Alberta Queen's Printer:

ALBERTA CORPORATE TAX ACT

Chapter A‑15

Table of Contents

1 Interpretation

2 Application of federal Act

3 Income Tax Convention or Treaty

4 Application of federal Act

4.01 Functional currency reporting

4.1 Application of Parts 9 and 10

Part 1
Liability for Income Tax

5 Liability for income tax

Part 2
Computation of Income

6 Income for taxation year

6.1 Cost amount of property

6.2 Rules for depreciable property

7 Income or loss

Division 1
Income or Loss from a Business or Property

8 Income or loss

8.3 Application of federal Act

8.4 Federal transfer pricing rules

Division 2
Taxable Capital Gains and Allowable Capital Losses

9 Capital gains and capital losses

Division 3
Other Sources of Income

10 Other sources of income

Division 4
Deductions in Computing Income

11 Deductions

Division 5
Rules Relating to Computation of Income

12 Computation of income rules

12.1 Reimbursement of Crown charges

Division 6
Corporations and Corporate Shareholders

14 Computation of income of corporations

14.1 Transfer of property to a corporation

14.2 Transfer of property from a partnership

14.3 Filing of election form

15 Shareholders of non‑resident corporations

Division 7
Partnerships

16 Partnership

16.1 Transfer of property to a partnership

16.2 Filing of election form

Division 8
Trusts

17 Trusts

Division 9
Non‑Residents

17.1 Taxable income of non‑resident corporation

Part 3
Computation of Taxable Income

18 Taxable income of corporation

Part 4
Computation of Amount Taxable in Alberta

Division 1
Alberta Allocation Factor

19 Alberta allocation factor

Division 2
Amount Taxable in Alberta

19.1 Amount taxable in Alberta

Division 3
Royalty Tax Deduction

20 Royalty tax deduction

20.1 Special definition for s20

Part 5
Computation of Income Tax Payable

21 Tax payable by corporation

Division 1
Small Business Deduction

22 Small business deduction

22.01 Over‑integration tax payable

22.2 Manufacturing and processing profits deduction

Division 2
Foreign Investment Income

23 Foreign investment income

Division 3
Political Contributions Tax Credit

24 Political contributions tax credit

24.1 Transitional

Division 4
Alberta Rental Investment Tax Credit

25 Rental investment tax credit

Part 6
Refundable Tax Credits

Division 1
Royalty Tax Credit

26 Interpretation

26.1 Royalty tax credit

26.4 Royalty tax credit instalment

26.41 Application of royalty tax credits

Division 2
Extended Alberta Rental Investment Tax Credit

26.5 Rental investment tax credit

Division 3
Scientific Research and Experimental
Development Tax Credit

26.6 Interpretation

26.7 Tax credit deduction

26.71 Recapcture of Alberta SR & ED credit

26.8 Maximum expenditure limit

27.9 Recapture

26.91 General provisions

Part 7
Special Rules Applicable in Certain Circumstances

27 Bankrupt corporations

27.1 Changes in residence

28 Investment corporations

29 Mortgage investment corporations

30 Mutual fund corporations

30.01 Amounts designated by mutual fund trust

30.1 Mutual funds - qualifying exchange

30.2 Communal organizations

31 Patronage

31.1 Agricultural cooperatives

32 Credit unions

33 Deposit insurance corporations

34 Insurance corporations

34.01 Financial institutions

34.011 Conversion of foreign bank affiliate to branch

34.02 Cost of tax shelter investments

34.1 Interest

35 Exemptions

Part 8
General

Division 1
Returns

36 Return to be filed

36.1 Electronic filing of return

36.2 Duty to file new information

37 Penalty for failure to file return

37.1 Penalty for false statement

38 Payment on account

38.1 Excess refund

39 Interest

39.1 Repayment of excess tax

39.2 Offset of refund and arrears interest

39.3 Period where interest not payable

Division 2
Assessment

41 Assessment of tax

42 Notice of assessment

43 Assessment, reassessment, etc.

43.01 Deeming of federal amounts

43.1 Federal‑based s72.1 assessments

44 Reassessment re loss carry‑backs

44.1 Reassessment re: election on proceeds

44.2 Reassessment re: excessive capital cost allowance

45 Assessment deemed valid and binding

46 Payment of balance

47 Overpayment of tax

47.1 Small amounts owing

48 Notice of objection to assessment

48.1 Extension of time by Provincial Minister

48.2 Extension of time by court

49 Legal representatives

49.1 Liability in respect of transfers by insolvent corporations

Division 3
Appeals

50 Appeal

50.1 Extension of time to appeal

51 Reply to notice of appeal

52 Powers of court on appeal

53 Practice and procedure

54 Variation of assessment

Division 4
Administration and Enforcement

55 Provincial Minister administers Act

55.01 Collection agreement

55.1 Waiver or cancellation of penalties or interest

56 Regulations

57 Taxes, etc. debt due to Crown

57.1 Limitations Act

58 Certification of amount payable

60 Powers of Provincial Minister

60.1 Restrictions on collection

60.2 Amounts in jeopardy

61 Records and books of account

62 Definitions

63 Inspection, audit and examination of books, etc.

64 Notice to provide information, etc.

65 Warrant to search and seize

65.1 Court order to provide information

66 Provincial Minister may authorize inquiry

67 Copies of seized documents

68 Hindrance an offence

69 Representation by counsel

70 Application of federal Act

71 Information return

72 Return, etc. to be signed

Division 4.1
Tax Avoidance

72.1 General anti‑avoidance rules

72.11 Limitation

Division 5
Offences and Penalties

73.01 Third party civil penalties

73.1 Penalty for late or deficient instalments

74 Evasion of tax by corporation

75 Evasion of tax

76 Offences

77 Communication of information

77.1 Communication of information ordered by judge

79 General offence and penalty

80 Liability of officers of corporation

Division 6
Procedure and Evidence

81 Procedure re information and complaint

82 Procedures

83 Documents deemed signed

84 Notices of assessment and forms

Division 7
Transitional

85 Transitional

Part 9
Insurance Corporations Tax

86 Definitions

87 Tax payable

88 Exemptions

89 Return

90 Penalty

91 Interest

92 Application of other Parts

Part 10
Financial Institutions Capital Tax

93 Interpretation

94 Liability for tax

95 Calculation of adjusted taxable capital

96 Calculation of taxable capital employed in Canada

97 Tax payable by resident financial institution

97.1 Tax payable by non‑resident financial institution

101 Time for payment

102 Filing return

103 Penalty for failure to file return

104 Interest

105 Application of other Parts

105.1 Coming into force

105.2 Application of Part

Part 11
Royalty Credit and Tax Refunds for Individuals

Division 1
Alberta Royalty Credit

106 Interpretation

107 Application

108 Entitlement to royalty credit

110 Time for application

111 Time limit

112 Royalty credit instalment

113 Repayment of instalment

114 Penalty

115 Interest

Division 2
Resource Allowance Tax Refund

115.1 Definitions

115.2 Additional resource allowance deduction

115.3 Resource allowance refund calculation

Division 3
Refund of Income Tax on Royalty Credit

115.4 Refund of income tax on royalty credit

Division 4
Assessment

115.5 Application for refunds

106 Interpretation

107 Application

108 Entitlement to royalty credit

110 Time for application

111 Time limit

112 Royalty credit instalment

113 Repayment of instalment

114 Penalty

115 Interest

116 Repayment

117 Repayment of interest

118 Assessment and determination on application

119 Assessment, reassessment, etc.

120 Refund of net credit

121 Application of other Parts

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Alberta, enacts as follows:

Interpretation

1(1) In this Act and in the application of the provisions of the federal Act and the regulations made under that Act that are by this Act made applicable, each of the provisions of Part XVII of the federal Act apply for the purposes of this Act, except as provided in this Act or the regulations.

(2) In this Act and in the application of the provisions of the federal Act and the regulations made under that Act that are by this Act made applicable for the purposes of this Act,

(a) “Alberta allocation factor” means the Alberta allocation factor determined in accordance with Division 1 of Part 4;

(b) “amount taxable in Alberta” means the amount taxable determined in accordance with Part 4;

(b.1) “balance‑due day” of a corporation for a taxation year means the day on or before which the corporation is required under section 38 to pay the remainder of its tax payable under Part 5 for the year or would be so required if such a remainder were payable;

(d) “federal Act” means the Income Tax Act (Canada) and includes any rules of application that are contained in any Act of the Parliament of Canada that amends the Income Tax Act (Canada);

(d.1) “federal assessment action” means any of the following actions taken by the Minister of National Revenue under the federal Act:

(i) an assessment, reassessment or additional assessment of tax, interest or penalties;

(ii) a determination or redetermination of a loss or an amount;

(iii) a confirmation of an assessment, reassessment or additional assessment of tax, interest or penalties or of a determination or redetermination of a loss or an amount;

(e) “federal regulation” means a regulation, as amended from time to time, made under the federal Act;

(e.01) “fiscal period” means the period for which the person’s or partnership’s accounts in respect of the business or property are made up for purposes of assessment under the federal Act;

(e.1) “jurisdiction” means a province of Canada or a country or political subdivision of a country;

(e.2) repealed RSA 2000 cA‑30 s88;

(f) “permanent establishment” means a fixed place of business of the corporation, including an office, a branch, a mine, an oil well, a farm, a timber land, a factory, a workshop or a warehouse, and

(i) if the corporation does not have any fixed place of business it means the principal place in which the corporation’s business is conducted,

(ii) if a corporation carries on business through an employee or agent, established in a particular place, who has general authority to contract for the employee’s or agent’s employer or principal or who has a stock of merchandise owned by the employee’s or agent’s employer or principal from which the employee or agent regularly fills orders that the employee or agent receives, the corporation is deemed to have a permanent establishment in that place,

(iii) an insurance corporation is deemed to have a permanent establishment in each province and country in which the corporation is registered or licensed to do business,

(iv) if a corporation, otherwise having a permanent establishment in Canada, owns land in a province, that land is deemed to be a permanent establishment,

(v) if a corporation uses substantial machinery or equipment in a particular place at any time in a taxation year it is deemed to have a permanent establishment in that place,

(vi) the fact that a corporation has business dealings through a commission agent, broker or other independent agent or maintains an office solely for the purchase of merchandise shall not of itself be held to mean that the corporation has a permanent establishment,

(vii) the fact that a corporation has a subsidiary controlled corporation in a place or a subsidiary controlled corporation engaged in trade or business in a place shall not of itself be held to mean that the corporation is operating a permanent establishment in that place, and

(viii) if a corporation resident in Canada does not otherwise have a permanent establishment in Canada, the corporation is deemed to have a permanent establishment in the place where it has its registered office or in a place designated in its articles, charter or by-laws as its office or registered office;

(g) “prescribed” means

(i) with respect to a form, the information to be given on a form or the manner of filing a form, authorized by the Provincial Minister,

(i.1) with respect to the manner of making or filing an election, authorized by the Provincial Minister, or

(ii) in any other case, prescribed by regulation;

(g.01) “Provincial Minister” means the Minister determined under section 16 of the Government Organization Act as the Minister responsible for this Act;

(g.1) “refundable tax credit” means a tax credit to which a corporation is entitled under Part 6;

(g.2) “royalty tax credit” means a tax credit to which a corporation is entitled under section 26.1;

(g.3) repealed 2001 c1 s2;

(h) “royalty tax deduction” means the royalty tax deduction determined in accordance with section 20(2);

(h.1) “specified future tax consequence” for a taxation year means specified future tax consequence as defined in subsection 248(1) of the federal Act, except that the following replaces paragraph (a) of that definition:

(a) the consequence of the deduction or exclusion of an amount referred to in section 39(3)(a) of the Alberta Corporate Tax Act, and;

(i) “tax payable” with respect to a corporation, means the tax payable by that corporation as fixed by assessment or reassessment and subject to variation or objection or on appeal;

(j) “taxable income” means the income of a corporation calculated in accordance with Part 3;

(k) “taxable income earned in Canada” means a corporation’s taxable income earned in Canada determined in accordance with section 17.1, except that in no case may a corporation’s taxable income earned in Canada be less than nil.

(2.1) For the purposes of this Act, a reference in this Act to the Minister of National Revenue is to be read as including the Commissioner of Revenue under the Canada Revenue Agency Act (Canada).

(3) If at any time an amount payable to a corporation by the Provincial Minister under this Act is applied by the Provincial Minister to reduce a liability of the corporation under this Act, the amount is an amount paid at that time on account of the liability of the corporation.

(4) Interest at a prescribed rate under this Act shall be computed and compounded daily.

(5) If interest is payable under a particular section and is not paid or applied on the day it would, but for this subsection, have ceased to be computed, interest at a prescribed rate under this Act shall be computed and compounded daily on the interest that is not paid or applied from that day to the day on which it is paid or applied.

(6) Repealed 2002 c28 s2.

RSA 2000 cA‑15 s1;RSA 2000 cA‑30 s88;2001 c1 s2;
2002 c28 ss2,34;2003 c34 s2;2009 c15 s2

Application of federal Act

2(1) When a section of the federal Act or a regulation made under the federal Act has, by this Act, been made applicable for the purposes of this Act and reference is made in that section to another provision of the federal Act and this Act provides that the other provision is inapplicable for the purposes of this Act, then that section shall be read as if the reference to the other provision had been struck out.

(2) When a section of the federal Act or a regulation made under the federal Act has, by this Act, been made applicable for the purposes of this Act and reference is made in that section to another provision of the federal Act and that other provision does not apply for the purposes of this Act because a provision of this Act applies instead of it, then the reference to the other provision is deemed to be a reference to the provision of this Act that applies instead of it.

(3) When a section of the federal Act or a regulation made under the federal Act has, by this Act, been made applicable for the purposes of this Act and reference is made in that section to another provision of the federal Act and that other provision applies in a different manner for the purposes of the federal Act than it does for the purposes of this Act, then the reference is deemed to be a reference to the other provision as it applies for the purposes of this Act.

(4) Repealed 1981 c8 s3.

(5) In the application of a section of the federal Act that, by this Act, is made applicable for the purposes of this Act, a reference to

(a) a return required to be filed under section 150 of that Act is deemed to be a reference to a return required to be filed under section 36 of this Act, and

(b) an assessment required to be made under section 152 of that Act is deemed to be a reference to an assessment required to be made under section 41 of this Act.

(5.1) If a provision of the federal Act or a regulation made under the federal Act that is made applicable by this Act refers to giving a notice or making an application to the Minister of National Revenue, the notice or application may be given or made to the Provincial Minister in respect of a matter under this Act.

(5.2) If in a provision of the federal Act or a regulation made under the federal Act that is made applicable by this Act something may be done by the Minister of National Revenue, it may be done by the Provincial Minister.

(6) Subject to sections 14.1, 14.2, 14.3, 16.1, 16.2 and 34.011(2), an election or designation by a corporation that may be made under the federal Act may be filed with the Provincial Minister and if so filed the rules respecting that election or designation in the federal Act apply but, in the event that the election or designation is not filed with the Provincial Minister, the Provincial Minister shall accept an election or designation made under the federal Act and the provisions of the federal Act imposing penalties for late filing of elections or designations are not applicable for the purposes of this Act.

(7) Repealed 1992 c2 s3.

(8) If a provision of the federal Act is made applicable for the purposes of this Act that provision shall apply only insofar as it applies to corporations.

(9) Repealed 1990 c4 s4.

(10) Subsections 248(7) and (11) of the federal Act do not apply for the purposes of this Act.

RSA 2000 cA‑15 s2;2001 c1 s3;2002 c28 ss3,34

Income Tax Convention or Treaty

3 If Canada has entered into an Income Tax Convention or Treaty with another jurisdiction and that Convention or Treaty is inconsistent with the federal Act and if by reason of any other Act of the Parliament of Canada that Convention or Treaty prevails to the extent of that inconsistency, that Convention or Treaty is, to the extent of the inconsistency, deemed to apply for the purposes of this Act in the same manner as it applies for the purposes of the federal Act.

RSA 1980 cA‑17 s3

Application of federal Act

4 The sections of the federal Act and the regulations made under it that are by this Act made applicable for the purposes of this Act, are, unless otherwise provided in this Act, deemed to apply as amended or re‑enacted from time to time and those amendments or re‑enactments shall apply for the purposes of this Act in the same manner as they apply for the purposes of the federal Act.

RSA 1980 cA‑17 s4

Functional currency reporting

4.01 Where subsection 261(4) of the federal Act applies to a corporation for a particular taxation year as a result of the corporation having filed a valid election under subsection 261(3) of the federal Act, in the application of section 261 of the federal Act for the purposes of this Act,

(a) the corporation is deemed to have made the same election for the purposes of this Act,

(b) all amounts payable under this Act in respect of that year must be paid in Canadian currency, and

(c) the corporation’s taxes payable for the year must be converted to Canadian dollars in accordance with the regulations.

2009 c15 s3

Application of Parts 9 and 10

4.1(1) Subject to subsection (2), Parts 9 and 10 do not apply for the purposes of Parts 1 to 8.

(2) A liability of a corporation that may be reduced by the application of an amount to the liability by the Provincial Minister under section 26.4 or 47 includes a liability under Part 9 or 10.

RSA 2000 cA‑15 s4.1;2002 c28 s34

Part 1
Liability for Income Tax

Liability for income tax

5(1) A corporation that has a permanent establishment in Alberta at any time in a taxation year shall pay an income tax as required by Part 5 of this Act on its amount taxable in Alberta, computed in accordance with Part 4, for that taxation year.

(2) The income of a corporation for a taxation year shall be determined in accordance with Part 2.

(3) The taxable income of a corporation for a taxation year shall be determined in accordance with Part 3.

(3.1) Notwithstanding subsections (2) and (3), a corporation not resident in Canada shall compute its taxable income earned in Canada in accordance with section 17.1.

(4) The amount taxable in Alberta of a corporation for a taxation year is to be determined in accordance with Part 4.

RSA 2000 cA‑15 s5;2002 c28 s4

Part 2
Computation of Income

Income for taxation year

6 Subject to sections 6.1 and 6.2, the income of a corporation for a taxation year is its income for the year determined by the following rules:

(a) determine the aggregate of amounts each of which is the corporation’s income for the year (other than a taxable capital gain from the disposition of a property) from a source inside or outside Canada, including, without restricting the generality of the foregoing, its income for the year from each business and property;

(b) determine the amount, if any, by which

(i) the aggregate of its taxable capital gains for the year from dispositions of property other than listed personal property, and its taxable net gain for the year from dispositions of listed personal property,

exceeds

(ii) the amount, if any, by which its allowable capital losses for the year from dispositions of property other than listed personal property exceed its allowable business investment losses for the year;

(c) determine the amount, if any, by which the aggregate determined under clause (a) plus the amount determined under clause (b) exceeds the aggregate of the deductions permitted by Division 4 of this Part in computing the corporation’s income for the year (except such of or such part of those deductions, if any, as have been taken into account in determining the aggregate referred to in clause (a));

(d) determine the amount, if any, by which the remainder determined under clause (c) exceeds the aggregate of amounts each of which is its loss for the year from a business or property or its allowable business investment loss for the year;

and for the purposes of this Act,

(e) where an amount is determined under clause (d) for the year in respect of the corporation, the corporation’s income for the year is the amount so determined, and

(f) in any other case, the corporation is deemed to have income for the year in an amount equal to zero.

RSA 2000 cA‑15 s6;2001 c1 s4

Cost amount of property

6.1 Where the cost amount of property owned by a corporation is relevant in the computation of income for the purposes of this Act, the cost amount, for the purposes of this Act, of any property owned by the corporation at the time it establishes a permanent establishment in Alberta is deemed to be the cost amount of such property, at that time, for purposes of the computation of income under the federal Act.

2001 c1 s5

Rules for depreciable property

6.2 Where the property referred to in section 6.1 is depreciable property and the capital cost of such property to the corporation immediately prior to the time the corporation establishes a permanent establishment in Alberta exceeds the cost amount of such property as determined under section 6.1, for the purposes of applying those sections of this Act that make applicable for the purposes of this Act sections 13 and 20 of the federal Act and any federal regulations made for the purposes of paragraph 20(1)(a) of the federal Act,

(a) the capital cost of the property to the corporation is deemed to be the capital cost to the corporation of the property for the purposes of the federal Act immediately prior to the time it established a permanent establishment in Alberta, and

(b) the excess is deemed to have been deducted by the corporation under the sections of this Act that make applicable paragraph 20(1)(a) of the federal Act.

2001 c1 s5

Income or loss

7(1) For the purposes of this Act,

(a) a corporation’s income or loss for a taxation year from a business, property or other source, or from sources in a particular place, is the corporation’s income or loss, as the case may be, computed in accordance with this Act on the assumption that it had during the taxation year no income or loss except from that source or no income or loss except from those sources, as the case may be, and was allowed no deductions in computing its income for the taxation year except such deductions as may reasonably be regarded as wholly applicable to that source or to those sources, as the case may be, and except such part of any other deductions as may reasonably be regarded as applicable thereto, and

(b) if the business carried on by a corporation was carried on partly in one place and partly in another place, the corporation’s income or loss for the taxation year from the business carried on by it in a particular place is the corporation’s income or loss, as the case may be, computed in accordance with this Act on the assumption that it had during the taxation year no income or loss except from the part of the business that was carried on in that particular place and was allowed no deductions in computing its income for the taxation year except such deductions as may reasonably be regarded as wholly applicable to that part of the business and except such part of any other deductions as may reasonably be regarded as applicable thereto.

(2) Subject to subsection (3), in applying subsection (1) no deductions permitted by section 60 of the federal Act, as made applicable by section 11 of this Act, are applicable either wholly or in part to a particular source or to sources in a particular place, as the case may be.

(3) In applying subsection (1) for the purposes of section 23 of this Act and subsections 104(22) and (22.1) of the federal Act,

(a) subject to clause (b), all deductions permitted in computing a corporation’s income for a taxation year, except any deduction permitted by paragraph 60(o) of the federal Act, shall apply either wholly or in part to a particular source or to sources in a particular place, and

(b) any deduction permitted by subsection 104(6) or (12) of the federal Act shall not apply either wholly or in part to a source in a country other than Canada.

(4) Repealed 1997 c2 s2.

RSA 1980 cA‑17 s7;1982 c1 s4;1992 c2 s5;1995 c3 s12;
1997 c2 s2

Division 1
Income or Loss from a
Business or Property

Income or loss

8(1) Subject to subsections (1.1) to (3), subdivision b of Division B of Part I of the federal Act applies in determining the income or loss of a corporation from a business or property for a taxation year.

