal Taxes by Province: Two Income Family of Four - $100,000
 Source: Alberta Treasury, January 2001
Including all income, consumption, and property taxes
Economic Forecast
Alberta's economy is expected to experience solid growth over the medium term averaging
over 3% growth per year for 2001-2004.
Alberta's real GDP growth for 2000 is estimated to be 6.1 per cent. Based on forecasts
prepared by private agencies and current trend information, real GDP growth for Alberta is
forecast at 5.0 per cent in 2001, compared with 2.9 percent for Canada.
Employment is expected to post a healthy 2.5 - 2.8 per cent increase, adding between
40,000 and 45,000 jobs to the provincial labour force in 2001.
Questions? We are pleased to help with your specific
situation.
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