On February 24, 2022, Minister of Finance Travis Toews presented Alberta’s 2022 budget. This year’s budget—only the second balanced budget in more than a decade—emphasizes strengthening the province’s healthcare system and ensuring its post-pandemic economic recovery. Bolstered by strong oil and gas prices, the budget touts record healthcare funding, significant investments in education, skills development, and innovation, and a projected surplus of $511 million for 2022–23.
While the government continues to focus on keeping taxes low for residents of Alberta, the province did announce a few interesting tax changes in its budget address.
Education Property Tax Update
The education portion of property tax generally represents 20% of a typical tax bill for a property owner. This rate is based on a combination of the aggregate assessed values for properties across the province and the requisite amount of education property tax revenue as determined by the government.
The education property tax requisition was set to increase in 2020; however, the planned increase was put on hold for both 2020 and 2021. For 2022, the rates will increase slightly, as summarized below:
- Non-Residential Properties – The rate is set to rise from $3.76 to $3.90 per $1,000 of assessed value, representing a 3.7% increase.
- Residential and Farmland Properties – The rate will change from $2.56 to $2.65 per $1,000 of assessed value, an increase of 3.5%.
Note that municipal tax rates are set independently by each municipality, so the overall tax rate change for a particular property may be more or less than the education portion increase.
Collection Obligation for Online Marketplaces
Amendments to the Tourism Levy Act will be made in 2022 to require online accommodation marketplaces to collect and remit the tourism levy on behalf of Alberta short-term rental providers. This measure is similar to steps taken by other Canadian jurisdictions to ensure the efficient and consistent collection of sales taxes on short-term rentals. Traditional accommodation providers (e.g., hotels and motels) listed on online marketplaces will be allowed to continue to collect and remit the tourism levy on their own behalf for any taxable accommodations provided in Alberta.
Rate Reduction for Smokeless Tobacco
Effective March 1, 2022, Alberta will implement a new smokeless tobacco products tax at a rate of 27.5 cents per gram, which is the same rate applied to cigarettes. Smokeless tobacco products (e.g., chewing tobacco) are consumed by chewing, sniffing, or placing the product between the gum and cheek or lip and are currently taxed at a rate of 41.25 cents per gram. This change is aimed at reducing the tax rate differential on these products between Alberta and Saskatchewan and, consequently, minimizing purchases by Albertans outside the province.
Tax on Vaping Products
Potential for Coordinated Taxation Approach
Alberta announced the implementation of a vaping products tax in its 2019 budget but put the initiative on hold because of the ongoing COVID-19 pandemic. Since that time, the Government of Canada has announced its intention (in the 2021 federal budget) to introduce a federal taxation framework for vaping products during 2022, including the potential for federal-provincial coordination (similar to how cannabis is taxed in Canada).
The province has indicated that it intends to work with the federal government to establish a coordinated taxation framework for vaping products sold in Alberta, rather than implementing a standalone provincial tax. A coordinated taxation approach should reduce both the compliance burden on Alberta businesses and the risks of interprovincial tax leakage and smuggling.
The current government also committed to reviewing Alberta’s overall tax system to ensure that it is efficient, effective, and competitive, but only after the province has more fully recovered from the pandemic.
For information on new and extended government funding initiatives included in this year’s provincial budget, please navigate to Mentor Works News.
Further details on Alberta’s 2022 budget may be found on the province’s website at: https://www.alberta.ca/budget.aspx.
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirect® line at 1.800.667.1600.