(1.1) In the application of subdivision b of Division B of Part I of the federal Act, a reference to amounts deducted under subsection 127(5) of the federal Act includes the amounts deemed to have been deducted under that subsection by subsection 127.1(3) or 192(10) of the federal Act.

(2) Subdivision b of Division B of Part I of the federal Act is deemed to include subsection 7(3) of the federal Act.

(2.001) In the application of subsection 12(1) of the federal Act,

(a) the reference in paragraph (o) to “or in respect of the late receipt or non‑receipt of any such amount” does not apply for the purposes of this Act,

(b) paragraph (x.1) does not apply for the purposes of this Act,

(c) for each taxation year that ends after 2002 and before 2007, the repeal of paragraph (o) does not apply for the purposes of this Act,

(d) for taxation years that end after 2002 and before 2007, paragraph (z.5) shall be read as “25% of the taxpayer’s prescribed resource loss for the year”,

(e) notwithstanding paragraph (x.2) as it applies for the purposes of this Act, payments received under the Alberta Royalty Tax Credit program shall be excluded from the calculation of taxable income,

(f) for a taxation year that begins in 2006 and ends in 2007, the repeal of paragraph (o) does not apply for the purposes of this Act to the proportion of the amount described by that paragraph that the number of days in the taxation year in 2006 bears to the number of days in the taxation year, and

(g) for a taxation year that begins in 2006 and ends in 2007, paragraph (z.5) shall be read as “that proportion of 25% of the taxpayer’s prescribed loss for the year that the number of days in the taxation year in 2006 bears to the number of days in the taxation year”.

(2.002) Subsection 17(7) of the federal Act does not apply for the purposes of this Act.

(2.01) In the application of subsection 18(1) of the federal Act,

(a) paragraph (a) shall be read as if “including but not limited to any tax payable under Part 1 of this Act, any tax payable under the federal Act, any tax similar to that imposed under Part 1 of this Act that is imposed by a province or any interest or penalties payable in respect of any of them” were added after “outlay or expense”,

(b) the reference in paragraph (m) to “or in respect of the late payment or non‑payment of any such amount” does not apply for the purposes of this Act,

(b.1) for each taxation year that ends after 2002 and before 2007, the repeal of paragraph (m) does not apply for the purposes of this Act,

(b.2) for a taxation year that begins in 2006 and ends in 2007, the repeal of paragraph (m) does not apply for the purposes of this Act to the proportion of the amount described by that paragraph that the number of days in the taxation year in 2006 bears to the number of days in the taxation year, and

(2.02) In the application of subsection 20(1) of the federal Act

(a) for a taxation year that ends after 2002 and before 2007, paragraph (v.1) shall be read as “such amount as is allowed to the taxpayer for the year by regulation in respect of natural accumulations of petroleum or natural gas in Canada, oil or gas wells in Canada or mineral resources in Canada”,

(b) for a taxation year that begins in 2006 and ends in 2007, paragraph (v.1) shall be read as “that proportion of such amount as is allowed to the taxpayer for the year by regulation in respect of natural accumulations of petroleum or natural gas in Canada, oil or gas wells in Canada or mineral resources in Canada that the number of days in the taxation year in 2006 bears to the number of days in the taxation year”, and

(2.1) Subsection 20(12) of the federal Act does not apply for the purposes of this Act.

(2.2) In determining the income of a corporation from a business or property for a taxation year, there may be deducted the amount described in subsection 20(12) of the federal Act less the amount that is deductible under subsection 126(1) of the federal Act.

(2.3) In determining the income of a corporation for a taxation year, taxes imposed by another province or territory of Canada and computed by reference to the amount of a corporation’s capital are not deductible for the purposes of this Act.

(3) In the application of subsection 22(2) of the federal Act, the reference to “Minister” is deemed to be a reference to the Provincial Minister.

(4) Subsection 27(2) of the federal Act does not apply for the purposes of this Act.

RSA 2000 cA‑15 s8;2001 c1 s6;2002 c28 ss5,34;
2004 c21 s2;2007 c25 s2

8.1, 8.2 Repealed 1995 c3 s3.

Application of federal Act

8.3 Section 246 except paragraph 246(1)(b) of the federal Act applies in computing income except that the reference to Part I of that Act is deemed to be a reference to this Act.

1990 c4 s6

Federal transfer pricing rules

8.4(1) Section 247, except subsections (3) and (11), of the federal Act applies in computing income for the purposes of this Act.

(2) This section applies to taxation years and fiscal periods that begin after 1997.

2001 c1 s7

Division 2
Taxable Capital Gains and Allowable Capital Losses

Capital gains and capital losses

9(1) Subject to subsection (2), subdivision c of Division B of Part I of the federal Act applies to determine the taxable capital gains and allowable capital losses of a corporation from the disposition of any property.

(2) In the application of subdivision c of Division B of Part I of the federal Act, a reference to amounts deducted under subsection 127(5) of the federal Act includes the amounts deemed to have been deducted under that subsection by subsection 127.1(3) or 192(10) of the federal Act.

RSA 1980 cA‑17 s9;1986 c1 s4

9.1 Repealed 1995 c3 s4.

Division 3
Other Sources of Income

Other sources of income

10(1) Subject to subsections (2) and (3), subdivision d of Division B of Part I of the federal Act applies to other sources of income.

(2) In the application of paragraph 56(1)(l) of the federal Act, a determination made by the Provincial Minister under section 41(1.11) or (2) is deemed to be an assessment or reassessment by the Provincial Minister.

(3) Paragraph 59.1(b) of the federal Act shall be read as though “subsections 152(4) and (5)” was struck out and “section 43 of this Act” was substituted.

RSA 2000 cA‑15 s10;2002 c28 s34

Division 4
Deductions in Computing Income

Deductions

11(1) Subject to subsections (1.1) and (2), subdivision e of Division B of Part I of the federal Act applies to deductions in computing income.

(1.1) In the application of subdivision e of Division B of Part I of the federal Act, a reference to amounts deducted under subsection 127(5) of the federal Act includes the amounts deemed to have been deducted under that subsection by subsection 127.1(3) or 192(10) of the federal Act.

(2) In the application of paragraph 60(o) of the federal Act, a determination made by the Provincial Minister under section 41(1.11) or (2) is deemed to be an assessment or reassessment by the Provincial Minister.

RSA 2000 cA‑15 s11;2002 c28 s34

Division 5
Rules Relating to
Computation of Income

Computation of income rules

12(1) Subject to subsection (2), subdivisions f and g of Division B of Part I of the federal Act apply for the purposes of this Act.

(2) Subsections 67.5(2) and 69(12) of the federal Act do not apply for the purposes of this Act.

RSA 2000 cA‑15 s12;2001 c1 s8

Reimbursement of Crown charges

12.1(1) Section 80.2 of the federal Act does not apply for the purposes of this Act in respect of reimbursement of Crown charges imposed in respect of production after December 31, 2002.

(2) Where, in respect of the period that begins on January 1, 2003 and ends on December 31, 2006,

(a) a taypayer, under the terms of a contract, pays to another person an amount (in this section referred to as the “specified payment”) that may reasonably be considered to have been received by the other person as a reimbursement, contribution or allowance in respect of an amount (referred to in clause (b) as the “particular amount”) paid or payable by the other person,

(b) the particular amount is included in the income of the other person or is denied as a deduction in computing the income of the other person by reason of paragraph 12(1)(o) or 18(1)(m) of the federal Act, as the case may be, as it applies for the purposes of this Act, and

(c) the taxpayer was resident in Canada or carrying on a business in Canada at the time the specified payment was made by the taxpayer,

the following rules apply for the purposes of this Act, other than this section:

(d) the taxpayer is deemed neither to have made nor to have become obligated to make the specified payment to the other person but to have paid an amount described in paragraph 18(1)(m) of the federal Act as it applies for the purposes of this Act equal to the amount of the specified payment, and

(e) the other person is deemed neither to have received nor to have become entitled to receive the specified payment from the taxpayer.

2006 c10 s2

13 Repealed 1990 c4 s8.

Division 6
Corporations and Corporate Shareholders

Computation of income of corporations

14(1) Subject to subsections (2), (3), (3.01), (3.02), (3.1), (3.2), (4) and (5) and sections 14.1, 14.2 and 14.3, subdivision h of Division B of Part I of the federal Act applies for the purposes of this Act.

(2) Paragraph 83(3)(b) of the federal Act shall be read as though “penalty” was struck out and “penalty under subsection (4) of the federal Act” was substituted.

(3) Subsections 83(3.1), (4) and (5) of the federal Act do not apply.

(3.01) Section 86.1 of the federal Act, except subsection (5), applies for the purposes of this Act if the information and the election required to be filed with the federal Minister are also filed with the Provincial Minister within the time period set out in section 86.1 of the federal Act.

(3.02) Where the cost amount to the corporation of the original shares referred to in subsection 86.1(3) of the federal Act is different for the purposes of this Act than for the purposes of the federal Act, the information filed with the Provincial Minister under subsection (3.01) of this section must include the cost adjustment calculation described in subsection 86.1(3) of the federal Act using the cost amount to the corporation of the original shares calculated for the purposes of this Act.

(3.1) Where there has been an amalgamation of 2 or more corporations and subsection 87(2) of the federal Act, as made applicable for the purposes of this Act, applies, the following rules also apply:

(a) repealed 1985 c1 s3;

(b) in order to determine the amount referred to in section 25(3)(a) for the new corporation at any time, there shall be added to the amount otherwise determined under that section the aggregate of the amounts that would have been determined under section 25(3)(a) for each predecessor corporation immediately before the amalgamation;

(c) the aggregate of the over‑integration tax adjustments of the new corporation at the beginning of its first taxation year is the total of the aggregate of the over‑integration tax adjustments of each predecessor corporation at the end of its last taxation year.

(3.2) If a taxable Canadian corporation has been wound up and subsection 88(1) of the federal Act, as made applicable for the purposes of this Act, applies, the following rules also apply:

(a) repealed 1985 c1 s3;

(b) in order to determine the amount referred to in section 25(3)(a) for the parent at any time in a taxation year ending after the commencement of the winding‑up, there is to be added to the amount otherwise determined the amount that would have been determined under section 25(3)(a) for the subsidiary immediately before the commencement of the winding‑up and section 25(3) shall not apply to the subsidiary for the taxation year in which the winding‑up commenced or any subsequent taxation year;

(c) there shall be added to the parent corporation’s aggregate of the over‑integration tax adjustments at the beginning of its first taxation year after the commencement of the winding‑up the aggregate of the over‑integration tax adjustments of the subsidiary at the end of its last taxation year ending before that time.

(4) In the application of section 89 of the federal Act for the purposes of this Act,

(a) the definition of “eligible dividend” in subsection (1) shall be read as “any amount that is an eligible dividend for purposes of the federal Act”;

(b) the following definitions apply instead of the definitions of “general rate income pool” and “low rate income pool” in subsection (1):

(i) “general rate income pool” is deemed to be an amount equal to the value of the general rate income pool for purposes of the federal Act at the particular time;

(ii) “low rate income pool” is deemed to be an amount equal to the value of the low rate income pool for purposes of the federal Act at the particular time;

(c) paragraph (b) in the definition of “taxable Canadian corporation” in subsection (1) shall be read as though “under this Part” were struck out and “under Part 1 of the federal Act and under this Act” were substituted.

(5) If a corporation makes an election under subsection 89(11) of the federal Act or revokes an election under subsection 89(12) of the federal Act, it is deemed to have made or revoked the same election for the purposes of this Act.

RSA 2000 cA‑15 s14;2001 c1 s9;2005 c25 s17;
2008 c29 s2

Transfer of property to a corporation

14.1(1) Subsection 85(1) of the federal Act applies in respect of the transfer of property to a corporation for the purposes of this Act only if a valid federal election has been made under subsection 85(1) of the federal Act in respect of the transfer of that property.

(2) Subject to subsection (3), where subsection 85(1) of the federal Act applies for the purposes of this Act in respect of the transfer of property to a corporation, the amount deemed to be the proceeds of disposition of the property to the corporation or individual disposing of the property and the cost of the property to the corporation acquiring the property for the purposes of the federal Act is the amount to be deemed for the purposes of this Act.

(3) If

(a) the corporation disposing of the property was a qualified party for the taxation year in which it disposed of the property, and

(b) the corporation acquiring the property was a qualified party for the taxation year in which it acquired the property and throughout all of its taxation years beginning in the 36 months subsequent to the end of the taxation year in which it acquired the property,

the corporation disposing of the property and the corporation acquiring the property may, for the purposes of this Act, jointly elect in the prescribed form and in accordance with section 14.3(3) an amount under subsection (4) to be the proceeds of disposition of the property to the corporation disposing of the property and the cost of the property to the corporation acquiring the property.

(4) For the purposes of an election under subsection (3), one of the following may be elected:

(a) the amount deemed to be the proceeds of disposition and the cost of the property under the federal Act;

(b) the amount equal to the amount in clause (a) less the cost amount of the property for the purposes of the computation of income under the federal Act, plus the cost amount of the property for the purposes of the computation of income under this Act, both determined immediately before the disposition to which the election relates;

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b).

(5) For the purposes of subsection (3), a qualified party is a corporation whose Alberta allocation factor for the particular taxation year, as determined by section 19, is at least 90%.

2001 c1 s10;2002 c28 s6;2003 c34 s3

Transfer of property from a partnership

14.2(1) Subsection 85(2) of the federal Act applies in respect of the transfer of property to a corporation from a partnership for the purposes of this Act only if a valid federal election has been made under subsection 85(2) of the federal Act in respect of the transfer of that property.

(2) Subject to subsection (3), where subsection 85(2) of the federal Act applies for the purposes of this Act in respect of the transfer of property to a corporation, the amount deemed to be the proceeds of disposition of the property to the partnership disposing of the property and the cost of the property to the corporation acquiring the property for the purposes of the federal Act is the amount to be deemed for the purposes of this Act.

(3) If

(a) one or more of the members of the partnership disposing of the property is a corporation,

(b) the partnership disposing of the property was a qualified party for the fiscal period in which it disposed of the property, and

(c) the corporation acquiring the property was a qualified party for the taxation year in which it acquired the property and throughout all of its taxation years beginning in the 36 months subsequent to the end of the taxation year in which it acquired the property,

all of the members of the partnership disposing of the property and the corporation acquiring the property may, for the purposes of this Act, jointly elect in the prescribed form and in accordance with section 14.3(3) an amount under subsection (4) to be the proceeds of disposition of the property to the partnership disposing of the property and the cost of the property to the corporation acquiring the property.

(4) For the purposes of an election under subsection (3), one of the following may be elected:

(a) the amount deemed to be the proceeds of disposition and the cost of the property under the federal Act;

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b).

(5) For the purposes of subsection (3), a qualified party is

(a) in the case of a corporation, a corporation whose Alberta allocation factor for the particular taxation year, as determined by section 19, is at least 90%, and

(b) in the case of a partnership, a partnership which, if it were treated as a corporation having a taxation year corresponding to its fiscal period, would have an Alberta allocation factor for the particular taxation year, as determined by section 19, of at least 90%.

2001 c1 s10;2002 c28 s7;2003 c34 s4

Filing of election form

14.3(1), (2) Repealed 2002 c28 s8.

(3) The election form referred to in sections 14.1(3) and 14.2(3) must be filed with the Provincial Minister by the corporation that acquired the property at the time its income tax return is due for the last taxation year beginning in the 36‑month period referred to in section 14.1(3)(b) or 14.2(3)(c), as the case may be.

2001 c1 s10;2002 c28 s8;2005 c25 s17

Shareholders of non-resident corporations

15(1) Subject to subsection (2), subdivision i of Division B of Part I of the federal Act applies for the purpose of computing the income of a corporation.

(2) Paragraphs 95(6)(a) and (b) of the federal Act shall be read as though “under this Act” was struck out and “under the federal Act and under this Act” was substituted.

RSA 1980 cA‑17 s15

Division 7
Partnerships

Partnership

16 Subject to sections 16.1 and 16.2, subdivision j of Division B of Part I of the federal Act applies for the purposes of computing the income of a corporation.

RSA 2000 cA‑15 s16;2001 c1 s11

Transfer of property to a partnership

16.1(1) Subsection 97(2) of the federal Act applies in respect of the transfer of property from a corporation to a partnership for the purposes of this Act only if a valid federal election has been made under subsection 97(2) of the federal Act in respect of the transfer of that property.

(2) Subject to subsection (3), where subsection 97(2) of the federal Act applies for the purposes of this Act in respect of the transfer of property to a partnership, the amount deemed to be the proceeds of disposition of the property to the corporation disposing of the property and the cost of the property to the partnership acquiring the property for purposes of the federal Act is the amount to be deemed for the purposes of this Act.

(3) If

(a) the corporation disposing of the property was a qualified party in the taxation year in which it disposed of the property,

(b) one or more of the members of the partnership acquiring the property was a corporation, and

(c) the partnership acquiring the property was a qualified party for the fiscal period in which the acquisition occurred and throughout all of its fiscal periods beginning in the 36 months subsequent to the end of the fiscal period in which it acquired the property,

the corporation disposing of the property and all of the members of the partnership acquiring the property may, for the purposes of this Act, jointly elect in the prescribed form and in accordance with section 16.2(3) an amount under subsection (4) to be the proceeds of disposition of the property to the corporation disposing of the property and the cost of the property to the partnership acquiring the property.

(4) For the purposes of an election under subsection (3), one of the following may be elected:

(a) the amount deemed to be the proceeds of disposition and the cost of the property under the federal Act;

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b).

(5) For the purposes of subsection (3), a qualified party is

(a) in the case of a corporation, a corporation whose Alberta allocation factor for the particular taxation year, as determined by section 19, is at least 90%, and

2001 c1 s12;2002 c28 s9;2003 c34 s5

Filing of election form

16.2(1), (2) Repealed 2002 c28 s10.

(3) The election form referred to in section 16.1(3) must be filed by all of the members of the partnership with the Provincial Minister at the time when the income tax return is first due for a member of the partnership that is a corporation for its taxation year that includes the last fiscal period of the partnership beginning in the 36‑month period referred to in section 16.1(3)(c).

2001 c1 s12;2002 c28 s10;2005 c25 s17

Division 8
Trusts

Trusts

17(1) Subdivision k of Division B of Part I of the federal Act applies for the purposes of computing the income of a corporation.

(2) The definitions in section 122.1 of the federal Act apply for the purposes of applying section 104 of the federal Act for the purposes of this Act.

RSA 2000 cA‑15 s17;2008 c29 s3

Division 9
Non‑Residents

Taxable income of non‑resident corporation

17.1(1) Sections 115, 115.1 and 115.2 of the federal Act apply for the purposes of determining the taxable income earned in Canada by a non‑resident corporation.

(2) Subsection 115(1) of the federal Act shall be read as if the references to section 3 or any of its paragraphs in subsection 115(1) of the federal Act were references to section 6 of this Act or the corresponding clauses of section 6.

RSA 2000 cA‑15 s17.1;2002 c28 s11

Part 3
Computation of Taxable Income

Taxable income of corporation

18(1) Taxable income for the taxation year shall be income as determined under Part 2 of this Act plus any amount added under subsection (1.1) and less any deductions allowed by subsection (2).

(1.1) There may be added to a corporation’s taxable income otherwise determined for a taxation year any amount up to the amount added by the corporation under section 110.5 of the federal Act to the extent that the addition does not increase an amount deductible by the corporation under section 22 or 22.2 for the year.

(2) Subject to subsection (3), sections 110, 110.1, 111, 112 and 113 of the federal Act apply in the calculation of taxable income for the purposes of this Act.

(3) In the application of section 111 of the federal Act

(a) subparagraph 111(3)(a)(ii) does not apply,

(a.1) paragraph (b) under C in the definition of “net capital loss” in subsection 111(8) shall be read as if “or claimed by the taxpayer under paragraph 186(1)(c) or (d)” were struck out,

(a.2) to determine the non‑capital loss of a corporation for a taxation year, the reference to section 110.5 under B in the definition of “non‑capital loss” in subsection 111(8) shall be read as a reference to section 18(1.1) of this Act,

(a.3) subsection 111(10) does not apply, and

(b) with respect to the computation of taxable income for taxation years of a corporation to which this Act applies, no deduction shall be allowed for a corporation’s non‑capital losses, net capital losses, restricted farm losses or farm losses determined under this Act for the 1983 or subsequent taxation years to the extent that those losses have been deducted in computing taxable income for taxation years of the corporation to which the Alberta Income Tax Act applies.

(4) Where the value of a gift has been determined under subsection 118.1(10) of the federal Act, the value of the gift as determined under that provision is the value of the gift for the purposes of this Act.

(5) Where the value of a gift has been determined under subsections 118.1(10.1) to (10.5) of the federal Act, the value of the gift as determined under those provisions is the value of the gift for the purposes of this Act.

RSA 2000 cA‑15 s18;RSA 2000 cA‑30 s88;2001 c1 s63;
2002 c28 s12

Part 4
Computation of Amount
Taxable in Alberta

Division 1
Alberta Allocation Factor

Alberta allocation factor

19(1) The Alberta allocation factor is the quotient obtained when taxable income earned in Alberta is divided by taxable income.

(1.1) For the purposes of sections 14.1(5), 14.2(5) and 16.1(5), in a year when a corporation or partnership does not have taxable income, the Alberta allocation factor shall be determined as if the taxable income of the corporation or partnership were $1 for the year.

(2) Subject to subsection (3), in this section, “taxable income earned in Alberta” means the amount determined in accordance with the regulations.

(3) Where a corporation is not resident in Canada, for the purposes of this Part and in the determination of taxable income earned in Alberta by the non‑resident corporation, the reference to taxable income in subsection (1) shall be read as a reference to taxable income earned in Canada.

RSA 2000 cA‑15 s19;2002 c28 s13;2003 c34 s6;
2007 c25 s3;2008 c29 s4

Division 2
Amount Taxable in Alberta

Amount taxable in Alberta

19.1 The amount taxable in Alberta is the product obtained when taxable income less the royalty tax deduction is multiplied by the Alberta allocation factor.

