Success Tips


5 Things to Know About Filing Business Taxes in Alberta

Nov. 07, 2018

Did you know that Alberta has some of the most generous tax incentives in Canada for small businesses? If you’re planning on moving to Alberta, or you’re just starting a business, here are some basics about filing business taxes in Alberta.

While on a federal level your business tax obligations are the same anywhere, the government of Alberta has taken major steps over time to foster a more business-friendly environment.

This means that in order to help your business thrive and to avoid any penalties, you’ll need to know all about filing business taxes in Alberta the right way. Here are 5 things you need to know about filing Alberta business taxes.

Business Income Can be Taxed as Your Personal Income

This is a rule that applies to those businesses that are not corporations. Your business income will be taxed as your own personal income if your businesses is a sole proprietorship or a part of a partnership.

You’ll need to report this on your T1 tax return, and make sure that you have the payment ready for tax day.

This means saving a certain amount of your revenue for this purpose.

Corporations: Filing a Separate Return for Business Taxes In Alberta

If your business is incorporated, things are a little different. First off, you’ll have a fiscal year end (which you can choose to be any date, when you incorporate), and you’ll have 2-3 months, depending on who controls the corporation, to pay any corporate incomes taxes owing.

Corporate revenue is not seen as personal income, so paying tax on it can be a lot more complex. Make sure to consult an accountant if you’re filing corporate tax revenues.

Avoid Penalties with Provincial and Federal Taxes

Perhaps one of the most important things to know about Alberta taxes is that all business income is subject to both provincial and federal taxes. You may have to file for both separately, and failure to pay one or the other will result in severe penalties.

You’ll need to know exactly what taxes levied on business income in Alberta, which again differs significantly from other regions, depending on what kind of business you have.

Alberta Does Not Have Harmonized Sales Tax (HST)

This only really applies if your business is selling goods or services. One of the better things about Alberta business taxes is that there is no Harmonized Sales Tax, nor is there a Provincial Sales Tax (PST).

This means that the sales tax you’ll be required to pay will be at a federal level only. Alberta is the only province that still has no PST.

If you’re selling goods, most of these will be taxable. However, certain goods are exempted from any kind of sales tax, so make sure to check to see if yours apply.

You should also note that if your business is operating or selling in other territories, you will be required to pay PST for those areas.

You’ll Need to Make Deductions For Employees

If your business has employees, you’ll need to make tax deductions from their payroll. In Alberta, these include income tax, employment insurance payments, and the payments for the Canada Pension Plan (CPP).

Make sure to check with the CRA which deductions apply to your business.

Learn More

To learn more about business taxes in Alberta, and to get the expert advice you need to file correctly, don’t hesitate to get in touch with us today.

Categories : Tax

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