2003 c34 s7

Division 3
Royalty Tax Deduction

Royalty tax deduction

20(1) In this section,

(a) “first successor pool” in respect of a corporation means the amount by which

(i) a first successor pool amount available to be carried forward that was acquired or deemed to have been acquired pursuant to subsection (7), (8) or (14),

exceeds

(ii) the aggregate of the royalty tax deduction claim amounts deducted under subsection (2) in respect of the pool for all taxation years ending after the pool amount available to be carried forward was acquired or deemed to have been acquired;

(b) “pool amount available to be carried forward” at the end of a taxation year means

(i) in respect of a first successor pool or a second successor pool, the pool amount available to be carried forward at the end of the immediately preceding taxation year, or

(ii) in respect of an unsuccessored pool, the net amount available for the taxation year in respect of the pool

less the royalty tax deduction claim amount in respect of the pool for the taxation year, unless the corporation did not have a permanent establishment in Alberta at some time during the year, in which case the pool amount available to be carried forward at the end of the taxation year is deemed to be nil;

(c) “property income” means an amount equal to such part of the corporation’s income for the year if no deduction were allowed under section 65, 66, 66.1, 66.2, 66.4, 66.5 or 66.7 of the federal Act as may reasonably be regarded as attributable to the production of petroleum, natural gas or related hydrocarbons or metal or minerals from the properties acquired or deemed to have been acquired pursuant to subsection (7), (8) or (14) and in respect of which an amount was carried forward pursuant to subsection (7), (8) or (14) and included in the pool in respect of which the royalty tax deduction claim amount is being determined;

(d) “second successor pool” in respect of a corporation means the amount by which

(i) a second successor pool amount available to be carried forward that was acquired or deemed to have been acquired pursuant to subsection (7), (8) or (14),

exceeds

(e) “unsuccessored pool” in respect of a corporation means the amount determined by the formula:

A + B – C

where

A is the amount deemed to have been acquired pursuant to subsection (7)(a),

B is the aggregate of all amounts each of which is the value of A calculated in accordance with subsection (6) for a taxation year,

C is the aggregate of the royalty tax deduction claim amounts in respect of the pool for all taxation years.

(2) Subject to subsection (3), a corporation’s royalty tax deduction for the year is the aggregate of its royalty tax deduction claim amounts in respect of its unsuccessored pool, first successor pools and second successor pools.

(3) The corporation’s royalty tax deduction for the year cannot exceed its taxable income for the year.

(4) Subject to subsection (3), the royalty tax deduction claim amount of the corporation in respect of each first successor pool or second successor pool cannot exceed the lesser of

(a) the pool amount available to be carried forward at the end of the immediately preceding taxation year, and

(b) property income in the taxation year.

(5) Subject to subsection (3), the royalty tax deduction claim amount of the corporation in respect of the corporation’s unsuccessored pool is the lesser of

(a) the net amount available for the taxation year as calculated under subsection (6), and

(b) taxable income of the corporation for the year less the aggregate of all royalty tax deduction claim amounts for the year in respect of its first successor and second successor pools.

(6) The net amount available for a taxation year in respect of the corporation’s unsuccessored pool is the amount determined by the formula

(A + B)

where

A is the amount, if any, by which the aggregate of

(a) the amounts required to be included in computing the corporation’s income for the year by virtue of paragraph 12(1)(o) of the federal Act as it applies for the purposes of this Act,

(b) the amounts in respect of which no deduction is allowed in computing the corporation’s income for the year by virtue of paragraph 18(1)(m) of the federal Act as it applies for the purposes of this Act, other than amounts described in the definition of “Canadian development expense” in subsection 66.2(5) of the federal Act or the definition of “Canadian oil and gas property expense” in subsection 66.4(5) of the federal Act,

(c) any amounts by which the fair market value, as determined under subsection 69(8) of the federal Act, of petroleum, natural gas or related hydrocarbons or metal or minerals disposed of under dispositions referred to in subsection 69(6) of the federal Act, exceeds the proceeds of disposition, if any, actually received by the corporation in respect of the petroleum, natural gas or related hydrocarbons or metal or minerals so disposed of,

(d) any amounts by which the amount referred to in subsection 69(7) of the federal Act in respect of acquisitions of petroleum, natural gas or related hydrocarbons or metal or minerals referred to in that subsection exceeds the fair market value, as determined under subsection 69(9) of the federal Act, of the petroleum, natural gas or related hydrocarbons or metal or minerals so acquired, and

(e) any amount that would be deemed to have been payable in the year by a trust to the corporation as beneficiary of the trust under subsection 104(29) of the federal Act,

exceeds the aggregate of

(f) the amount of reimbursement received by the corporation under the terms of a contract, where the reimbursement was for an amount paid or payable by the corporation that is required to be included in computing its income or denied as a deduction in computing its income by virtue of paragraph 12(1)(o) or 18(1)(m) of the federal Act as it applies for the purposes of this Act, and

(g) the amount allowed to the corporation for the year under section 8 in its adoption of paragraph 20(1)(v.1) of the federal Act;

B is the pool amount available to be carried forward at the end of the immediately preceding taxation year.

(7) Notwithstanding section 20(1)(b), where at the beginning of the first taxation year to which this section applies, the corporation, or the corporation as a successor corporation or a second successor corporation, had attributed royalty income carry forward as defined in subsection (4) as it formerly read,

(a) the corporation is deemed to have acquired an unsuccessored pool amount available to be carried forward at that time equal to the attributed royalty income carry forward at the end of the immediately preceding taxation year in respect of which it was neither a successor corporation nor a second successor corporation as defined in subsection (5) or (6) as they formerly read,

(b) the corporation, formerly referred to as the successor corporation, is deemed to have acquired a first successor pool amount available to be carried forward at that time equal to the attributed royalty income carry forward at the end of the immediately preceding taxation year in respect of which it was a successor corporation as defined in subsection (5) as it formerly read,

(c) the corporation, formerly referred to as the second successor corporation, is deemed to have acquired a second successor pool amount available to be carried forward at that time equal to the attributed royalty income carry forward at the end of the immediately preceding taxation year in respect of which it was a second successor corporation as defined in subsection (6) as it formerly read, and

(d) the attributed royalty income carry forward of the corporation, the successor corporation and the second successor corporation is deemed to be nil.

(8) Except with respect to an amalgamation or winding‑up to which subsection (10) or (11) applies, if a corporation has, at any time, acquired by purchase, amalgamation, merger, winding‑up or otherwise from another person (in this subsection referred to as the “predecessor”) all or substantially all of the Canadian resource properties of the predecessor,

(a) the corporation is deemed to have acquired

(i) a first successor pool amount available to be carried forward at the beginning of the taxation year in which the corporation acquired the properties equal to the unsuccessored pool amount that the predecessor would have been entitled to carry forward in respect of its taxation year in which the properties were acquired, and

(ii) second successor pool amounts available to be carried forward at the beginning of the taxation year in which the corporation acquired the properties equal to the first successor pool amounts that the predecessor would have been entitled to carry forward in respect of its taxation year in which the properties were acquired,

and

(b) the predecessor’s unsuccessored, first successor and second successor pool amounts available to be carried forward at the end of the taxation year in which it disposed of the properties are deemed to be nil.

(9) Where a corporation is not resident in Canada, the references to taxable income in subsections (3) and (5) and section 19.1 shall be read as a reference to taxable income earned in Canada.

(10) If there has been an amalgamation described in subsection 87(1) of the federal Act of corporations described in subsection 87(1.1) or (1.2) of the federal Act, the new corporation is, for the purposes of this section, deemed to be the same corporation as and a continuation of each predecessor corporation, except that this subsection shall in no respect affect the determination of any predecessor corporation’s fiscal period, taxable income or tax payable.

(11) For the purposes of this section, if the rules in subsection 88(1) of the federal Act applied to the winding‑up of a subsidiary, its parent is deemed to be the same corporation as and a continuation of the subsidiary.

(12) Subsection (8) does not apply to a corporation when the predecessor referred to in that subsection is exempt from tax under Part I of the federal Act on its taxable income, unless the predecessor

(a) is a corporation referred to in paragraph 149(1)(d) of the federal Act, and

(b) is a principal‑business corporation as defined in subsection 66(15) of the federal Act.

(13) If a corporation is a member of a partnership, in computing for a taxation year each of the amounts described in the definition of A in subsection (6), it shall include its share of each of those amounts of the partnership, calculated as if the partnership were a corporation.

(14) For the purposes of this section, where at any time

(a) control of a corporation is acquired by a person or group of persons, or

(b) a corporation ceases to be exempt from tax under this Act on its taxable income,

so that subsection 66.7(10) of the federal Act as adopted by section 11(1) applies for the purposes of this Act, the following rules apply:

(c) the corporation is deemed to have disposed of all of the Canadian resource properties owned by it immediately prior to that time and to have acquired all of those properties from a predecessor immediately after that time;

(d) the corporation’s unsuccessored pool amount available to be carried forward at the beginning of the taxation year commencing at that time is deemed to be nil and the corporation is deemed to have acquired a first successor pool amount available to be carried forward equal to its unsuccessored pool amount available to be carried forward at the end of the taxation year ending immediately before that time;

(e) the corporation’s first successor pool amounts available to be carried forward at the beginning of the taxation year commencing at that time are deemed to be nil and the corporation is deemed to have acquired second successor pool amounts available to be carried forward equal to its first successor pool amounts available to be carried forward at the end of the taxation year ending immediately before that time;

(f) the corporation’s second successor pool amounts available to be carried forward at the beginning of the taxation year commencing at that time are deemed to be nil and no royalty tax deduction claim amounts may be claimed for the taxation year commencing at that time or any future taxation year in respect of those pools.

(15) This section applies to taxation years beginning on or after the day this section comes into force.

(16) Subject to subsection (17), all pool amounts available to be carried forward expire December 31, 2013.

(17) The royalty tax deduction claim for a taxation year that begins in 2013 and ends in 2014 is that proportion of the royalty tax deduction for the year as otherwise determined that the number of days in the taxation year in 2013 bears to the number of days in the taxation year.

RSA 2000 cA‑15 s20;2002 c28 s14;2003 c34 s7;
2004 c21 s3;2005 c25 s2

Special definition for s20

20.1(1) Notwithstanding section 20(1), in section 20(2) to (7), “attributed Canadian royalty income” of a corporation for a taxation year commencing in 1998, 1999, 2000 or 2001 in which it had a permanent establishment in Alberta means the amount, if any, by which the aggregate of

(a) the amounts required to be included in computing the corporation’s income for the year by virtue of paragraph 12(1)(o) of the federal Act as it applies for the purposes of this Act,

(c) any amounts by which the fair market value, as determined under subsection 69(8) of the federal Act, of petroleum, natural gas or related hydrocarbons or metal or minerals disposed of under dispositions referred to in subsection 69(6) of the federal Act exceeds the proceeds of disposition, if any, actually received by it in respect of the petroleum, natural gas or related hydrocarbons or metal or minerals so disposed of,

(d.1) any amount that would be deemed to have been payable in the year by a trust to the corporation as beneficiary of the trust under subsection 104(29) of the federal Act if the reference in that subsection to paragraph 18(1)(l.1) as it applies for the purposes of this Act were struck out,

exceeds the aggregate of

(e) the amount allowed to the corporation for the year under section 8 in its adoption of paragraph 20(1)(v.1) of the federal Act as it applies for the purposes of this Act, and

(f) the amount of any reimbursement received by the corporation under the terms of a contract, where the reimbursement was for an amount paid or payable by the corporation that is required to be included in computing its income or denied as a deduction in computing its income by virtue of paragraph 12(1)(o) or 18(1)(m) of the federal Act as it applies for the purposes of this Act.

(2) For taxation years commencing in 1998, 1999, 2000 or 2001, the amounts referred to in section 20(7) are the corresponding amounts referred to in subsection (1) of this section.

(3) For the purposes of this section, any reference to section 20 is a reference to section 20 as it read before the coming into force of section 7 of the Alberta Corporate Tax Amendment Act, 2003.

RSA 2000 cA‑15 s20.1;2003 c34 s8;2006 c10 s3

Part 5
Computation of Income Tax Payable

Tax payable by corporation

21 Except where otherwise provided in this Part, the tax payable under this Act by a corporation that has a taxation year

(a) ending before April 1, 1987 is 11% of the amount taxable in Alberta for the year,

(b) part of which is before April 1, 1987 and part of which is after March 31, 1987 is the aggregate of

(i) 11% of the proportion of the amount taxable in Alberta for the year that the number of days in the year before April 1, 1987 bears to the number of days in the year, and

(ii) 15% of the proportion of the amount taxable in Alberta for the year that the number of days in the year after March 31, 1987 bears to the number of days in the year,

(d) part of which is before April 1, 1991 and part of which is after March 31, 1991 is the aggregate of

(i) 15% of the proportion of the amount taxable in Alberta for the year that the number of days in the year before April 1, 1991 bears to the number of days in the year, and

(ii) 15.5% of the proportion of the amount taxable in Alberta for the year that the number of days in the year after March 31, 1991 bears to the number of days in the year,

(e) beginning after March 31, 1991 and ending before April 1, 2001 is 15.5% of the amount taxable in Alberta for the year,

(f) part of which is before April 1, 2001 and part of which is after March 31, 2001, is the aggregate of

(i) 15.5% of the proportion of the amount taxable in Alberta for the year that the number of days in the year before April 1, 2001 bears to the number of days in the year, and

(ii) 13.5% of the proportion of the amount taxable in Alberta for the year that the number of days in the year after March 31, 2001 bears to the number of days in the year,

(g) beginning after March 31, 2001 and ending before April 1, 2002 is 13.5% of the amount taxable in Alberta for the year,

(h) part of which is before April 1, 2002 and part of which is after March 31, 2002, is the aggregate of

(i) 13.5% of the proportion of the amount taxable in Alberta for the year that the number of days in the year before April 1, 2002 bears to the number of days in the year, and

(ii) 13.0% of the proportion of the amount taxable in Alberta for the year that the number of days in the year after March 31, 2002 bears to the number of days in the year,

(i) beginning after March 31, 2002 and ending before April 1, 2003 is 13.0% of the amount taxable in Alberta for the year,

(j) part of which is before April 1, 2003 and part of which is after March 31, 2003, is the aggregate of

(i) 13.0% of the proportion of the amount taxable in Alberta for the year that the number of days in the year before April 1, 2003 bears to the number of days in the year, and

(ii) 12.5% of the proportion of the amount taxable in Alberta for the year that the number of days in the year after March 31, 2003 bears to the number of days in the year,

(k) beginning after March 31, 2003 and ending before April 1, 2004 is 12.5% of the amount taxable in Alberta for the year;

(l) part of which is before April 1, 2004 and part of which is after March 31, 2004, is the aggregate of

(i) 12.5% of the proportion of the amount taxable in Alberta for the year that the number of days in the year before April 1, 2004 bears to the number of days in the year, and

(ii) 11.5% of the proportion of the amount taxable in Alberta for the year that the number of days in the year after March 31, 2004 bears to the number of days in the year,

(m) beginning after March 31, 2004 and ending before April 1, 2006 is 11.5% of the amount taxable in Alberta for the year,

(n) part of which is before April 1, 2006 and part of which is after March 31, 2006, is the aggregate of

(i) 11.5% of the proportion of the amount taxable in Alberta for the year that the number of days before April 1, 2006 bears to the number of days in the year, and

(ii) 10.0% of the proportion of the amount taxable in Alberta for the year that the number of days after March 31, 2006 bears to the number of days in the year,

(o) beginning after March 31, 2006 is 10.0% of the amount taxable in Alberta for the year.

RSA 2000 cA‑15 s21;2001 c1 s13;2002 c28 s15;
2003 c34 s9;2004 c21 s4;2006 c10 s4

Division 1
Small Business Deduction

Small business deduction

22(1) In this section,

(a) “active business” carried on by a corporation means any business carried on by the corporation other than a specified investment business or a personal services business and includes an adventure or concern in the nature of trade;

(b) “business limit” of a corporation for a taxation year has the meaning assigned to it by subsection 125(2) of the federal Act, as modified by subsections 125(3), (4), (5) and (5.1) of that Act and as adopted by this Act;

(d) “income of the corporation for the year from an active business” has the meaning assigned to it by subsection 125(7) of the federal Act;

(e) “personal services business” carried on by a corporation in a taxation year has the meaning assigned to it by subsection 125(7) of the federal Act;

(f) “specified investment business” carried on by a corporation in a taxation year has the meaning assigned to it by subsection 125(7) of the federal Act;

(g) “specified partnership income” of a corporation for a taxation year has the meaning assigned to it by subsection 125(7) of the federal Act except that where the fiscal period of a partnership ends after March 31, 2001, paragraph (b) of the definition of A shall be read as follows:

(b) the aggregate of the amounts determined by the formulas

(i) K x P,
L

(ii) K x Q,
L

(iii) K x R,
L

(iv) K x S,
L

(v) K x T,
L

(vi) K x U, and
L

(vii) K x V
L

where

K and L have the meaning assigned to them in the definition of specified partnership income in subsection 125(7) of the federal Act, and

P is the lesser of

(i) $200 000, and

(ii) the product obtained when $548 is multiplied by the total of all amounts each of which is the number of days contained in a fiscal period of the partnership ending in the year that were before April 1, 2001,

Q is the lesser of

(i) $300 000, and

(ii) the product obtained when $822 is multiplied by the total of all amounts each of which is the number of days contained in a fiscal period of the partnership ending in the year that were after March 31, 2001 and before April 1, 2002,

R is the lesser of

(i) $350 000, and

(ii) the product obtained when $959 is multiplied by the total of all amounts each of which is the number of days contained in a fiscal period of the partnership ending in the year that were after March 31, 2002 and before April 1, 2003,

S is the lesser of

(i) $400 000, and

(ii) the product obtained when $1096 is multiplied by the total of all amounts each of which is the number of days contained in a fiscal period of the partnership ending in the year that were after March 31, 2003 and before April 1, 2007,

T is the lesser of

(i) $430 000, and

(ii) the product obtained when $1175 is multiplied by the total of all amounts each of which is the number of days contained in a fiscal period of the partnership ending in the year that were after March 31, 2007 and before April 1, 2008,

U is the lesser of

(i) $460 000, and

(ii) the product obtained when $1261 is multiplied by the total of all amounts each of which is the number of days contained in a fiscal period of the partnership ending in the year that were after March 31, 2008 and before April 1, 2009,

and

V is the lesser of

(i) $500 000, and

(ii) the product obtained when $1370 is multiplied by the total of all amounts each of which is the number of days contained in a fiscal period of the partnership ending in the year that were after March 31, 2009;

(h) “specified partnership loss” of a corporation for a taxation year has the meaning assigned to it by subsection 125(7) of the federal Act;

(i) “specified shareholder” of a corporation in a taxation year has the meaning assigned to it by subsection 248(1) of the federal Act.

(1.1) For the purposes of this section, if an amount paid or payable to a corporation, in this subsection referred to as the “recipient corporation”, by another corporation, in this subsection referred to as the “associated corporation”, with which the recipient corporation was associated in any particular taxation year, would otherwise be included in computing the income of the recipient corporation for the particular year from a source in Canada that is a property,

(a) the portion of the amount that was or may be deductible in computing the income of the associated corporation for any taxation year from an active business carried on by it in Canada is deemed to be income of the recipient corporation for the particular year from an active business carried on by it in Canada, and

(b) any outlay or expense, to the extent that it may reasonably be regarded as having been made or incurred by the recipient corporation for the purpose of gaining or producing the amount determined in clause (a), is deemed to have been made or incurred by the recipient corporation for the purpose of gaining or producing that income.

(2) Subject to subsection (2.01), there may be deducted from the tax payable under section 21 for a taxation year ending before April 1, 2001 by a corporation that was, throughout the year, a Canadian‑controlled private corporation, an amount equal to the product obtained when the small business allocation factor is multiplied by the applicable percentage for the taxation year of the least of

(a) the amount, if any, by which the aggregate of

(i) the aggregate of all amounts each of which is the income of the corporation for the year from an active business carried on in Canada other than the income of the corporation for the year from a business carried on by it as a member of a partnership, and

(ii) the specified partnership income of the corporation for the year

exceeds the aggregate of

(iii) the aggregate of all amounts each of which is a loss of the corporation for the year from an active business carried on in Canada other than a loss of the corporation for the year from a business carried on by it as a member of a partnership,

(iv) the specified partnership loss of the corporation for the year, and

(v) the corporation’s royalty tax deduction for the year,

(b) the amount, if any, by which the corporation’s taxable income for the year exceeds the aggregate of

(i) the aggregate of the amounts determined under subparagraphs 125(1)(b)(i) and (ii) of the federal Act,

(i.1) that part, if any, of the amount taxable in Alberta for the year that is not subject to income tax under this Act, and

(ii) the corporation’s royalty tax deduction for the year,

and

(2.01) No amount may be deducted under subsection (2) for a taxation year in excess of the product obtained when the amount determined under section 19.1 is multiplied by the applicable percentage for the taxation year.

(2.1) For the purposes of subsections (2) and (2.01), the applicable percentage

(a) for a taxation year ending before April 1, 1987 is 6%,

(b) for a taxation year, part of which is before April 1, 1987 and part of which is after March 31, 1987 is the aggregate of

(i) the proportion of 6% that the number of days in the year before April 1, 1987 bears to the number of days in the year, and

(ii) the proportion of 10% that the number of days in the year after March 31, 1987 bears to the number of days in the year,

(d) for a taxation year, part of which is before April 1, 1990 and part of which is after March 31, 1990 is the aggregate of

(i) the proportion of 10% that the number of days in the year before April 1, 1990 bears to the number of days in the year, and

(ii) the proportion of 9% that the number of days in the year after March 31, 1990 bears to the number of days in the year,

(e) for a taxation year beginning after March 31, 1990 and ending before April 1, 1991 is 9%,

(f) for a taxation year, part of which is before April 1, 1991 and part of which is after March 31, 1991 is the aggregate of

(i) the proportion of 9% that the number of days in the year before April 1, 1991 bears to the number of days in the year, and

(ii) the proportion of 9.5% that the number of days in the year after March 31, 1991 bears to the number of days in the year,

and

(g) for a taxation year beginning after March 31, 1991 and ending before April 1, 2001 is 9.5%.

(2.11) Subject to subsection (2.13), there may be deducted from the tax payable under section 21 for a taxation year beginning before April 1, 2001 and ending after March 31, 2001 by a corporation that was, throughout the taxation year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 9.5%;

(c) the proportion of the least of the following amounts that the number of days in the year before April 1, 2001 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) the corporation’s business limit for the year.

(2.12) There may be deducted from the tax payable under section 21 for a taxation year ending after March 31, 2001 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 8.5%;

(c) the proportion of the least of the following amounts that the number of days in the year after March 31, 2001 and before April 1, 2002 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 150% of the corporation’s business limit for the year.

(2.121) There may be deducted from the tax payable under section 21 for a taxation year ending after March 31, 2002 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 8.5%;

(c) the proportion of the least of the following amounts that the number of days in the year after March 31, 2002 and before January 1, 2003 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 175% of the corporation’s business limit for the year.

(2.122) There may be deducted from the tax payable under section 21 for a taxation year ending after December 31, 2002 by a corporation that was, throughout the year, a Canadian-controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 8.5%;

(c) the proportion of the least of the following amounts that the number of days in the year after December 31, 2002 and before April 1, 2003 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 155.56% of the corporation’s business limit for the year.

(2.123) There may be deducted from the tax payable under section 21 for a taxation year ending after March 31, 2003 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 8.5%;

(c) the proportion of the least of the following amounts that the number of days in the year after March 31, 2003 and before January 1, 2004 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 177.78% of the corporation’s business limit for the year.

(2.124) There may be deducted from the tax payable under section 21 for a taxation year ending after December 31, 2003 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 8.5%;

(c) the proportion of the least of the following amounts that the number of days in the year after December 31, 2003 and before January 1, 2005 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 160% of the corporation’s business limit for the year.

(2.125) Repealed 2006 c10 s5.

(2.126) There may be deducted from the tax payable under section 21 for a taxation year ending after December 31, 2004 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 8.5%;

(c) the proportion of the least of the following amounts that the number of days in the year after December 31, 2004 and before April 1, 2006 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 133.34% of the corporation’s business limit for the year.

(2.127) There may be deducted from the tax payable under section 21 for a taxation year ending after March 31, 2006 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 7.0%;

(c) the proportion of the least of the following amounts that the number of days in the year after March 31, 2006 and before January 1, 2007 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 133.34% of the corporation’s business limit for the year.

(2.128) There may be deducted from the tax payable under section 21 for a taxation year ending after December 31, 2006 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 7%;

(c) the proportion of the least of the following amounts that the number of days in the year after December 31, 2006 and before April 1, 2007 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) the corporation’s business limit for the year.

(2.129) There may be deducted from the tax payable under section 21 for a taxation year ending after March 31, 2007 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 7%;

(c) the proportion of the least of the following amounts that the number of days in the year after March 31, 2007 and before April 1, 2008 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 107.5% of the corporation’s business limit for the year.

(2.1291) There may be deducted from the tax payable under section 21 for a taxation year ending after March 31, 2008 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 7%;

(c) the proportion of the least of the following amounts that the number of days in the year after March 31, 2008 and before April 1, 2009 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 115% of the corporation’s business limit for the year.

(2.1292) There may be deducted from the tax payable under section 21 for a taxation year ending after March 31, 2009 by a corporation that was, throughout the year, a Canadian‑controlled private corporation an amount equal to the product obtained by the multiplication of the following:

(a) the small business allocation factor for the year;

(b) 7%;

(c) the proportion of the least of the following amounts that the number of days in the year after March 31, 2009 bears to the number of days in the year:

(i) the amount determined under subsection (2)(a);

(ii) the amount determined under subsection (2)(b);

(iii) 125% of the corporation’s business limit for the year.

(2.13) Repealed 2004 c21 s5.

(2.2) For the purposes of subsections (2), (2.11), (2.12), (2.121), (2.122), (2.123), (2.124), (2.125), (2.126), (2.127), (2.128), (2.129), (2.1291) and (2.1292), the “small business allocation factor” is the Alberta allocation factor that would be determined if, during the taxation year, the corporation had no permanent establishment in a country other than Canada.

(3) Subsections 125(3) and (4) of the federal Act apply for the purposes of this section except that

(a) any references to the Minister are deemed to be references to the Provincial Minister, and

(b) any agreement filed with the Provincial Minister may not allocate any different amount to a corporation than the amount allocated to the corporation pursuant to the agreement filed with the Minister of National Revenue pursuant to subsection 125(3) of the federal Act.

(4) Subsections 125(5), (5.1) and (6) of the federal Act apply for the purposes of this section.

RSA 2000 cA‑15 s22;2001 c1 s14;2002 c28 s16;
2003 c34 s10;2004 c21 s5;2006 c10 s5;2007 c25 s4

Over‑integration tax payable

22.01(1) If a corporation paid eligible dividends during a taxation year and has an over‑integration tax adjustment for that taxation year or for any prior taxation year, there shall be added to the tax payable for the taxation year under this Act by the corporation the amount determined under subsection (2).

(2) The over‑integration tax payable for a taxation year is equal to the lesser of

(a) the amount determined by the formula

A x B x 10%

where

A is the amount of eligible dividends paid in the taxation year and after 2008,

B is the rolling average allocation rate at the end of the taxation year determined in accordance with subsection (7),

and

(b) the aggregate of the over‑integration tax adjustments of the corporation determined in accordance with subsection (5).

(3) If the least of the amounts referred to in section 22 for purposes of computing a corporation’s small business deduction for a taxation year is greater than the amount of the corporation’s business limit for that year, the over‑integration tax adjustment for the taxation year is equal to 6.7% of the product obtained when the difference between the least of those amounts and the business limit for the year is multiplied by the Alberta allocation factor for the year.

(4) Notwithstanding subsection (3), the over‑integration tax adjustment of a corporation for a taxation year that commences before January 1, 2009 and ends after December 31, 2008 is equal to 6.7% of the amount determined by the formula

(A – B) x C/D x E

where

A is the least of the amounts referred to in section 22 for purposes of computing the corporation’s small business deduction for the taxation year;

B is the corporation’s business limit for the taxation year;

C is the number of days in the taxation year after December 31, 2008;

D is the number of days in the taxation year;

E is the Alberta allocation factor for the taxation year.

(5) The aggregate of the over‑integration tax adjustments of the corporation is the amount by which the total of the over‑integration tax adjustments of the corporation for all taxation years exceeds the amounts applied to reduce or eliminate an over‑integration tax adjustment for a taxation year pursuant to subsection (6).

(6) Over‑integration tax adjustments for preceding taxation years shall be reduced or eliminated at the beginning of a taxation year by an amount not exceeding the amount of the over‑integration tax payable for the immediately preceding taxation year, except that an over‑integration tax adjustment for a taxation year cannot be reduced or eliminated until over‑integration tax adjustments for preceding taxation years have been eliminated.

(7) The rolling average allocation rate at the end of a particular taxation year is equal to the quotient obtained when the total of the Alberta allocation factors for

(a) all taxation years ending on or before the end of the particular year and within the calendar year in which the particular year ends, and

(b) all taxation years ending within the immediately preceding 2 calendar years

is divided by the total number of those taxation years.

(8) This section comes into force on January 1, 2009 except that

(a) for taxation years ending in 2009, subsection (7) shall be read as “The rolling average allocation rate at the end of the taxation year is equal to the quotient obtained when the total of the Alberta allocation factors for all taxation years ending on or before the end of the year and within the calendar year is divided by the total number of those taxation years”,

(a.1) for taxation years ending in 2009, the definition of B in subsection (4) shall be read as “B is equal to $500 000 for the taxation year”, and

(b) for taxation years ending in 2010, subsection (7) shall be read as “The rolling average allocation rate at the end of the taxation year is equal to the quotient obtained when the total of the Alberta allocation factors for all taxation years ending on or before the end of the particular year and within the immediately preceding calendar year is divided by the total number of those taxation years”.

2008 c29 s5;2009 c15 s4

22.1 Repealed 2001 c1 s15.

Manufacturing and processing profits deduction

22.2(1) In this section, except as otherwise provided in subsections (7) and (8),

(a) “adjusted business income” of a corporation for a taxation year has the meaning assigned to it by section 5202 of the federal regulations;

(b) “Alberta cost of manufacturing and processing capital” of a corporation for a taxation year means 100/85 of that portion of the cost of capital of the corporation for that year that reflects the extent to which each property included in that calculation was used directly in qualified activities of the corporation during the year, but the amount so calculated shall not exceed the cost of capital of the corporation for the year;

(c) “Alberta cost of manufacturing and processing labour” of a corporation for a taxation year means 100/75 of that portion of the cost of labour of the corporation for that year that reflects the extent to which

(i) the salaries and wages included in that calculation were paid or payable to persons for the portion of their time that they were directly engaged in qualified activities of the corporation during the year, and

(ii) the other amounts included in that calculation were paid or payable to persons for the performance of functions that would be directly related to qualified activities of the corporation during the year if those persons were employees of the corporation,

but the amount so calculated shall not exceed the cost of labour of the corporation for the year;

(d) “Canadian investment income” of a corporation for a taxation year has the meaning assigned to it by subsection 129(4) of the federal Act;

(e) “cost of capital” of a corporation for a taxation year has the meaning assigned to it by section 5202 of the federal regulations;

(f) “cost of labour” of a corporation for a taxation year has the meaning assigned to it by section 5202 of the federal regulations;

(g) “foreign investment income” of a corporation for a taxation year has the meaning assigned to it by subsection 129(4) of the federal Act;

(h) “manufacturing or processing” does not include

(i) farming or fishing,

(ii) logging,

(iii) construction,

(iv) operating an oil or gas well or extracting petroleum or natural gas from a natural accumulation of petroleum or natural gas,

(v) extracting minerals from a mineral resource,

(vi) processing

(A) ore, other than iron ore or tar sands ore, from a mineral resource located in Canada to any stage that is not beyond the prime metal stage or its equivalent,

(B) iron ore from a mineral resource located in Canada to any stage that is not beyond the pellet stage or its equivalent, or

(C) tar sands ore from a mineral resource located in Canada to any stage that is not beyond the crude oil stage or its equivalent,

(vii) producing industrial minerals,

(vii.1), (viii) repealed 1998 c40 s1(8),

(ix) producing or processing electrical energy or steam, for sale,

(x) processing natural gas as part of the business of selling or distributing gas in the course of operating a public utility,

(x.1) processing heavy crude oil recovered from a natural reservoir in Canada to a stage that is not beyond the crude oil stage or its equivalent,

(x.2) Canadian field processing, or

(xi) any manufacturing or processing of goods for sale or lease, if, for any taxation year of a corporation in respect of which the expression is being applied, less than 10% of its gross revenue from all active businesses carried on in Canada was from

(A) the selling or leasing of goods manufactured or processed in Canada by it, and

(B) the manufacturing or processing in Canada of goods for sale or lease, other than goods for sale or lease by it;

(i) “qualified activities” means

(i) any of the following activities when they are performed in Alberta in connection with manufacturing or processing, not including the activities listed in clause (h)(i) to (x), in Alberta of goods for sale or lease:

(A) engineering design of products and production facilities;

(B) receiving and storing of raw materials;

(D) inspecting and packaging of finished goods;

(E) line supervision;

(F) production support activities including security, cleaning, heating and factory maintenance;

(G) quality and production control;

(H) repair of production facilities;

(I) pollution control;

(ii) all other activities when they are performed in Alberta directly in connection with manufacturing or processing, not including the activities in clause (h)(i) to (x), in Alberta of goods for sale or lease, and

(iii) scientific research and experimental development, as defined in section 2900 of the federal regulations, carried out in Alberta,

but does not include

(iv) storing, shipping, selling and leasing of finished goods,

(v) purchasing of raw materials,

(vi) administration, including clerical and personnel activities,

(vii) purchase and resale operations,

(viii) data processing, or

(ix) providing facilities for employees, including cafeterias, clinics and recreational facilities;

(j) “salaries and wages” has the meaning assigned to it by section 5202 of the federal regulations.

(2) Subject to subsection (3), “Alberta manufacturing and processing profits” of a corporation for a taxation year means that proportion of its adjusted business income that the aggregate of its Alberta cost of manufacturing and processing capital for the year and its Alberta cost of manufacturing and processing labour for the year is of the aggregate of its cost of capital for the year and its cost of labour for the year.

(3) The “Alberta manufacturing and processing profits” of a corporation for a taxation year are deemed to be equal to the corporation’s adjusted business income for the year if

(a) the activities of the corporation during the year were primarily manufacturing or processing in Canada of goods for sale or lease,

(b) the aggregate of

(i) the aggregate of all amounts each of which is the income of the corporation for the year from an active business minus the aggregate of all amounts each of which is the loss of the corporation for the year from an active business, and

(ii) if the corporation is associated in the year with a Canadian corporation, the aggregate of all amounts each of which is the income of the latter corporation from an active business for its taxation year coinciding with or ending in the year,

did not exceed $200 000,

(c) the corporation was not engaged in any of the activities listed in subclause (1)(h)(i) to (x) at any time during the year, and

(d) the corporation did not carry on any active business outside Canada at any time during the year.

(4) For the purposes of subsection (3)(b)(ii), if a corporation is associated in the year with a Canadian corporation that did not have a permanent establishment in Alberta in its taxation year referred to in subsection (3)(b)(ii), the income of the latter corporation from an active business is deemed to be its income from an active business as determined under the federal Act.

(5) Subject to subsection (10), there may be deducted from the tax otherwise payable under section 21 for a taxation year by a corporation an amount equal to 1% of the lesser of

(a) the amount, if any, by which

(i) the corporation’s Alberta manufacturing and processing profits for the year

exceed

(ii) the product obtained when the least of the amounts determined under section 22(2)(a) to (c) in respect of the corporation for the year is multiplied by the Alberta allocation factor,

and

(b) the amount, if any, by which the amount of the corporation’s amount taxable in Alberta for the year exceeds the aggregate of

(i) the amount determined under clause (a)(ii), and

(ii) where the corporation was a Canadian‑controlled private corporation throughout the year, the product obtained when the corporation’s aggregate investment income for the year (within the meaning assigned by subsection 129(4) of the federal Act) is multiplied by the Alberta allocation factor.

(6) The amount determined under subsection (5) for a taxation year,

(a) where the 1992 taxation year of the corporation ends after June 30, 1992, is the product obtained when 50% of the amount otherwise determined is multiplied by the proportion that the number of days in the taxation year after June 30, 1992 bears to the number of days in the taxation year,

(b) where the corporation has a taxation year that commences before July 1, 1992 and ends after December 31, 1992, is the aggregate of the products obtained when

(i) 50% of the amount otherwise determined is multiplied by the proportion that the number of days in the taxation year after June 30, 1992 and before 1993 is to the number of days in the taxation year, and

(ii) the amount otherwise determined is multiplied by the proportion that the number of days in the taxation year in 1993 is to the number of days in the taxation year,

and

(c) where the corporation has a taxation year that commences after June 30, 1992 and ends in 1993, is the aggregate of the products obtained when

(i) 50% of the amount otherwise determined is multiplied by the proportion that the number of days in the taxation year before 1993 is to the number of days in the taxation year, and

(ii) the amount otherwise determined is multiplied by the proportion that the number of days in the taxation year after 1992 is to the number of days in the taxation year.

(7) Where a corporation has resource activities for a taxation year pursuant to subsection 5203(2) of the federal regulations the following applies, except as otherwise provided in subsection (8):

(a) “adjusted business income” of the corporation for the year has the meaning assigned to it by subsection 5203(1) of the federal regulations;

(b) “cost of capital” of the corporation for the year has the meaning assigned to it by subsection 5203(1) of the federal regulations;

(c) “cost of labour” of the corporation for the year has the meaning assigned to it by subsection 5203(1) of the federal regulations.

(8) Where a corporation is a member of a partnership at any time in the taxation year of the corporation, the following applies:

(a) “cost of capital” of the corporation for the year has the meaning assigned to it by section 5204 of the federal regulations;

(b) “cost of labour” of the corporation for the year has the meaning assigned to it by section 5204 of the federal regulations;

(c) “Alberta cost of manufacturing and processing capital” of the corporation for the year has the meaning assigned to the words “cost of manufacturing and processing capital” by section 5204 of the federal regulations except that the reference to “qualified activities” is deemed to be a reference to “qualified activities” as defined in subsection (1)(i);

(d) “Alberta cost of manufacturing and processing labour” of the corporation for the year has the meaning assigned to the words “cost of manufacturing and processing labour” by section 5204 of the federal regulations except that the reference to “qualified activities” is deemed to be a reference to “qualified activities” as defined in subsection (1)(i).

(9) For the purposes of subsection (1)(h)(xi), if a corporation was a member of a partnership at any time in a taxation year, paragraphs 125.1(4)(a) and (b) of the federal Act apply.

(10) Where a corporation has a taxation year beginning before April 1, 2001 and ending after March 31, 2001, the amount determined under subsection (5) for that taxation year is the proportion of the amount otherwise determined that the number of days in the taxation year before April 1, 2001 bears to the number of days in the taxation year.

(11) This section does not apply to taxation years beginning after March 31, 2001.

RSA 2000 cA‑15 s22.2;2001 c1 s16

Division 2
Foreign Investment Income

Foreign investment income

23(1) For the purposes of this section, an amount referred to in subparagraph 126(1)(b)(i) of the federal Act from sources in a country other than Canada shall be referred to as “foreign investment income”.

(2) If a corporation has included foreign investment income in computing its income for a taxation year and is entitled to a deduction under subsection 126(1) of the federal Act in respect of income or profits tax paid to a country other than Canada, it may deduct from tax otherwise payable an amount equal to the least of

(a) the Alberta allocation factor multiplied by,

(i) if the taxation year ends before April 1, 1987, 11% of the foreign investment income for the year from sources in that country,

(ii) if part of the taxation year is before April 1, 1987 and part of the taxation year is after March 31, 1987, the aggregate of

(A) 11% of the proportion of the foreign investment income for the year from sources in that country that the number of days in the year before April 1, 1987 bears to the number of days in the year, and

(B) 15% of the proportion of the foreign investment income for the year from sources in that country that the number of days in the year after March 31, 1987 bears to the number of days in the year,

(iii) if the taxation year begins after March 31, 1987 and ends before April 1, 1991, 15% of the foreign investment income for the year from sources in that country, or

(iv) if the taxation year ends after March 31, 1991, the amount determined when the foreign investment income for the year from sources in that country is multiplied by the proportion that tax payable under section 21 for the year is of the amount taxable in Alberta for the year,

(b) the Alberta allocation factor multiplied by the amount, if any, by which

(i) the non‑business‑income tax paid by the corporation for the year to that country, except any amount that may be regarded as having been paid in respect of income from a share of the capital stock of a foreign affiliate of the corporation,

exceeds the aggregate of

(ii) the amount deductible under subsection 126(1) of the federal Act in respect thereof, and

(iii) the greater of the amount deducted under subsection 20(12) of the federal Act in determining income under the federal Act and the amount deducted under subsection 20(12) of the federal Act as adopted by this Act in determining income under this Act,

and

(2.1) For the purposes of this section, the following definitions have the meaning assigned to them in subsection 126(7) of the federal Act:

(a) “economic profit”, “qualifying incomes”, “qualifying losses”, “related transactions”, “tax-exempt income” and “taxing country”, and

(b) “non-business income tax”, read without reference to paragraph (c) of the definition.

(2.2) Subsections 126(4), (4.1), (4.2), (4.3), (4.4), (8) and (9) of the federal Act apply for the purposes of computing a corporation’s non‑business‑income tax.

(3) For the purposes of this section,

(a) the government of a country other than Canada includes the government of a state, province or other political subdivision of that country,

(b) where a taxpayer’s income for a taxation year is in whole or in part from sources in more than one country other than Canada, subsection (2) shall be read as providing for separate deductions in respect of each of the countries other than Canada, and

(c) if any income from a source in a particular country would be tax-exempt income but for the fact that a portion of the income is subject to an income or profits tax imposed by the government of a country other than Canada, the portion is deemed to be income from a separate source in the particular country.

(4) In applying this section and subsections 20(12) and (12.1) of the federal Act as made applicable by section 8 of this Act in respect of an authorized foreign bank,

(a) the bank is deemed, for the purposes of this section, to be resident in Canada in respect of its Canadian banking business,

(b) the reference in subsection 20(12) of the federal Act to a country other than Canada shall be read as a reference to a country that is neither Canada nor a country in which the taxpayer is resident at any time in the taxation year,

(1) For the purposes of this section, an amount calculated under subparagraph 126(1)(b)(i) of the federal Act in respect of a corporation’s Canadian banking business from sources in a country that is neither Canada nor the country in which the corporation is resident at any time in the taxation year shall be referred to as foreign investment income.

(d) subsection (2)(a)(iv) shall be read as follows:

(A) the corporation’s taxable income earned in Canada for the year, and

(B) the total of the corporation’s income for the year from its Canadian banking business and the amount determined in respect of the corporation under subparagraph 115(1)(a)(vii) of the federal Act as it applies for purposes of this Act for the year,

(e) in computing the non‑business‑income tax paid by the bank for a taxation year to the government of a country other than Canada, there shall be included only taxes that relate to amounts that are included in computing the bank’s taxable income earned in Canada from its Canadian banking business, and

(f) the definition of tax‑exempt income in subsection 126(7) of the federal Act shall be read as follows:

“tax‑exempt income” means income of a corporation from a source in a particular country in respect of which

(a) the corporation is, because of a comprehensive agreement or convention for the elimination of double tax on income that has the force of law in the particular country and to which a country in which the corporation is resident is a party, entitled to an exemption from all income or profits taxes imposed in the particular country to which the agreement or convention applies, and

(b) no income or profits tax to which the agreement or convention does not apply is imposed in the particular country.

RSA 2000 cA‑15 s23;2001 c1 ss17,63;2002 c28 s17;
2008 c29 s6

Division 3
Political Contributions Tax Credit

Political contributions tax credit

24(1) In this section,

(a) “registered candidate” means a person who is a registered candidate under the Election Finances and Contributions Disclosure Act;

(b) “registered constituency association” means a registered constituency association under the Election Finances and Contributions Disclosure Act;

(c) “registered party” means a political party that is a registered party under the Election Finances and Contributions Disclosure Act.

(2) In respect of the aggregate amount of contributions under the Election Finances and Contributions Disclosure Act contributed by a corporation during the taxation year to a registered party, registered constituency association or registered candidate, that corporation may reduce the amount of tax that it would be required to pay under this Part after claiming the deductions under sections 22, 22.2 and 23 by an amount equal to

(a) in the case of a registered party, a registered constituency association or a registered candidate who is a candidate under the Election Act, for contributions made on or after January 1, 1982 but before January 1, 2004, in respect of an election under the Election Act,

(i) 75% of the amount contributed if the aggregate amount of contributions by the corporation does not exceed $150,

(ii) $112.50 plus 50% of the amount contributed in excess of $150 if the aggregate amount of contributions by the corporation exceeds $150 but does not exceed $825, or

(iii) the lesser of

(A) $750, and

(B) $450 plus 33 1/3% of the amount contributed in excess of $825,

if the aggregate amount of contributions by the corporation exceeds $825,

and

(b) in the case of a registered party that has nominated a candidate under the Senatorial Selection Act or a registered candidate who is a candidate under the Senatorial Selection Act, for contributions made on or after January 1, 1989 but before January 1, 2004, in respect of an election under the Senatorial Selection Act,

(i) 75% of the amount contributed if the aggregate amount of contributions by the corporation does not exceed $150,

(ii) $112.50 plus 50% of the amount contributed in excess of $150 if the aggregate amount of contributions by the corporation exceeds $150 but does not exceed $825, or

(iii) the lesser of

(A) $750, and

(B) $450 plus 33 1/3% of the amount contributed in excess of $825,

if the aggregate amount of contributions by the corporation exceeds $825,

or the amount of the tax payable after claiming the deductions under sections 22, 22.2 and 23, whichever is the lesser.

(2.1) In respect of the aggregate amount of contributions under the Election Finances and Contributions Disclosure Act contributed by a corporation during the taxation year to a registered party, registered constituency association or registered candidate, that corporation may reduce the amount of tax that it would be required to pay under this Part after claiming the deductions under sections 22 and 23 by an amount equal to

(a) in the case of a registered party, a registered constituency association or a registered candidate who is a candidate under the Election Act, for contributions made on or after January 1, 2004 in respect of an election under the Election Act,

(i) 75% of the amount contributed if the aggregate amount of contributions by the corporation does not exceed $200,

(ii) $150 plus 50% of the amount contributed in excess of $200 if the aggregate amount of contributions by the corporation exceeds $200 but does not exceed $1100, or

(iii) if the aggregate amount of contributions by the corporation exceeds $1100, the lesser of

(A) $1000, and

(B) $600 plus 33 1/3 % of the amount contributed in excess of $1100,

and

(b) in the case of a registered party that has nominated a candidate under the Senatorial Selection Act or a registered candidate who is a candidate under the Senatorial Selection Act, for contributions made on or after January 1, 2004 in respect of an election under the Senatorial Selection Act,

(i) 75% of the amount contributed if the aggregate amount of contributions by the corporation does not exceed $200,

(ii) $150 plus 50% of the amount contributed in excess of $200 if the aggregate amount of contributions by the corporation exceeds $200 but does not exceed $1100, or

(iii) if the aggregate amount of contributions by the corporation exceeds $1100, the lesser of

(A) $1000, and

(B) $600 plus 33 1/3 % of the amount contributed in excess of $1100.

(3) Payment of each amount that is included in the aggregate amount of contributions in respect of which a deduction is claimed under subsection (2) or (2.1) shall be proved by filing with the Provincial Minister receipts for them signed on behalf of the registered party, registered constituency association or registered candidate, as the case may be.

(4) Where a corporation was, at the end of a taxation year of a partnership, a member of the partnership, its share of any amount contributed by the partnership in that taxation year that would, if the partnership were a corporation, be an amount contributed referred to in subsection (2) or (2.1), is, for the purposes of this section, deemed to be an amount contributed by the corporation in its taxation year in which the taxation year of the partnership ended.

RSA 2000 cA‑15 s24;2001 c1 s63;2002 c28 s34;
2004 c23 s98

Transitional

24.1(1) In this section, “qualifying contribution” means a contribution in respect of which the taxpayer would be entitled to a tax credit under section 24(2) or (2.1).

(2) Where a taxpayer has a taxation year that commences in 2003 and ends in 2004 and has made qualifying contributions in that taxation year in both 2003 and 2004, the amount of the credit to which the corporation is entitled under those sections is determined by the formula

75%A + 75%B + 50%C + 50%D + 1/3E + 1/3F

where

A is the lesser of

(a) total qualifying contributions made in the taxation year, and

(b) $150;

B is the lesser of

(a) total qualifying contributions made in the taxation year in 2004 minus A, and

(b) $50;

C is the lesser of

(a) total qualifying contributions made in the taxation year minus (A+B), and

(b) $675;

D is the lesser of

(a) total qualifying contributions made in the taxation year in 2004 minus (A+B+C), and

(b) $225;

E is the lesser of

(a) total qualifying contributions made in the taxation year minus (A+B+C+D), and

(b) $900;

F is the lesser of

(a) total qualifying contributions made in the taxation year in 2004 minus (A+B+C+D+E), and

(b) $300.

2004 c23 s98

Division 4
Alberta Rental Investment Tax Credit

Rental investment tax credit

25(1), (2) Repealed 2002 c28 s18.

(3) A corporation may reduce the amount of tax that it would be required to pay under this Part after complying with sections 21, 22, 22.2, 23 and 24 by an amount equal to the lesser of

(a) the amount, if any, by which the aggregate of the maximum eligible incentive for all qualifying Alberta multiple unit residential buildings of the corporation exceeds the aggregate of all tax credits allowed in a previous taxation year to the corporation under this section, and

(b) the tax payable under this Act after claiming the deductions under sections 22, 22.2, 23 and 24.

(4), (4.1), (5) Repealed 2002 c28 s18.

RSA 2000 cA‑15 s25;2001 c1 s63;2002 c28 s18

Part 6
Refundable Tax Credits

Division 1
Royalty Tax Credit

Interpretation

26(1) In this Division,

(a) “above‑limit corporation” means a corporation that

(i) would, if its taxation year for the purposes of computing its income under the federal Act and this Act had been the 12‑month period ending August 31, 1982, have had Alberta crown royalty for that taxation year in excess of $5 333 333,

(ii) was associated with one or more corporations on August 24, 1982 pursuant to subsection (1.6) and the corporation and all of the corporations with which it was associated at that time would, if the taxation year of the corporation and each of the corporations with which it was associated at that time for the purposes of computing their income under the federal Act and this Act had been the 12‑month period ending August 31, 1982, have had Alberta crown royalty for that taxation year that would in aggregate exceed $5 333 333, or

(iii) is deemed to be an above‑limit corporation by the Provincial Minister pursuant to subsection (1.3);

(b) “above‑limit partnership” means a partnership in existence on August 24, 1982 each of the members of which, on August 24, 1982, was an above‑limit corporation;

(d) “Alberta resource property” means a property that is

(i) a right, licence or privilege to explore for, drill for or take petroleum, natural gas or petroleum and natural gas in Alberta,

(ii) a petroleum or natural gas well in Alberta,

(iii) a rental or royalty computed by reference to the amount or value of production from a petroleum or natural gas well in Alberta, or

(iv) a right or interest of any nature whatsoever or howsoever described in any property referred to in subclauses (i) to (iii), including a right to receive proceeds of disposition in respect of a disposition of that property;

(d.1) “crown royalty shelter” means a corporation’s crown royalty shelter determined under section 26.1;

(e) “exempt corporation” means a corporation that

(i) is an above‑limit corporation, or

(ii) is formed at any time after August 24, 1982 on the amalgamation of 2 or more corporations, each of which was an exempt corporation immediately prior to the amalgamation;

(e.1) “qualified royalty” means a royalty receivable by or payable to the Crown in right of Alberta

(i) under an agreement as defined in the Mines and Minerals Act granting petroleum rights, natural gas rights or petroleum and natural gas rights and, for greater certainty, a qualified royalty under this subclause does not include any royalty under an agreement as defined in the Mines and Minerals Act granting rights to oil sands as defined in the Mines and Minerals Act, or

(ii) pursuant to the Oil Sands Royalty Regulation, 1984 (AR 166/84) in respect of a prescribed lease;

(f) “restricted corporation” means a corporation described in subsection (1.12);

(g) “restricted partnership” means a partnership described in subsection (1.13);

(h) “restricted resource property” means

(i) any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta with a finished drilling date on or before August 24, 1982 where the right or interest or part thereof was owned by an above‑limit corporation or an above‑limit partnership on August 24, 1982, and includes a right or interest or part thereof acquired by an above‑limit corporation or an above‑limit partnership after August 24, 1982 pursuant to the terms of a contract, other than an option, entered into and enforceable on or before that date, but does not include any right or interest or part thereof that is disposed of by an above‑limit corporation or by an above‑limit partnership after August 24, 1982 pursuant to the terms of a contract, other than an option, entered into and enforceable on or before that date,

(ii) if subclause (i) does not apply, any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta that was disposed of after its finished drilling date and after April 7, 1986 by a restricted corporation, or

(iii) if subclause (i) does not apply, any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta that was disposed of after its finished drilling date and after April 7, 1986 by a restricted partnership;

(i) “weighted average rate” means the weighted average rate determined in accordance with the regulations.

(1.01) For the purposes of this Division, “Alberta crown royalty” of a corporation for a taxation year, subject to subsection (1.1), means the aggregate of

(a) any amount that is or is in respect of a qualified royalty (other than an amount prescribed under the federal regulations and an amount referred to in clause (b))

(i) that became receivable from the corporation in the year by

(A) the Crown in right of Alberta,

(B) an agent of the Crown in right of Alberta, or

(C) a corporation, a commission or an association that is controlled by the Crown in right of Alberta or by an agent of the Crown in right of Alberta,

and

(ii) that can reasonably be considered to be a royalty, tax (other than a tax or portion of a tax that can reasonably be considered to be a municipal or school tax), lease rental or bonus, however described, or to be in respect of the late receipt or non‑receipt of any of those amounts, in relation to

(A) the acquisition, development or ownership of a Canadian resource property of the corporation, or

(B) the production in Canada

(I) of petroleum, natural gas or related hydrocarbons from a natural accumulation of petroleum or natural gas (other than a mineral resource) located in Canada, or from an oil or gas well located in Canada, in respect of which the corporation had an interest,

(II) of sulphur from a natural accumulation of petroleum or natural gas located in Canada, from an oil or gas well located in Canada or from a mineral resource located in Canada, in respect of which the corporation had an interest,

(III) to any stage that is not beyond the prime metal stage or its equivalent, of metal, minerals (other than iron or petroleum or related hydrocarbons) or coal from a mineral resource located in Canada in respect of which the corporation had an interest,

(IV) to any stage that is not beyond the pellet stage or its equivalent, of iron from a mineral resource located in Canada in respect of which the corporation had an interest, or

(V) to any stage that is not beyond the crude oil stage or its equivalent, of petroleum or related hydrocarbons from a deposit located in Canada of bituminous sands or oil shales in respect of which the corporation had an interest,

and

(b) any amount that is or is in respect of a qualified royalty (other than an amount prescribed in the federal regulations)

(i) that is paid or payable by the corporation in the year to

(A) the Crown in right of Alberta,

(B) an agent of the Crown in right of Alberta, or

(C) a corporation, a commission or an association that is controlled by the Crown in right of Alberta or by an agent of the Crown in right of Alberta, and

(ii) that can reasonably be considered to be a royalty, tax (other than a tax or portion of a tax that can reasonably be considered to be a municipal or school tax), lease rental or bonus, however described, or to be in respect of the late payment or non‑payment of any of those amounts, in relation to

(A) the acquisition, development or ownership of a Canadian resource property, or

(B) the production in Canada

(I) of petroleum, natural gas or related hydrocarbons from a natural accumulation of petroleum or natural gas (other than a mineral resource) located in Canada or from an oil or gas well located in Canada,

(II) of sulphur from a natural accumulation of petroleum or natural gas located in Canada, from an oil or gas well located in Canada or from a mineral resource located in Canada,

(IV) to any stage that is not beyond the pellet stage or its equivalent, of iron from a mineral resource located in Canada, or

(V) to any stage that is not beyond the crude oil stage or its equivalent, of petroleum or related hydrocarbons from a deposit located in Canada of bituminous sands or oil shales

less any amount that is or is in respect of a qualified royalty and that is a reimbursement, contribution or allowance received by the corporation under the terms of a contract pursuant to section 12.1(2) if the reimbursement, contribution or allowance was for an amount paid or payable by the corporation in respect of an amount referred to in clause (a) or (b).

(1.02) Except for the purposes of section 26.1(3.6), (3.7), (3.9), and (3.91), Alberta crown royalty of a corporation for taxation years commencing after 2005 shall not include any amount that, but for this subsection, would have been Alberta crown royalty of the corporation for the taxation year, where

(a) the amount is or is in respect of a qualified royalty that is paid or payable to, or became receivable by, any of the recipients described in subsection (1.01)(a)(i)(A), (B) or (C) or (b)(i)(A), (B) or (C) after December 31, 2006,

(b) the amount is or is in respect of a qualified royalty that is paid or payable to, or became receivable by, any of the recipients described in subsection (1.01)(a)(i)(A), (B) or (C) or (b)(i)(A), (B) or (C) on or before December 31, 2006, to the extent that the corporation is entitled to receive a reimbursement, contribution or allowance in respect of that qualified royalty under the terms of a contract pursuant to section 12.1(2), or

(c) the amount is Alberta crown royalty of a partnership that is deemed to be Alberta crown royalty of the corporation pursuant to section 26.1(12) or (12.1) and

(i) is or is in respect of a qualified royalty that is paid or payable to, or became receivable by, any of the recipients described in subsection (1.01)(a)(i)(A), (B) or (C) or (b)(i)(A), (B) or (C) after December 31, 2006, or

(ii) is or is in respect of a qualified royalty that is paid or payable to, or became receivable by, any of the recipients described in subsection (1.01)(a)(i)(A), (B) or (C) or (b)(i)(A), (B) or (C) on or before December 31, 2006, to the extent that the partnership is entitled to receive a reimbursement, contribution or allowance in respect of that qualified royalty under the terms of a contract pursuant to section 12.1(2).

(1.1) A corporation shall not include in computing its Alberta crown royalty for a taxation year

(a) any of the amounts described in subsection (1)(c)(i) to (iii) where those amounts are or are in respect of royalties receivable by or payable to the Crown in right of Alberta,

(i) after August 31, 1982 in respect of a restricted resource property described in subsection (1)(h)(i), unless the corporation is an exempt corporation, or

(ii) after March 31, 1986 in respect of a restricted resource property described in subsection (1)(h)(ii),

(b) the restricted percentage of any of the amounts described in subsection (1.01) where those amounts are or are in respect of royalties receivable by or payable to the Crown in right of Alberta after March 31, 1986 in respect of a restricted resource property described in subsection (1)(h)(iii).

(1.11) If the restricted resource property is disposed of by only one restricted partnership, the restricted percentage of the amounts referred to in subsection (1.1)(b) is the greater of

(a) the aggregate of all percentages, each of which represents the participation in the profits of the restricted partnership of a restricted corporation that was a partner in the restricted partnership during the last fiscal period of the restricted partnership that ends prior to the date of the disposition of the restricted resource property by the restricted partnership, and

(b) the aggregate of all percentages, each of which represents the participation in the profits of the restricted partnership of a restricted corporation that was a partner in the restricted partnership

(i) during the fiscal period of the restricted partnership in which the date of the disposition of the restricted resource property by the restricted partnership occurred, and

(ii) on or before the date of the disposition of the restricted resource property.

(1.111) If the restricted resource property is disposed of by more than one restricted partnership, the restricted percentage of the amounts referred to in subsection (1.1)(b) is the largest of the restricted percentages determined under subsection (1.11) for each of the restricted partnerships.

(1.12) A corporation is a restricted corporation at any particular time if during its last taxation year ending before that time,

(a) it has Alberta crown royalty in excess of $2 000 000, or

(b) it is associated with one or more corporations and the sum of

(i) its Alberta crown royalty for that taxation year, and

(ii) the aggregate of all amounts each of which is the Alberta crown royalty of a corporation with which it is associated for a taxation year of that corporation that ends in its taxation year

is in excess of $2 000 000.

(1.13) A partnership is a restricted partnership at any particular time if, at any time during the period commencing 365 days prior to the particular time, one or more restricted corporations are partners in the partnership.

(1.14) For the purposes of subsection (1.12), the Alberta crown royalty of a corporation for a taxation year is an amount equal to the product of

(a) the Alberta crown royalty of the corporation for the taxation year as otherwise determined, and

(b) the ratio of 365 to the number of days in the taxation year.

(1.141) For the purposes of subsection (1.12), if the last taxation year of a corporation that is not a new corporation referred to in subsection (1.145) ending before the particular time, referred to in this subsection as the “actual taxation year”,

(a) is the corporation’s first taxation year, and

(b) consists of less than 365 days,

the last taxation year of the corporation ending before the particular time is deemed to commence 365 days prior to the first day of the taxation year immediately following the actual taxation year and to end on the last day of the actual taxation year.

(1.142) For the purposes of subsection (1.12)(b), if the last taxation year of a corporation that is not a new corporation referred to in subsection (1.141) or (1.145) ending before the particular time, referred to in this subsection as the “actual taxation year”, consists of less than 365 days, the last taxation year of the corporation ending before the particular time is deemed to commence 365 days prior to the first day of the taxation year immediately following the actual taxation year and to end on the last day of the actual taxation year.

(1.143) If a corporation is a new corporation, other than a corporation referred to in subsection (1.144), and does not have a taxation year ending before the particular time,

(a) for the purposes of subsection (1.12)(a) and (b)(i), the corporation is deemed to have a taxation year that commences on the date the corporation commences to carry on business and ends on the date immediately prior to the particular time, and

(b) for the purposes of subsection (1.12)(b)(ii), the corporation is deemed to have a taxation year that commences 365 days prior to the particular time and ends on the date immediately prior to the particular time.

(1.144) For the purposes of subsection (1.12), if a corporation is a new corporation formed by the amalgamation of 2 or more predecessor corporations and the new corporation does not have a taxation year ending before the particular time, the new corporation is deemed

(a) to have a taxation year that commences 365 days prior to the particular time and ends on the date immediately prior to the particular time,

(b) to have Alberta crown royalty in that taxation year in an amount equal to the aggregate of

(i) the Alberta crown royalty of each predecessor corporation for the period described in clause (a), and

(ii) the Alberta crown royalty of the new corporation for the period described in clause (a),

and

(c) to be associated with a corporation that is associated with a predecessor corporation of the new corporation during the 365‑day period described in clause (a).

(1.145) For the purposes of subsection (1.12), if a corporation is a new corporation formed by the amalgamation of 2 or more predecessor corporations and the last taxation year of the new corporation ending before the particular time, referred to in this subsection as the “actual taxation year”, is the corporation’s first taxation year and consists of less than 365 days,

(a) the last taxation year of the new corporation ending before the particular time is deemed to commence 365 days prior to the first day of the taxation year immediately following the actual taxation year and to end on the last day of the actual taxation year,

(b) the new corporation is deemed to have Alberta crown royalty in that last taxation year in an amount equal to the aggregate of

(i) the Alberta crown royalty of each predecessor corporation for the 365‑day period described in clause (a), and

(ii) the Alberta crown royalty of the new corporation for the 365‑day period described in clause (a),

and

(c) the new corporation is deemed to be associated with a corporation that is associated with a predecessor corporation of the new corporation during the 365‑day period described in clause (a).

(1.15) If the Provincial Minister is satisfied that

(a) the separate existence of 2 or more corporations at any time is not solely for the purpose of carrying out the business of those corporations in the most effective manner, and

(b) one of the main reasons for the separate existence of the corporations is to avoid one or more of those corporations’ remaining or becoming a restricted corporation,

the Provincial Minister may direct that all of the corporations are deemed to be associated with each other during a taxation year for the purposes of subsection (1.12).

(1.2) For the purposes of subsection (1)(h)(i), a right or interest or part of a right or interest is deemed not to be owned by a partnership unless there was in existence on August 24, 1982 a written agreement of partnership together with any other evidence that, in the opinion of the Provincial Minister, is sufficient to establish that the right or interest or part of the right or interest was intended by each of the members of the partnership to be owned by the partnership and not by the members.

(1.21) For the purposes of this Division, where a partnership exists, the following rules apply:

(a) the partnership is deemed to be a separate person;

(b) the determination of what constitutes partnership property of the partnership shall be made in accordance with the Partnership Act, notwithstanding that the partnership itself may be governed by the law of another jurisdiction.

(1.22) For the purposes of this Division, where at any time, any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta was disposed of to a partnership and became partnership property of the partnership, the right or interest or part thereof is deemed to have been disposed of to the partnership at that time and not to any member of the partnership.

(1.23) For the purposes of this Division, where any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta that was partnership property of a partnership, is disposed of at any time by that partnership, the right or interest or part thereof is deemed to have been disposed of by the partnership and not by any member of the partnership.

(1.3), (1.4) Repealed 2001 c1 s18.

(1.5) Notwithstanding subsections (1)(e), (1.7), (1.8) and (1.9), if at any time control of an exempt corporation is acquired by a person, that corporation is deemed not to be an exempt corporation for the taxation year in which control is acquired and for all subsequent taxation years unless the Provincial Minister is satisfied that the result of the acquisition of control of the corporation by that person is not to increase the amount of royalty tax credit that would otherwise be determined under this Act.

(1.51) For the purposes of this Division, if at any time after April 7, 1986 control of a restricted corporation is acquired by a person and on the date of the acquisition of control the restricted corporation owns any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta, the restricted corporation is deemed to have disposed of and reacquired that right, interest or part immediately prior to the date of the acquisition of control unless the Provincial Minister is satisfied that the result of the acquisition of control of the restricted corporation by that person is not to increase the amount of royalty tax credit that would otherwise be determined under this Act.

(1.52) If at any time after April 7, 1986 control of a corporation is acquired by a person and the corporation is associated with a restricted corporation immediately prior to the date of the acquisition of control, the corporation is deemed to have been a restricted corporation immediately prior to the date of the acquisition of control.

(1.53) For the purposes of this Division, if a new corporation is formed by the amalgamation at any time after April 7, 1986 of 2 or more predecessor corporations and as a result of the amalgamation the property owned by a predecessor corporation immediately before the date of the amalgamation that consisted of any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta became the property of the new corporation, the predecessor corporation is deemed to have disposed of that right or interest and the new corporation is deemed to have acquired that right or interest on the date of the amalgamation unless the Provincial Minister is satisfied that the result of the amalgamation is not to increase the amount of royalty tax credit that would otherwise be determined under this Act.

(1.6) For the purposes of this Division, one corporation is associated with another corporation at a particular time if by reference to that particular time the corporation would have been associated with the other corporation in its taxation year in which the particular time falls pursuant to subsection (2).

(1.7) Notwithstanding subsection (1)(e) and subject to subsection (1.901), if at any time after August 24, 1982 a corporation (in this section referred to as the “purchaser”) acquires all of the Alberta resource properties of another corporation (in this subsection referred to as the “vendor”) and the vendor, but for this subsection, would have been an exempt corporation immediately before the date of acquisition, then

(a) where the purchaser has acquired all of the Alberta resource properties of the vendor on a winding‑up to which subsection 88(1) of the federal Act applies, the purchaser is deemed to be an exempt corporation as of the first day of its taxation year in which the winding‑up commences, or

(b) where clause (a) does not apply, if the vendor and each of the corporations with which it is associated on the date of acquisition jointly elect together with the purchaser in the prescribed form and within the prescribed time, then

(i) the purchaser is deemed to be an exempt corporation as of the first day of its taxation year in which the acquisition takes place, and

(ii) the vendor and each of the corporations with which it is associated on the date of acquisition are deemed not to be exempt corporations as of the first day of their taxation years in which the acquisition takes place.

(1.71) Where the election referred to in subsection (1.7)(b) is not made within the prescribed time, the election is deemed to have been made on the last day that is within the prescribed time if,

(a) on or before the day that is 2 years after that last day, the election is made in the prescribed form, and

(b) the penalty as assessed under subsection (1.73) is paid within 30 days after the mailing of the notice of assessment.

(1.72) The penalty payable in respect of an election referred to in subsection (1.71) is $200 for each complete month in the period commencing with the last day that is within the prescribed time and ending on the day on which the election is actually made.

(1.73) The Provincial Minister shall examine each election to which subsection (1.71) applies, assess the penalty payable and send a notice of assessment to the purchaser.

(1.8) Repealed 2001 c1 s18.

(1.9) Notwithstanding subsection (1)(e) and subject to subsection (1.901), if at any time after March 31, 1986 a new corporation is formed by the amalgamation of

(a) a corporation and one or more of its subsidiary wholly‑owned corporations, or

(b) 2 or more corporations, each of which is a subsidiary wholly‑owned corporation of the same corporation,

and one of the amalgamating corporations is an exempt corporation immediately prior to the date of the amalgamation, the new corporation is deemed to be an exempt corporation as of the first day of its first taxation year.

(1.901) A corporation is not deemed to be an exempt corporation under subsection (1.7)(b) or (1.9) if, in the opinion of the Provincial Minister, the result of deeming the corporation to be an exempt corporation is to increase the amount of royalty tax credit that would otherwise be determined under this Act.

(1.91) If at any time after April 7, 1986 a restricted corporation

(a) amalgamates with

(i) one or more of its subsidiary wholly‑owned corporations,

(ii) one or more corporations, each of which is a subsidiary wholly‑owned corporation of the same corporation of which the restricted corporation is a subsidiary wholly‑owned corporation, or

(iii) a corporation of which the restricted corporation is a subsidiary wholly‑owned corporation,

(b) is wound up in circumstances to which subsection 88(1) of the federal Act would apply if the reference to “taxable Canadian corporation” in that subsection were a reference to “corporation”,

and any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta is deemed to have been disposed of to the new corporation pursuant to subsection (1.53) or is disposed of as a result of the winding‑up, for the purposes of subsection (1)(h)(ii) that disposition is deemed not to have occurred.

(1.92) If at any particular time after April 7, 1986 a restricted corporation disposes of any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta to a corporation that is associated with it immediately before the date of the disposition, for the purposes of subsection (1)(h)(ii),

(a) that disposition is deemed not to have occurred, and

(b) the corporation acquiring the right, interest or part is deemed to be a restricted corporation with respect to any disposition by it of any right or interest of any nature whatsoever or howsoever described or part thereof in any production from a petroleum or natural gas well in Alberta that takes place within 365 days after that particular time.

(1.93) If at any time a partnership disposes of all or part of a right or interest of any nature whatsoever or howsoever described in any production from a petroleum or natural gas well in Alberta to a corporation in circumstances to which subsection 98(3) of the federal Act applies, and the Provincial Minister is satisfied that the disposition will not increase the amount of royalty tax credit that would otherwise be determined under this Act, the Provincial Minister may deem that, for the purposes of subsection (1)(h)(iii), the disposition has not occurred.

(1.94) If, before a particular petroleum or natural gas well in Alberta is spudded, 2 persons enter into an agreement in respect of the well under the terms of which

(a) one person, in this subsection referred to as the “farmor”, disposes of a working interest in the well to another person, in this subsection referred to as the “farmee”, in consideration for the farmee’s incurring Canadian development expense, Canadian exploration expense or, if the agreement so provides, acquiring gas or oil well equipment as defined in subsection 1104(2) of the federal regulations in respect of the well,

(b) the farmor, at the time the farmor disposes of the working interest in the well,

(i) reserves a gross overriding royalty in respect of production from the well, or

(ii) retains a working interest, a carried interest or a net profits interest in the well,

and

(c) the farmor has an option to convert the royalty or interest referred to in clause (b) into a working interest in the well which, if exercised, must be exercised within a stipulated number of days, not exceeding 60, of receiving written notification from the farmee to the effect that the farmee’s cumulative net proceeds from production from the well are at least equal to its cumulative costs of drilling, equipping, completing and operating the well,

the disposition by the farmor described in clause (a) and any disposition by the farmee of a working interest in the well pursuant to the farmor’s exercise of the option described in clause (c) are deemed not to be dispositions for the purposes of subsection (1)(h).

(1.95) If, before a particular petroleum or natural gas well in Alberta is spudded, 2 persons enter into an agreement in respect of the well under the terms of which

(b) the agreement provides that the disposition of the working interest will occur at rig release date,

the disposition of the working interest is deemed not to be a disposition for the purposes of subsection (1)(h).

(2) If 2 or more corporations are associated or deemed to be associated with each other under this Act, only those associated corporations that have Alberta crown royalty in the taxation year during which they are associated ending in the same calendar year are the corporations that are associated with each other for the purposes of this Division.

(3), (3.1) Repealed 1990 c4 s12.

(3.2) For the purposes of this Division, if all the shares and rights to acquire shares of the capital stock of a corporation are owned directly or indirectly by one or more registered pension funds or plans and the corporation is associated with another corporation by reason only that the other corporation is

(a) a trustee under a trust pursuant to which the corporation is controlled, or

(b) associated with the trustee described in paragraph (a),

the corporations are deemed not to be associated with each other in the taxation year unless,

(d) at any time in the taxation year, 20% or more of the issued shares of any class of the capital stock of each of the corporation and the other corporation is owned by one registered pension fund or plan.

(4), (5) Repealed 1990 c4 s12.

(6) Repealed 1983 c2 s4.

RSA 2000 cA‑15 s26;2001 c1 s18;2002 c28 s34;2004 c21 s6;
2005 c25 s3;2006 c10 s6;2007 c25 s5;2009 c15 s5

Royalty tax credit

26.1(1) Repealed 1991 c1 s7.

(2) Subject to subsection (14), a corporation that has Alberta crown royalty in a taxation year ending before January 1, 2009 is entitled to a royalty tax credit for the year in the amount obtained when the weighted average rate for that year is multiplied by the lesser of

(a) its crown royalty shelter for the year, and

(b) its Alberta crown royalty for the year.

(3) If a corporation is not associated with one or more corporations in a taxation year, its crown royalty shelter for the taxation year is

(a) if the taxation year ends before January 1, 1995, the lesser of

(i) $2 500 000, and

(ii) the proportion of $2 500 000 that the number of days in the taxation year bears to 365,

and

(b) if the taxation year begins after December 31, 1994 and ends before January 1, 2007, the lesser of

(i) $2 000 000, and

(ii) the proportion of $2 000 000 that the number of days in the taxation year bears to 365.

(3.01) If in a taxation year of a corporation that commences in 2006 and ends in 2007 the corporation is

(a) not associated with one or more corporations, and

(b) is not a member of a partnership during the taxation year,

its crown royalty shelter for the taxation year is the proportion of $2 000 000 that the number of days before January 1, 2007 in the taxation year bears to 365.

(3.1) Notwithstanding subsection (3), if a corporation is not associated with one or more corporations in a taxation year and part of the taxation year is before January 1, 1995 and part of it is after December 31, 1994, the crown royalty shelter of the corporation for that taxation year is the aggregate of

(a) the lesser of

(i) $2 000 000, and

(ii) the proportion of $2 000 000 that the number of days in the taxation year bears to 365,

and

(b) the proportion of $500 000 that the number of days in the taxation year before January 1, 1995 bears to 365.

(3.2) Notwithstanding subsection (5), if 2 or more corporations are associated with each other in a taxation year and the taxation year of one of them begins before January 1, 1995 and ends after December 31, 1994, the aggregate of the crown royalty shelters for those corporations for the taxation year in which they are associated is the aggregate of

(a) the lesser of

(i) $2 000 000, and

(ii) the proportion of $2 000 000 that the number of days in the taxation year of the corporation with the longest taxation year bears to 365,

and

(b) the proportion of $500 000 that the number of days before January 1, 1995 in the taxation year of the corporation with the greatest number of days before January 1, 1995 bears to 365.

(3.3) Notwithstanding subsection (3), if in a taxation year of a corporation commencing after December 31, 1994 the corporation is not associated with one or more corporations and is a member of one or more partnerships whose fiscal periods ending in that taxation year commenced before January 1, 1995, the crown royalty shelter of the corporation for that taxation year is the aggregate of

(a) the proportion of the lesser of

(i) $2 000 000, and

(ii) the proportion of $2 000 000 that the number of days in that taxation year bears to 365,

that the difference between the Alberta crown royalty of the corporation for the year and the Alberta crown royalty deemed by subsection (12) or (12.1) to be the Alberta crown royalty for the year from all those partnerships bears to the Alberta crown royalty of the corporation for the year, and

(b) the amount for each of those partnerships that is equal to the proportion of the aggregate of

(i) the lesser of

(A) $2 000 000, and

(B) the proportion of $2 000 000 that the number of days in the fiscal period of that partnership bears to 365,

and

(ii) the proportion of $500 000 that the number of days in the fiscal period of that partnership before January 1, 1995 bears to 365,

that the Alberta crown royalty deemed by subsection (12) or (12.1) to be the Alberta crown royalty of the corporation for the year from that partnership bears to the Alberta crown royalty of the corporation for the year.

(3.4) Notwithstanding subsections (3) and (3.1), if in a taxation year of a corporation part of which is before January 1, 1995 and part of which is after December 31, 1994 the corporation is not associated with one or more corporations and is a member of one or more partnerships whose fiscal periods ending in that taxation year

(a) ended in 1994 (in this subsection referred to as a “1994 partnership”), or

(b) commenced before January 1, 1995 and ended after December 31, 1994 (in this subsection referred to as a “1995 partnership”),

the crown royalty shelter of the corporation for that taxation year is the aggregate of

(i) the lesser of

(A) $2 000 000, and

(B) the proportion of $2 000 000 that the number of days in the taxation year bears to 365,

and

(ii) the proportion of $500 000 that the number of days in the taxation year before January 1, 1995 bears to 365

that the difference between the Alberta crown royalty of the corporation for the year and the Alberta crown royalty deemed by subsection (12) or (12.1) to be Alberta crown royalty of the corporation for the year from all the 1994 partnerships and the 1995 partnerships bears to the Alberta crown royalty of the corporation for the year,

(d) an amount for each of the 1994 partnerships that is equal to the proportion of the lesser of

(i) $2 500 000, and

(ii) the proportion of $2 500 000 that the number of days in the fiscal period of that partnership bears to 365,

that the Alberta crown royalty deemed by subsection (12) or (12.1) to be Alberta crown royalty of the corporation for the year from that partnership bears to the Alberta crown royalty of the corporation for the year, and

(e) an amount for each of the 1995 partnerships that is equal to the proportion of the aggregate of

(i) the lesser of

(A) $2 000 000, and

(B) the proportion of $2 000 000 that the number of days in the fiscal period of that partnership bears to 365,

and

(ii) the proportion of $500 000 that the number of days in the fiscal period of that partnership before January 1, 1995 bears to 365,

(3.5) Notwithstanding subsections (3.2) and (5), if 2 or more corporations are associated with each other in a taxation year and one or more of the corporations is a corporation to which subsection (3.3) or (3.4) would apply if it were not associated with one or more corporations in that taxation year, the aggregate of the crown royalty shelters for those corporations for the taxation year in which they are associated is the greater of

(a) the crown royalty shelter of the corporation with the greatest crown royalty shelter for that taxation year determined pursuant to subsection (3), (3.1), (3.3) or (3.4) as if it were not associated, and

(b) an amount that is equal to the aggregate of

(i) the lesser of

(A) $2 000 000, and

(B) the proportion of $2 000 000 that the number of days in the taxation year of the corporation with the longest taxation year bears to 365,

and

(ii) the proportion of $500 000 that the number of days before January 1, 1995 in the taxation year of the corporation with the greatest number of days before January 1, 1995 bears to 365.

(3.6) If in a taxation year of a corporation that commences after December 31, 2006 the corporation is not associated with one or more corporations and is a member of one or more partnerships whose fiscal periods ending in that taxation year commenced before January 1, 2007, the crown royalty shelter of the corporation for that taxation year is the aggregate of the amounts determined by the application of the following formula for each partnership:

$2 000 000 x A x B
365 C

where

A is the number of days before January 1, 2007 in the partnership’s fiscal period,

B is the Alberta crown royalty deemed by subsection (12) or (12.1) to be Alberta crown royalty of the corporation for the year from that partnership, and

C is the Alberta crown royalty of the corporation for the year.

(3.7) If in a taxation year of a corporation part of which is before January 1, 2007 and part of which is after December 31, 2006 the corporation is not associated with one or more corporations and is a member of one or more partnerships whose fiscal periods begin before January 1, 2007 and end in that taxation year, the crown royalty shelter of the corporation for that taxation year is the aggregate of the following:

(a) the amount determined by the following formula:

$2 000 000 x E x D
365 C

where

C is the Alberta crown royalty of the corporation for the year,

D is the difference between the Alberta crown royalty of the corporation for the year and the Alberta crown royalty deemed by subsection (12) or (12.1) to be Alberta crown royalty of the corporation for the year from all partnerships, and

E is the number of days before January 1, 2007 in the corporation’s taxation year,

(b) the aggregate of the amounts determined by the application of the following formula for each partnership:

$2 000 000 x A x B
365 C

where

A is the number of days before January 1, 2007 in the partnership’s fiscal period,

B is the Alberta crown royalty deemed by subsection (12) or (12.1) to be Alberta crown royalty of the corporation from the particular partnership, and

C is the Alberta crown royalty of the corporation for the year.

(3.8) If 2 or more corporations are associated with each other in taxation years ending in 2007, one or more of the corporations’ taxation years ending in 2007 begin in 2006 and none of the corporations is a member of a partnership to which subsection (12) or (12.1) applies in those taxation years, the aggregate of the crown royalty shelter of the corporations for the taxation year in which they are associated is the proportion of $2 000 000 that the number of days before January 1, 2007 in the taxation year of the corporation that has the greatest number of days before January 1, 2007 in its taxation year bears to 365.

(3.9) If 2 or more corporations are associated with each other in taxation years ending in 2007 and one or more of the corporations is a corporation to which subsection (3.6) or (3.7) would apply if it were not associated with one or more corporations in that taxation year, the aggregate of the crown royalty shelters for those corporations for the taxation year in which they are associated is the greater of

(a) the crown royalty shelter of the corporation with the greatest crown royalty shelter for that taxation year determined pursuant to subsection (3.01), (3.6) or (3.7) as if it were not associated, and

(b) the proportion of $2 000 000 that the number of days before January 1, 2007 in the taxation year of the corporation that has the greatest number of days before January 1, 2007 in its taxation year bears to 365.

(3.91) If 2 or more corporations are associated with each other in taxation years ending in 2008 and one or more of the corporations is a member of a partnership whose fiscal period ending in that taxation year commenced in 2006, the aggregate of the crown royalty shelter for those corporations for the taxation year in which they are associated is the greater of

(a) the crown royalty shelter of the corporation with the greatest crown royalty shelter for the taxation year determined pursuant to subsection (3.6) as if it were not associated, and

(b) the proportion of $2 000 000 that the number of days before January 1, 2007 in the fiscal period of the partnership that has the greatest number of days before January 1, 2007 in its fiscal period bears to 365.

(4) Subject to subsection (4.1), if a corporation is associated with one or more corporations in a taxation year, its crown royalty shelter for the taxation year is that portion of the aggregate of the crown royalty shelters calculated under subsection (3.2), (3.5), (3.8), (3.9), (3.91), (5), (7.02) or (7.05) that is allocated to the corporation under subsection (6) or (7).

(4.1) The crown royalty shelter allocated to a corporation that is associated with one or more corporations in a taxation year ending before January 1, 2007 cannot exceed the proportion of $2 000 000 that the number of days in the corporation’s taxation year bears to 365.

(4.2) Subject to subsection (4.3), the crown royalty shelter allocated to a corporation that is associated with one or more corporations in taxation years ending in 2007 cannot exceed the proportion of $2 000 000 that the number of days before January 1, 2007 in the corporation’s taxation year bears to 365.

(4.3) If in a taxation year ending in 2007 or 2008 a corporation is associated with one or more corporations and is a member of one or more partnerships whose fiscal periods ending in the particular year commenced before January 1, 2007, the crown royalty shelter allocated to the corporation for that taxation year cannot exceed the proportion of $2 000 000 that the greater of the number of days before January 1, 2007 in the fiscal period of the partnership that has the greatest number of days before January 1, 2007 in its fiscal period and the number of days before January 1, 2007 in the corporation’s taxation year bears to 365.

(5) The aggregate of the crown royalty shelters to be allocated among 2 or more corporations that are associated with each other in a taxation year is

(a) if the taxation year ends before January 1, 1995, the lesser of

(i) $2 500 000, and

(ii) the proportion of $2 500 000 that the number of days in the taxation year of the corporation with the longest taxation year bears to 365,

and

(b) if the taxation year begins after December 31, 1994 and ends before January 1, 2007, the lesser of

(i) $2 000 000, and

(ii) the proportion of $2 000 000 that the number of days in the taxation year of the corporation with the longest taxation year bears to 365.

(6) If 2 or more corporations that are associated with each other file an agreement in the prescribed form with the Provincial Minister, the Provincial Minister shall allocate the aggregate of the crown royalty shelters among the corporations in accordance with the agreement if the agreement

(a) is among all of the corporations, and

(b) allocates the aggregate of the crown royalty shelters of the corporations calculated under subsection (3.2), (3.5), (3.8), (3.9), (3.91), (5), (7.02) or (7.05).

(7) If the corporations referred to in subsection (6) do not file an agreement in accordance with subsection (6) within 60 days after notice by the Provincial Minister that an agreement under subsection (6) for a taxation year is required for the purposes of this Act is mailed to any of them, the Provincial Minister shall allocate the aggregate of the crown royalty shelters of the corporations calculated under subsection (3.2), (3.5), (3.8), (3.9), (3.91), (5), (7.02) or (7.05) to one or more of the corporations, and the crown royalty shelter of each corporation for that taxation year is the amount, if any, allocated to it.

(7.01) Notwithstanding subsection (3), if a corporation is not associated with one or more corporations in a taxation year and part of the taxation year is before January 1, 1990 and part of it is after December 31, 1989, the crown royalty shelter of the corporation for that taxation year is the aggregate of

(a) the lesser of

(i) $2 500 000, and

(ii) the proportion of $2 500 000 that the number of days in the taxation year bears to 365,

and

(b) the proportion of $1 500 000 that the number of days in the taxation year before January 1, 1990 bears to 365.

(7.02) Notwithstanding subsection (5), if 2 or more corporations are associated with each other in a taxation year and the taxation year of one of them begins before January 1, 1990 and ends after December 31, 1989, the aggregate of the crown royalty shelters for those corporations for the taxation year in which they are associated is the aggregate of

(a) the lesser of

(i) $2 500 000, and

(ii) the proportion of $2 500 000 that the number of days in the taxation year of the corporation with the longest taxation year bears to 365,

and

(b) the proportion of $1 500 000 that the number of days before January 1, 1990 in the taxation year of the corporation with the greatest number of days before January 1, 1990 bears to 365.

(7.03) Notwithstanding subsection (3), if in a taxation year of a corporation commencing after December 31, 1989 the corporation is not associated with one or more corporations and is a member of one or more partnerships whose fiscal periods ending in that taxation year commenced before January 1, 1990 and ended after December 31, 1989, the crown royalty shelter of the corporation for that taxation year is the aggregate of

(a) the proportion of the lesser of

(i) $2 500 000, and

(ii) the proportion of $2 500 000 that the number of days in the taxation year bears to 365,

that the difference between the Alberta crown royalty of the corporation for the year and the Alberta crown royalty deemed by subsection (12) or (12.1) to be Alberta crown royalty for the year from all those partnerships bears to the Alberta crown royalty of the corporation for the year, and

(b) an amount for each of those partnerships that is equal to the proportion of the aggregate of

(i) the lesser of

(A) $2 500 000, and

(B) the proportion of $2 500 000 that the number of days in the fiscal period of that partnership bears to 365,

and

(ii) the proportion of $1 500 000 that the number of days in the fiscal period of that partnership before January 1, 1990 bears to 365,

(7.04) Notwithstanding subsections (3) and (7.01), if in a taxation year of a corporation part of which is before January 1, 1990 and part of which is after December 31, 1989 the corporation is not associated with one or more corporations and is a member of one or more partnerships whose fiscal periods ending in that taxation year

(a) ended in 1989, in this subsection referred to as a “1989 partnership”, or

(b) commenced before January 1, 1990 and ended after December 31, 1989, in this subsection referred to as a “1990 partnership”,

the crown royalty shelter of the corporation for that taxation year is the aggregate of

(i) the lesser of

(A) $2 500 000, and

(B) the proportion of $2 500 000 that the number of days in the taxation year bears to 365,

and

(ii) the proportion of $1 500 000 that the number of days in the taxation year before January 1, 1990 bears to 365

that the difference between the Alberta crown royalty of the corporation for the year and the Alberta crown royalty deemed by subsection (12) or (12.1) to be Alberta crown royalty of the corporation for the year from all the 1989 partnerships and the 1990 partnerships bears to the Alberta crown royalty of the corporation for the year,

(d) an amount for each of the 1989 partnerships that is equal to the proportion of the lesser of

(i) $4 000 000, and

(ii) the proportion of $4 000 000 that the number of days in the fiscal period of that partnership bears to 365

(e) an amount for each of the 1990 partnerships that is equal to the proportion of the aggregate of

(i) the lesser of

(A) $2 500 000, and

(B) that proportion of $2 500 000 that the number of days in the fiscal period of that partnership bears to 365,

and

(ii) the proportion of $1 500 000 that the number of days in the fiscal period of that partnership before January 1, 1990 bears to 365,

(7.05) Notwithstanding subsections (5) and (7.02), if 2 or more corporations are associated with each other in a taxation year and one or more of the corporations is a corporation to which subsection (7.03) or (7.04) would apply if it were not associated with one or more corporations in that taxation year, the aggregate of the crown royalty shelters for those corporations for the taxation year in which they are associated is the greater of

(a) the crown royalty shelter of the corporation with the greatest crown royalty shelter for that taxation year determined pursuant to subsection (3), (7.01), (7.03) or (7.04) as if it were not associated, and

(b) an amount that is equal to the aggregate of

(i) the lesser of

(A) $2 500 000, and

(B) the proportion of $2 500 000 that the number of days in the taxation year of the corporation with the longest taxation year bears to 365,

and

(ii) the proportion of $1 500 000 that the number of days before January 1, 1990 in the taxation year of the corporation with the greatest number of days before January 1, 1990 bears to 365.

(7.1) Notwithstanding anything in this Division, if at any time (in this subsection referred to as the “particular time”) after November 3, 1983

(a) control of a corporation (in this subsection referred to as the “particular corporation”) has been acquired by a person, and

(b) the Provincial Minister is satisfied that the result of the acquisition of control of the particular corporation is that the amount of the royalty tax credit to which the particular corporation, or any corporation or group of corporations with which it is associated in the calendar year in which the particular time falls, is entitled is greater than the amount of the royalty tax credit to which the particular corporation, or any corporation or group of corporations with which the particular corporation is associated in the calendar year in which the particular time falls, would have been entitled, had control of the particular corporation not been acquired,

the Provincial Minister may determine the amount of the royalty tax credit to which the particular corporation or any corporation or group of corporations with which it is associated in the calendar year in which the particular time falls shall be entitled for taxation years that end in the same calendar year as that in which the particular time falls.

(7.2) Notwithstanding anything in this Division, if at any time after November 3, 1983, a corporation (in this subsection referred to as the “particular corporation”), by reason of an amalgamation or otherwise,

(a) has a taxation year that ends before the time that it otherwise would have ended, or

(b) has 2 or more taxation years ending in the same calendar year,

the Provincial Minister may determine the amount of the royalty tax credit to which

(d) any successor corporation formed on the amalgamation of the particular corporation with another corporation, or

(e) any corporation with which the particular corporation was associated in the calendar year in which any of the taxation years described in clauses (a) and (b) of the particular corporation end,

shall be entitled for any of the taxation years of any of the corporations described in clauses (c), (d) and (e) that end in the same calendar year as any of the taxation years described in clauses (a) and (b) of the particular corporation.

(8) In computing the Alberta crown royalty of a corporation, no amount shall be included that would, if included, artificially increase the Alberta crown royalty of that corporation.

(9) If the Provincial Minister is satisfied that

(a) the separate existence of 2 or more corporations in a taxation year is not solely for the purpose of carrying out the business of those corporations in the most effective manner, and

(b) one of the main reasons for the separate existence of the corporations in that year is to increase the amount of royalty tax credit that would otherwise be determined under this Act,

the Provincial Minister may direct that all of the corporations are deemed to be associated with each other for the purposes of this Division.

(10) If in the opinion of the Provincial Minister, 2 or more corporations have at any time entered into one or more sales, exchanges, declarations of trust or other transactions that

(a) lack any substantial business purpose, other than increasing the aggregate amount of the royalty tax credit that may be claimed, or

(b) artificially increase the royalty tax credit that may be claimed,

the Provincial Minister may direct that all of those corporations are deemed to be associated with each other for the purposes of this Division.

(11) A direction made under subsection (9) or (10)

(a) shall not apply to a taxation year of any corporation prior to the taxation year for which the direction is made or to a taxation year commencing before January 1, 1982, and

(b) may be revoked by the Provincial Minister and, if revoked, shall not apply to the taxation year for which the revocation occurs or to any subsequent taxation year.

(12) If a corporation, other than an exempt corporation, is a member of a partnership, its share of the amount that would be the Alberta crown royalty of that partnership, if the partnership were a corporation other than an exempt corporation, is deemed to be Alberta crown royalty of the corporation.

(12.1) If an exempt corporation is a member of a partnership, its share of the amount that would be the Alberta crown royalty of that partnership, if the partnership were an exempt corporation, is deemed to be Alberta crown royalty of the corporation.

(13) Repealed 1990 c4 s13.

(13.1) Repealed 1987 c36 s11.

(14) A corporation is entitled to a royalty tax credit in respect of the taxation year only if it files an application for the credit in the prescribed form

(a) with its return for that taxation year, or

(b) on a day after the return has been filed,

but in any case no later than 3 years after the end of the taxation year.

(14.1) A corporation is deemed to have paid on the day on which it files an application in accordance with subsection (14) in respect of a taxation year an amount on account of its liability under this Act for the year equal to the amount, if any, by which the royalty tax credit to which it is entitled for the year exceeds the aggregate of amounts paid by the Provincial Minister under section 26.4 for the year.

(14.2), (14.3) Repealed 1994 c33 s3.

(15), (16) Repealed 1983 c66 s6.

RSA 2000 cA‑15 s26.1;2002 c28 ss19,34;2007 c25 s6

26.2 Repealed by Revision.

26.3, 26.31, 26.32 Repealed 1990 c4 s14.

Royalty tax credit instalment

26.4(1) In this section, “moving average of the specified rates” means the moving average of the specified rates determined in accordance with the regulations.

(2) Repealed 1991 c1 s9.

(3) A corporation that has reason to believe it will be entitled to a royalty tax credit for a taxation year may, in respect of each month in the year, apply to the Provincial Minister at any time before the end of the year in the prescribed form for payment of a royalty tax credit instalment.

(3.1) If there is a partial month between the end of a month and the end of a corporation’s taxation year

(a) the corporation may apply to the Provincial Minister at any time before the end of the taxation year in the prescribed form for payment of a royalty tax credit instalment in respect of the partial month, and

(b) the instalment for the partial month shall be computed in accordance with subsection (4) and paid in accordance with subsection (5), except that a reference to “month” in those subsections shall be read as a reference to “partial month”.

(4) A corporation’s royalty tax credit instalment for a month in a taxation year is the amount by which

(a) the product obtained when the lesser of

(i) the corporation’s estimated Alberta crown royalty for the year, and

(ii) the corporation’s estimated crown royalty shelter for the year

is multiplied by

(iii) the proportion that the number of days from the beginning of the taxation year to the last day of that month bears to the number of days in the taxation year, and

(iv) the moving average of the specified rates determined in respect of that month,

exceeds

(b) the aggregate of the royalty tax credit instalments in respect of previous months in the taxation year paid to the corporation or applied to any liability it had under this Act.

(5) If a corporation applies for payment in respect of a month under this section, the Provincial Minister may determine the amount, if any, to be paid or applied by the Provincial Minister and, on or after the last day of the month,

(a) pay the amount to the corporation, or

(b) if the corporation is liable to make a payment under this Act,

(i) apply the amount to reduce the liability, or

(ii) pay part of the amount to the corporation and apply the balance of the amount to reduce the liability,

and the amount or the part of the amount applied at a particular time to reduce the liability is deemed to be a payment to the corporation that is paid by the corporation at the particular time to the Provincial Minister on account of the liability.

RSA 2000 cA‑15 s26.4;2001 c1 s19;2002 c28 s34

Application of royalty tax credits

26.41(1) The aggregate of all royalty tax credits paid under this Act shall

(a) be applied by the Provincial Minister to reduce non‑renewable resource revenue, as defined in the Alberta Heritage Savings Trust Fund Act, and

(b) be deducted from the total amounts used to determine the transfers required to be made to the Alberta Heritage Savings Trust Fund pursuant to section 9 of the Alberta Heritage Savings Trust Fund Act or any Special Act referred to in that section and enacted before or after April 1, 1984, notwithstanding anything in those Acts.

(2) The aggregate of all royalty credits paid under Part 11 shall

(a) be applied by the Provincial Minister to reduce non‑renewable resource revenue, as defined in the Alberta Heritage Savings Trust Fund Act, and

RSA 2000 cA‑15 s26.41;2001 c1 s20;2002 c28 s34

Division 2
Extended Alberta Rental
Investment Tax Credit

Rental investment tax credit

26.5(1), (2) Repealed 2002 c28 s20.

(3) A corporation that has a permanent establishment in Alberta at any time in the taxation year and has an amount invested is entitled to an extended Alberta rental investment tax credit for the taxation year in an amount equal to the aggregate of the maximum eligible incentives of the corporation that have not been used in the calculation of an extended Alberta rental investment tax credit in a previous taxation year.

(4) to (6), (6.1), (7) Repealed 2002 c28 s20.

RSA 2000 cA‑15 s26.5;2002 c28 s20.

Division 3
Scientific Research and Experimental Development Tax Credit

Interpretation

26.6(1) In this Division,

(a) “Alberta proxy amount” means the amount determined under subsection (3);

(b) “Alberta SR&ED tax credit” means the scientific research and experimental development tax credit calculated under section 26.7(1);

(d) “federal expenditures of the corporation” means those amounts included in the SR&ED qualified expenditure pool at the end of a taxation year of a qualified corporation as determined for purposes of the federal Act under subsection 127(9) of the federal Act and for greater certainty does not include any amount in respect of which a qualified corporation is required to add an amount determined under subsection 127(8) or (8.3) of the federal Act;

(e) “federal investment tax credit” means an investment tax credit to which a corporation becomes entitled in a taxation year under section 127 of the federal Act that is in respect of scientific research and experimental development;

(f) “first term shared‑use‑equipment” has the meaning assigned by subsection 127(9) of the federal Act;

(g) “maximum expenditure limit” for a taxation year means the amount determined under section 26.8;

(h) “qualified corporation” means a corporation that

(i) has a permanent establishment in Alberta at any time during the taxation year, and

(ii) carries on scientific research and experimental development in Alberta during the taxation year,

but does not include a corporation that is exempt from tax in the taxation year under this Act by virtue of section 35, other than a prescribed corporation;

(i) “scientific research and experimental development” has the meaning assigned by subsection 248(1) of the federal Act;

(j) “second term shared‑use‑equipment” has the meaning assigned by subsection 127(9) of the federal Act.

(2) The eligible expenditures of a qualified corporation for a taxation year, including a year in which the corporation does not incur scientific research and experimental development expenditures in Alberta, means the amount determined by the formula

A – B + C + D – E + F

where

A is those amounts included in federal expenditures of the corporation that are incurred in Alberta after 2008,

B is the amount, if any, included in the amounts determined under the definition of A that is in respect of a prescribed proxy amount included in federal expenditures of the corporation,

C is the Alberta proxy amount, if any, for the taxation year,

D is the amount, if any, in respect of an Alberta SR&ED tax credit that reduced federal expenditures of the corporation in the taxation year,

E is the amount of the federal investment tax credit received by the corporation in the immediately preceding taxation year that can reasonably be considered to relate to amounts included in the definition of A in any taxation year, and

F is the amount of a repayment, in the taxation year, of

(a) government assistance, other than an Alberta SR&ED tax credit, or

(b) a contract payment

referred to in paragraphs (e.1) and (e.2) in the definition of investment tax credit in subsection 127(9) of the federal Act that can reasonably be considered to relate to amounts included in the definition of A in the taxation year or any preceding taxation year.

(3) The Alberta proxy amount, for purposes of determining a corporation’s eligible expenditures for a taxation year, is 65% of the salaries and wages used in the calculation of the prescribed proxy amount included in federal expenditures of the corporation for the taxation year that were incurred in Alberta.

2008 c29 s7;2009 c15 s6

Tax credit deduction

26.7(1) A qualified corporation is entitled to an Alberta SR&ED tax credit in the taxation year equal to 10% of the lesser of

(a) the corporation’s eligible expenditures for the taxation year, and

(b) the corporation’s maximum expenditure limit for the taxation year.

(2) A qualified corporation may deduct from its tax otherwise payable under this Act for a taxation year an amount not exceeding the lesser of

(a) the corporation’s Alberta SR&ED tax credit for the year, and

(b) the corporation’s tax otherwise payable under this Act for the year.

(3) The amount deducted under subsection (2) is deemed to have been paid on account of the qualified corporation’s tax payable under this Act on the corporation’s balance‑due day for the taxation year.

(4) The amount by which a qualified corporation’s Alberta SR&ED tax credit for the year exceeds the amount referred to in subsection (2)(b) may be applied by the Provincial Minister to pay any tax, interest or penalty owing by the corporation for that or any taxation year pursuant to this Act, or any other amount owing to the Crown in right of Alberta, and the part of the amount not so applied shall be paid to the corporation.

(5) The amount by which a qualified corporation’s Alberta SR&ED tax credit for the year exceeds the amount referred to in subsection (2)(b) is deemed to have been paid by the corporation on the day on which the corporation’s claim for the Alberta SR&ED tax credit was received by the Provincial Minister.

(6) No amount shall be included in determining the Alberta SR&ED tax credit of a qualified corporation for a taxation year if the Provincial Minister does not receive a prescribed form containing prescribed information in respect of the amount on or before the day that is 12 months after the day on or before which the corporation is required to file its return for the taxation year pursuant to section 36.

2008 c29 s7;2009 c15 s7

Recapture of Alberta SR&ED credit

26.71(1) A corporation that received a federal investment tax credit in the immediately preceding taxation year in respect of federal expenditures of the corporation incurred in Alberta and in respect of which an amount could reasonably be considered to have been included in determining the corporation’s Alberta SR&ED tax credit for a prior year must determine an amount under section 26.6(2) for the taxation year.

(2) Where the amount determined under section 26.6(2) for a taxation year by a corporation referred to in subsection (1) is negative (in this section referred to as the “adjustment”), an amount equal to 10% of the adjustment is deemed to be an amount owing by the corporation to the Crown in right of Alberta, which is payable to the Provincial Minister on or before the corporation’s balance‑due day for the current taxation year.

2009 c15 s8

Maximum expenditure limit

26.8(1) Subject to subsection (2), if a qualified corporation is not associated with one or more corporations in a taxation year, its maximum expenditure limit for the taxation year is

(a) $4 000 000 if the taxation year of the corporation is 365 or 366 days,

(b) $4 000 000 multiplied by the ratio of the number of days in the taxation year to 365 if the taxation year is shorter than 365 days and does not include February 29, or

(c) $4 000 000 multiplied by the ratio of the number of days in the taxation year to 366 if the taxation year is shorter than 366 days and includes February 29.

(2) If the taxation year of a qualified corporation referred to in subsection (1) begins before January 1, 2009 and ends after December 31, 2008, the maximum expenditure limit of the corporation for that year is the proportion of $4 000 000 that the number of days in the taxation year in 2009 is of 365.

(3) Subject to subsections (4) and (5), if a qualified corporation is associated with one or more corporations in a taxation year, the corporation’s maximum expenditure limit for the taxation year is that portion of the maximum expenditure limit that is allocated to the corporation under subsection (9) or (10).

(4) The maximum expenditure limit allocated to a qualified corporation that is associated with one or more corporations in a taxation year cannot exceed the proportion of $4 000 000 that the number of days in the corporation’s taxation year bears to 365.

(5) The maximum expenditure limit allocated to a qualified corporation that is associated with one or more corporations in its taxation year that begins before January 1, 2009 and ends after December 31, 2008 cannot exceed the proportion of $4 000 000 that the number of days in the taxation year in 2009 bears to 365.

(6) Subject to subsection (7), the maximum expenditure limit to be allocated among 2 or more qualified corporations that are associated with each other in a taxation year is the lesser of

(a) $4 000 000, and

(b) the proportion of $4 000 000 that the number of days in the taxation year of the corporation with the longest taxation year bears to 365.

(7) If the taxation year of one or more of the corporations referred to in subsection (6) begins before January 1, 2009 and ends after December 31, 2008, the maximum expenditure limit to be allocated among the corporations that are associated with each other in the taxation year is the proportion of $4 000 000 that the number of days after December 31, 2008 in the taxation year of the corporation that has the greatest number of days after December 31, 2008 in its 2009 taxation year bears to 365.

(8) When a taxation year of a qualified corporation includes February 29, the references to “365” in subsections (2), (4), (5), (6) and (7) shall be read as a reference to “366”.

(9) If 2 or more qualified corporations that are associated with each other file an agreement in the prescribed form with the Provincial Minister, the Provincial Minister shall allocate the maximum expenditure limit among the corporations in accordance with the agreement if the agreement

(a) is among all the qualified corporations, and

(b) allocates the maximum expenditure limit of the corporations calculated under subsection (6).

(10) If 2 or more qualified corporations that are associated with each other do not file an agreement in accordance with subsection (9) within 60 days after notice in writing that an agreement under subsection (9) for a taxation year is required for the purpose of this Act has been forwarded to any of them by the Provincial Minister, the Provincial Minister shall allocate the maximum expenditure limit of the corporations calculated under subsections (5) to (8) to one or more of the corporations, and the maximum expenditure limit of each corporation for that taxation year is the amount, if any, allocated to it.

(11) If 2 or more corporations are associated or deemed to be associated with each other under this Act, only those associated corporations that are claiming an Alberta SR&ED tax credit in the taxation year during which they are associated ending in the same calendar year are the corporations that are associated with each other for the purposes of this Division.

(12) If the Provincial Minister is satisfied that

(a) the separate existence of 2 or more qualified corporations in a taxation year is not solely for the purpose of carrying on the business of those corporations in the most effective manner, and

(b) one of the main reasons for the separate existence of those corporations in that year is to increase the amount of the Alberta SR&ED tax credit that would otherwise be determined under this Act,

the Provincial Minister may direct that all of the corporations are deemed to be associated with each other for the purposes of this Division.

(13) If, in the opinion of the Provincial Minister, a qualified corporation has at any time entered into one or more sales, exchanges, declarations of trust or other transactions that

(a) lack any substantial business purpose, other than increasing the Alberta SR&ED tax credit to which it or any qualified corporation is otherwise entitled, or

(b) artificially increase the Alberta SR&ED tax credit that may be claimed by it or any qualified corporation,

the Provincial Minister may direct that all of those corporations are deemed to be associated with each other for the purposes of this Division.

(14) A direction made under subsection (12) or (13)

(a) does not apply to a taxation year of any qualified corporation prior to the taxation year for which the direction is made, and

(b) may be revoked by the Provincial Minister and, if revoked, does not apply to the taxation year to which the revocation relates or to any subsequent taxation year.

(15) Notwithstanding anything in this Division, if at any time (in this subsection referred to as the “particular time”) after December 31, 2008

(a) control of a qualified corporation (in this subsection referred to as the “particular corporation”) has been acquired by a person, and

(b) the Provincial Minister is satisfied that the result of the acquisition of control of the particular corporation is that the amount of the Alberta SR&ED tax credit to which the particular corporation, or any corporation or group of corporations with which it is associated in the calendar year in which the particular time falls, is entitled is greater than the amount of the Alberta SR&ED tax credit to which the particular corporation, or any corporation or group of corporations with which the particular corporation is associated in the calendar year in which the particular time falls, would have been entitled, had control of the corporation not been acquired,

the Provincial Minister may determine the amount of the Alberta SR&ED tax credit to which the particular corporation or any corporation or group of corporations with which it is associated in the calendar year in which the particular time falls is entitled for taxation years that end in the same calendar year as that in which the particular time falls.

(16) Notwithstanding anything in this Division, if at any time after December 31, 2008, a qualified corporation (in this subsection referred to as the “particular corporation”), by reason of an amalgamation or otherwise,

(a) has a taxation year that ends before the time at which it otherwise would have ended, or

(b) has 2 or more taxation years ending in the same calendar year,

the Provincial Minister may determine the amount of Alberta SR&ED tax credit to which

(d) any successor corporation formed on the amalgamation of the particular corporation with another corporation, or

(e) any corporation with which the particular corporation was associated in the calendar year in which any of the taxation years described in clauses (a) and (b) of the particular corporation end,

is entitled for any of the taxation years of any of the corporations described in clauses (c), (d) and (e) that end in the same calendar year as any of the taxation years described in clauses (a) and (b) of the particular corporation.

2008 c29 s7

Recapture

26.9(1) Where

(a) a qualified corporation acquired a particular property from a person or partnership in a taxation year of the corporation or in any of the 20 preceding taxation years,

(b) the cost, or a portion of the cost, of the particular property was an amount

(i) included in, or

(ii) if the SR&ED qualified expenditure pool referred to in the definition of federal expenditures of the corporation were determined without reference to subsection 127(26) of the federal Act, that would be included in

eligible expenditures of the corporation at the end of any taxation year referred to in clause (a), and

(c) in the year the corporation converts to commercial use, or disposes of, without having previously converted to commercial use, the particular property or another property that incorporates the particular property,

there shall be added to the corporation’s tax otherwise payable under this Act for the year the lesser of

(d) the amount that can reasonably be considered to have been received by the corporation as an Alberta SR&ED tax credit, or that would have been received by the corporation if the SR&ED qualified expenditure pool referred to in the definition of federal expenditures of the corporation were determined without reference to subsection 127(26) of the federal Act at the end of any taxation year referred to in clause (a) in respect of the particular property, and

(e) the product of the ratio as defined in B in section 26.91(4) and 10% of

(i) in the case where the particular property or the other property is disposed of to a person who deals at arm’s length with the corporation,

(A) the proceeds of disposition of the property if the property

(I) is the particular property and is neither first term shared‑use‑equipment nor second term shared‑use‑equipment, or

(II) is the other property,

(B) 25% of the proceeds of disposition of the property if the property is the particular property, is first term shared‑use‑equipment and is not second term shared‑use‑equipment, and

(C) 50% of the proceeds of disposition of the property if the property is the particular property and is second term shared‑use‑equipment,

and

(ii) in the case where the particular property or the other property is converted to commercial use or is disposed of to a person who does not deal at arm’s length with the corporation,

(A) the fair market value of the property at the time of its conversion or disposition if the property

(I) is the particular property and is neither first term shared‑use‑equipment nor second term shared‑use‑equipment, or

(II) is the other property,

(B) 25% of the fair market value of the property at the time of its conversion or disposition if the particular property is first term shared‑use‑equipment and is not second term shared‑use‑equipment, and

(C) 50% of the fair market value of the property at the time of its conversion or disposition if the particular property is second term shared‑use‑equipment.

(2) Where

(a) a corporation acquired a particular property from a person or partnership in a taxation year or in any of the 20 preceding taxation years,

(b) the cost of the particular property was an amount included in eligible expenditures of the corporation at the end of any taxation year referred to in clause (a),

(c) all or part of that cost can reasonably be considered to have been the subject of an agreement made under subsection 127(13) of the federal Act by the corporation and another corporation (in this subsection referred to as the “transferee”), and

(d) in the year, the corporation converts to commercial use, or disposes of without having converted to commercial use, the particular property or another property that incorporates the particular property,

there shall be added to the corporation’s tax otherwise payable under this Act for the year the lesser of

(e) the amount that can reasonably be considered to have been received by the transferee as an Alberta SR&ED tax credit in respect of the property that was the subject of the agreement, and

(f) the product of the ratio as defined in B in section 26.91(4) as it applies to the transferee and the amount determined by the formula

10% x C – D

where

C is

(i) where the particular property or the other property is disposed of to a person who deals at arm’s length with the corporation, the proceeds of disposition of that property, or

(ii) in any other case, the fair market value of the particular property or the other property at the time of the conversion or disposition;

D is the amount, if any, added to the corporation’s tax payable under subsection (1) in respect of the particular property.

(3) Where, at any particular time in a taxation year, a purchaser is a corporation that converts to commercial use, or disposes of without having previously converted to commercial use, a property

(a) that was acquired by the purchaser in circumstances described in section 26.91(2) or that is another property that incorporates a property acquired in such circumstances, and

(b) that was first acquired, or that incorporates a property that was first acquired, by a corporation (in this subsection referred to as the “original user”) with which the purchaser did not deal at arm’s length at the time at which the purchaser acquired the property, in the original user’s taxation year that includes the particular time (on the assumption that the original user had such a taxation year) or in any of the original user’s 20 preceding taxation years,

there shall be added to the purchaser’s tax otherwise payable under this Act for the year the lesser of

(c) the amount that can reasonably be considered to have been received by the original user as an Alberta SR&ED tax credit in respect of the property, and

(d) the product of the ratio of the original user’s maximum expenditure limit for the taxation year in which the property was acquired to the greater of the maximum expenditure limit or eligible expenditures of the original user for that year and 10% of

(i) if the property or the other property is disposed of to a person who deals at arm’s length with the purchaser, the proceeds of disposition of that property, and

(ii) in any other case, the fair market value of the property or the other property at the time of the conversion or disposition.

2008 c29 s7;2009 c15 s9

General provisions

26.91(1) Where at any time a particular property, or a property that incorporates the particular property, ceases to be located in Alberta, the particular property or the property that incorporates the particular property is, for purposes of section 26.9, deemed to have been disposed of to a person who deals at arm’s length with the corporation for proceeds of disposition equal to the fair market value of the property at that time.

(2) Section 26.9 does not apply to a corporation (in this subsection referred to as the “transferor”) that disposes of a property to a qualified corporation (in this subsection and section 26.9(3) referred to as the “purchaser”) that does not deal at arm’s length with the transferor, if the purchaser acquired the property in circumstances

(a) whereby the property did not cease to be located in Alberta, and

(b) where the cost of the property to the purchaser would have been an expenditure of the purchaser described in subclause 37(8)(a)(ii)(A)(III) or (B)(III) of the federal Act as it applies for the purposes of this Act but for subparagraph 2902(b)(iii) of the federal regulations.

(3) For the purpose of applying section 26.9(1) or (2) in respect of a corporation, or section 26.9(3) in respect of a purchaser and an original user, as the case may be (which corporation, purchaser or original user is, in this subsection, referred to as the “taxpayer”), the reference to “20” in that subsection is to be read as a reference to the number that is the lesser of

(a) 20, and

(b) the number of taxation years of the taxpayer that end after 2008.

(4) For the purposes of section 26.9, the amount that can reasonably be considered to have been included in a corporation’s Alberta SR&ED tax credit in respect of a particular property is equal to the amount determined by the formula

10% x A x B

where

A is the amount included in eligible expenditures of the corporation in respect of the cost of the property in the taxation year in which the property was acquired;

B is the ratio of the corporation’s maximum expenditure limit for the taxation year in which the property was acquired to the greater of the maximum expenditure limit or eligible expenditures of the corporation for that year.

(5) For the purposes of subsection (4), if a qualified corporation included an amount in respect of the same property in eligible expenditures in more than one taxation year, it shall calculate the amount referred to in subsection (4) in respect of each taxation year, and the amount that can reasonably be considered to have been included in its Alberta SR&ED tax credit is the aggregate of the amounts so calculated for each of the taxation years in which an amount in respect of the same property was included.

2008 c29 s7;2009 c15 s10

Division 3 (s26.2) Repealed 1999 c32 s19.

Part 7
Special Rules Applicable in
Certain Circumstances

Bankrupt corporations

27 If a corporation has become bankrupt as defined in subsection 128(3) of the federal Act, the rules provided in section 128 of that Act apply for the purposes of this Act, except that paragraph 128(1)(f) of the federal Act does not apply for the purposes of Part 6, Division 1 of this Act.

RSA 1980 cA‑17 s27;1981 c8 s10;1983 c2 s7

Changes in residence

27.1 Sections 128.1 and 128.2 of the federal Act apply for the purposes of this Act.

1995 c3 s8

Investment corporations

28(1) If a corporation is throughout a taxation year an investment corporation, other than a corporation that was a mutual fund corporation throughout the year, subsections 131(1) and (2) of the federal Act, as made applicable by section 30 of this Act, apply as if

(a) the corporation had been a mutual fund corporation throughout that and all previous taxation years ending after 1971 throughout which it was an investment corporation, and

(b) its capital gains redemption for that and all previous taxation years ending after 1971, throughout which it would but for the assumption made by clause (a) not have been a mutual fund corporation, were nil.

(2) Section 30 applies to a corporation to which this section applies.

RSA 2000 cA‑15 s28;2001 c1 s21

Mortgage investment corporations

29 If a corporation was throughout a taxation year a mortgage investment corporation as defined in subsection 130.1(6) of the federal Act, the rules provided in section 130.1 of that Act apply for the purposes of this Act insofar as those rules apply to corporations.

RSA 1980 cA‑17 s29

Mutual fund corporations

30(1) Subject to subsections (1.1) to (7), if a corporation is a mutual fund corporation, section 131 of the federal Act applies for the purposes of this Act.

(1.1) Subsection 131(2) of the federal Act applies only for the purpose of determining the amount of capital gains refund of a corporation for a taxation year.

(2) Repealed 2001 c1 s22.

(2.01) In the application of subparagraph 131(2)(a)(i) of the federal Act for the purposes of this Act,

(a) in respect of a taxation year ending after March 31, 1991 and before February 28, 2000, a reference to any percentage in subparagraph 131(2)(a)(i) of the federal Act shall be read as a reference to ¾ of the proportion that tax payable under section 21 of this Act for the year is of the amount taxable in Alberta for the year, and

(b) in respect of a taxation year ending after July 12, 1996, a reference to any percentage in subparagraph 131(2)(a)(i) of the federal Act shall be read as a reference to ½ of the proportion that tax payable under section 21 of this Act for the year is of the amount taxable in Alberta for the year.

(2.1), (3) Repealed 1987 c36 s20.

(4), (4.1) Repealed 2001 c1 s22.

(4.2) In the application of the definitions of capital gains dividend account and capital gains redemptions in subsection 131(6) of the federal Act for the purposes of this Act in respect of a taxation year ending after December 31, 1991,

(a) a reference to 100/21 shall be read as a reference to the fraction obtained when 1 is divided by ¾ of the proportion that tax payable under section 21 of this Act for the taxation year is of the amount taxable in Alberta for the year,

(b) a reference to 100/18.7 shall be read as a reference to the fraction obtained when 1 is divided by 2/3 of the proportion that tax payable under section 21 of this Act for the taxation year is of the amount taxable in Alberta for the year, and

(c) a reference to 100/14 shall be read as a reference to the fraction obtained when 1 is divided by ½ of the proportion that tax payable under section 21 of this Act for the taxation year is of the amount taxable in Alberta for the year.

(5) Repealed 2001 c1 s22.

(5.1) In the application of the definition of “refundable capital gains tax on hand” in subsection 131(6) of the federal Act for the purposes of this Act,

(a), (b) repealed 2001 c1 s22,

(i) the reference to the percentage in clauses (a) and (b) in A of the definition shall be read as a reference to the proportion that tax payable under section 21 for the year is of the amount taxable in Alberta for the year, and

(ii) clause (c) in A of the definition shall be read as if “this Part for the year determined without reference to section 123.2” were struck out and “this Act for the year” were substituted.

(6) If a corporation had a permanent establishment in a jurisdiction outside Alberta during a taxation year in respect of which this section applies, the capital gains refund under this section shall be the capital gains refund otherwise determined under this section multiplied by the Alberta allocation factor, except that this subsection does not apply to the capital gains refund referred to in subparagraph (b)(iii) of the definition of “capital gains dividend account” or the description of B in the definition of “refundable capital gains tax on hand” in subsection 131(6) of the federal Act, as made applicable by this section.

(7) Subsections 131(1.3), (1.4), (3), (3.1), (3.2), (5) and (9) and paragraph 131(1.1)(b) of the federal Act do not apply for the purposes of this Act.

(8) If a corporation has filed a return under section 36 for the taxation year within 3 years from the end of the taxation year, the corporation is entitled to and is deemed to have paid on account of its liability under this Act for the taxation year an amount equal to its capital gains refund for the year on the day on which it makes an application in writing containing a calculation of its capital gains refund if, under circumstances in which section 43(1)(d)(ii) or (iii) or (1.2) applies, the day is within the periods referred to in section 43(1)(d)(ii) or (iii) or (1.2), as the case may be.

RSA 2000 cA‑15 s30;2001 c1 s22;2002 c28 s21

Amounts designated by mutual fund trust

30.01 When a corporation is or becomes a beneficiary under a mutual fund trust, subsections 132(5.1) and (5.2) and sections 132.1 and 132.11 of the federal Act apply for the purposes of determining the income of the corporation under this Act.

RSA 2000 cA‑15 s30.01;2001 c1 s23;2006 c10 s7

Mutual funds - qualifying exchange

30.1 Section 132.2 of the federal Act applies for the purposes of this Act.

1996 c4 s11

Communal organizations

30.2 Section 143 of the federal Act applies for the purposes of this Act.

2006 c10 s8

Patronage

31(1) Subject to subsection (2), the provisions of section 135 of the federal Act with respect to the deduction from income of payments made pursuant to allocations in proportion to patronage and the inclusion in income of payments received pursuant to allocations in proportion to patronage are, insofar as they apply to corporations, applicable in computing income for the purposes of this Act.

(2) Subsection 135(3) of the federal Act does not apply for the purposes of this Act.

RSA 1980 cA‑17 s31

Agricultural cooperatives

31.1(1) Section 135.1 of the federal Act, except subsection (7), applies for the purposes of this Act.

(2) This section applies after 2005 except that paragraph 135.1(4)(b) of the federal Act as it applies for the purposes of this Act does not apply to any indebtedness entered into before 2006.

2007 c25 s7

Credit unions

32(1) Subject to subsections (2) and (3), section 137 of the federal Act applies for the purposes of this Act insofar as it applies to corporations.

(2) Subsections 137(3) and (4) of the federal Act do not apply for the purposes of this Act.

(3) Repealed 1986 c1 s15.

RSA 1980 cA‑17 s32;1983 c66 s8;1985 c1 s11;1986 c1 s15;
1996 c4 s12

Deposit insurance corporations

33 Section 137.1 of the federal Act, except subsection (9), applies in computing the income of deposit insurance corporations and member institutions for the purposes of this Act.

RSA 1980 cA‑17 s33

Insurance corporations

34(1) Subject to subsections (2) and (3), the rules provided in sections 138, 138.1, 140 and 141.1 of the federal Act apply in computing the taxable income of insurance corporations for the purposes of this Act.

(2) Repealed 1998 c40 s1(10).

(3) The rules provided in section 139 of the federal Act with respect to the conversion of provincially incorporated life insurance corporations into a mutual corporation apply for the purposes of this Act.

(4) Sections 139.1, 139.2 and 141 of the federal Act apply for the purposes of this Act.

(5) Sections 139.1 and 139.2 of the federal Act apply to transactions that occur after December 15, 1998.

(6) Section 141 of the federal Act, as re‑enacted by section 40 of chapter 19, Statutes of Canada 2000, applies after December 15, 1998.

RSA 2000 cA‑15 s34;2001 c1 s24

Financial institutions

34.01 Sections 142.2 to 142.6 of the federal Act apply for the purposes of this Act.

1996 c4 s14

Conversion of foreign bank affiliate to branch

34.011(1) Subject to subsection (2), section 142.7 of the federal Act applies for the purposes of this Act.

(2) If a corporation is

(a) a Canadian affiliate,

(b) an entrant bank,

(d) a corporation with whom an entrant bank does not deal at arm’s length,

within the meaning of section 142.7 of the federal Act and has filed a valid election under the federal Act applicable to make the particular provisions of section 142.7 operative in the determination of its taxable income under the federal Act, and all other conditions that section 142.7 requires have been complied with, the corporation shall, in the determination of its taxable income under this Act, be required to use the same cost, value, tax basis, dividend, non‑capital loss or net capital loss or other amount that was used in the determination of its taxable income under the federal Act.

2002 c28 s22

Cost of tax shelter investments

34.02(1) Subject to subsections (2), (3), (4) and (5), section 143.2, except subsection (15), and subsection 237.1(1) of the federal Act apply in computing the income of a corporation under this Act.

(2) Where the Minister of National Revenue has initiated a federal assessment action for a taxation year of a corporation applying subsection 143.2(13) of the federal Act, the amount deemed to be a limited‑recourse amount in relation to an expenditure pursuant to subsection 143.2(13) of the federal Act is deemed to be the limited‑recourse amount relating to the expenditure under this Act.

(3) Where the Minister of National Revenue has initiated a federal assessment action for a taxation year of a corporation applying subsection 143.2(14) of the federal Act, the corporation and such other taxpayers as the Minister of National Revenue has determined are not dealing at arm’s length for the purposes of section 143.2 of the federal Act are deemed not to be dealing with each other at arm’s length for the purposes of this section.

(4) No amount may be deducted or claimed by a corporation for the purposes of this Act in respect of a tax shelter unless the corporation has filed with the Minister of National Revenue the prescribed form containing prescribed information, including the identification number for the tax shelter, pursuant to the requirements of section 237.1 of the federal Act.

(5) No amount may be deducted or claimed by a corporation for the purposes of this Act for any taxation year in respect of a tax shelter of the corporation if the corporation is liable to a penalty under subsection 237.1(7.4) or 162(9) of the federal Act in respect of the tax shelter or interest on the penalty and

(a) the penalty or interest has not been paid, or

(b) the penalty and interest have been paid, but an amount on account of the penalty or interest has been repaid under subsection 164(1.1) of the federal Act or applied under subsection 164(2) of the federal Act.

(6) Subject to subsections (7) to (11), subsections (1) to (3) apply to property acquired and to outlays and expenses made or incurred by a taxpayer after November 1994.

(7) Subsections (1) to (3) do not apply where

(a) the property was acquired, or the outlay or expense was made or incurred, before 1995 pursuant to an agreement in writing made by the taxpayer before December 1994, or

(b) the property is

(i) a film production prescribed for the purpose of subparagraph 96(2.2)(d)(ii) of the federal Act, as it applies for the purposes of this Act, where

(A) the principal photography of the production began before 1995 or, in the case of a production that is a television series, one episode of the series began before 1995, and

(B) the principal photography of the production was completed before March 2, 1995,

(ii) an interest in a partnership (all or substantially all of the property of which is a film production referred to in subclause (i)) acquired before 1995 by a taxpayer that is a partnership,

and the following conditions are met:

(c) in the case of an interest that is a tax shelter for which section 237.1 of the federal Act requires an identification number to be obtained from the Minister of National Revenue under the federal Act, the identification number was obtained before December 1994;

(d) there is no agreement or other arrangement under which the taxpayer’s obligations with respect to the interest can be changed, reduced or waived if there is a change to this Act or the federal Act or if there is an adverse assessment under this Act or the federal Act.

(8) Subsections (1) to (3) do not apply to revenue guarantees prescribed for the purpose of subparagraph 96(2.2)(d)(ii) of the federal Act, as it applies for the purposes of this Act, that were granted before 1996.

(9) Subparagraph 143.2(6)(b)(ii) of the federal Act as it applies for the purposes of this Act does not apply

(a) to property acquired, or outlays or expenses made or incurred, by a taxpayer before April 27, 1995, or

(b) to property acquired, or outlays or expenses made or incurred, by a taxpayer before 1996 pursuant to a particular agreement in writing made by the taxpayer before April 27, 1995 where the following conditions are met:

(i) in the case of a property that is a tax shelter for which section 237.1 of the federal Act requires an identification number to be obtained from the Minister of National Revenue under the federal Act, the identification number was obtained before April 27, 1995, and

(ii) there is no agreement or other arrangement under which the taxpayer’s obligations under the particular agreement can be changed, reduced or waived if there is a change to this Act or the federal Act or if there is an adverse assessment under this Act or the federal Act.

(10) Paragraph 143.2(7)(a) of the federal Act, as it applies for the purposes of this Act, is to be read without reference to “not exceeding 10 years” where

(a) the indebtedness arises

(i) pursuant to the terms of an agreement in writing made by the taxpayer before April 27, 1995,

(ii) before 1996, in respect of the acquisition of a film production prescribed for the purpose of subparagraph 96(2.2)(d)(ii) of the federal Act, as it applies for the purposes of this Act, or an interest in a partnership all or substantially all of the property of which is either a film production prescribed for the purpose of that subparagraph or an interest in one or more partnerships all or substantially all of the property of each of which is such a film production, where

(A) the principal photography of the production began before 1996 or, in the case of a production that is a television series, the principal photography of one episode of the series began before 1996, and

(B) the principal photography of the production was completed before March 1996,

(iii) before July 1995

(A) pursuant to the terms of a document that is a prospectus, preliminary prospectus or registration statement filed before April 27, 1995 with a public authority in Canada pursuant to and in accordance with the securities legislation of Canada or of any province and, where required by law, accepted for filing by the public authority, and the funds so raised were expended before 1996 on expenditures contemplated by the document, or

(B) pursuant to the terms of an offering memorandum distributed as part of an offering of securities where

(I) the memorandum contained a complete or substantially complete description of the securities contemplated in the offering as well as the terms and conditions of the offering,

(II) the memorandum was distributed before April 27, 1995,

(III) solicitations in respect of the sale of the securities contemplated by the memorandum were made before April 27, 1995,

(IV) the sale of the securities was substantially in accordance with the memorandum, and

(V) the funds were expended before 1996 in accordance with the memorandum,

and

(b) the following conditions are met:

(i) in the case of an interest to which clause (a)(i) or (iii) applies that is a tax shelter for which section 237.1 of the federal Act requires an identification number to be obtained from the Minister of National Revenue under the federal Act, the identification number was obtained before April 27, 1995;

(ii) there is no agreement or other arrangement under which the taxpayer’s obligations with respect to the interest can be changed, reduced or waived if there is a change to this Act or the federal Act or if there is an adverse assessment under this Act or the federal Act.

(11) Subsection 143.2(8) of the federal Act, as it applies for the purposes of this Act, does not apply to a taxpayer in respect of an indebtedness

(a) where the indebtedness

(i) arose, and

(ii) is related to property acquired, or outlays or expenses made or incurred, by the taxpayer

before April 27, 1995, or

(b) where the indebtedness

(i) arose, and

(ii) is related to property acquired, or outlays or expenses made or incurred, by the taxpayer,

before 1996 pursuant to a particular agreement in writing made by the taxpayer before April 27, 1995 and there is no agreement or other arrangement under which the taxpayer’s obligations under the particular agreement can be changed, reduced or waived if there is a change to this Act or the federal Act or if there is an adverse assessment under this Act or the federal Act.

(12) Subsections (4) and (5) apply after December 1, 1994.

2001 c1 s25

Interest

34.1 Section 148 of the federal Act applies for the purposes of this Act.

1984 c3 s10

Exemptions

35(1) No tax is payable under this Act

(a) on the taxable income of a corporation, other than a prescribed corporation, for a period when section 149 of the federal Act applies to exempt the taxable income of the corporation from federal tax,

(b) on the taxable income of a corporation when that corporation was a non‑resident owned investment corporation within the meaning of subsection 133(8) of the federal Act, or

(c) by a corporation in respect of which an election has been made for the taxation year pursuant to subsection 143(2) of the federal Act and the Minister has accepted the election pursuant to subsection 143(3) of the federal Act.

(1.1) Subsection (1) does not apply in respect of the taxable income of a benevolent or fraternal benefit society or order from carrying on a life insurance business or, for greater certainty, from the sale of property used by it in the year in, or held by it in the year in the course of, carrying on a life insurance business.

(1.2) For the purposes of subsection (1.1), the taxable income of a benevolent or fraternal benefit society or order from carrying on a life insurance business shall be computed on the assumption that it had no income or loss from any other sources.

(2) If it is necessary for the purposes of this Act to ascertain the taxable income of a corporation for a period that is a part of a taxation year, the taxable income for the period is deemed to be the proportion of the taxable income for the taxation year that the number of days in the period bears to the number of days in the taxation year.

(2.1) Subject to subsection (2.2), subsection (1) applies to an insurer described in paragraph 149(1)(t) of the federal Act only in respect of the part of its taxable income for a taxation year determined by the formula

A x B x C
D

where

A is its taxable income for the year;

B is

(a) 1/2, where less than 25% of the total of the gross premium income (net of reinsurance ceded) earned in the year by it and, where it is not a prescribed insurer for the purpose of paragraph 149(1)(t) of the federal Act, by all other insurers that

(i) are specified shareholders of the insurer,

(ii) are related to the insurer, or

(iii) where the insurer is a mutual corporation, are part of a group that controls, directly or indirectly in any manner whatever, or are controlled, directly or indirectly in any manner whatever by, the insurer,

is in respect of insurance of property used in farming or fishing or residences of farmers or fishermen, and

(b) 1, in any other case;

C is the part of the gross premium income (net of reinsurance ceded) earned by it in the year that, in the opinion of the Provincial Minister, is in respect of insurance of property used in farming or fishing or residences of farmers or fishermen;

D is the gross premium income (net of reinsurance ceded) earned by it in the year.

(2.2) Subsection (2.1) does not apply in respect of an insurer described in paragraph 149(1)(t) of the federal Act in respect of the taxable income of the insurer for a taxation year where more than 90% of the total of the gross premium income, net of reinsurance ceded, earned in the year by the insurer and, where the insurer is not a prescribed insurer under the federal Act, all other insurers that

(a) were specified shareholders of the insurer,

(b) were related to the insurer, or

(c) where the insurer is a mutual corporation, were part of a group that controlled, directly or indirectly in any manner whatever, or were controlled, directly or indirectly in any manner whatever, by the insurer,

is in respect of insurance of property used in farming or fishing or residences of farmers or fishermen.

(2.3) For the purposes of this Act, in computing the taxable income of an insurer for a particular taxation year, the insurer is deemed to have deducted under paragraphs 20(1)(a), 20(7)(c) and 138(3)(a) and section 140 of the federal Act in each of the taxation years preceding the particular year and in respect of which paragraph 149(1)(t) of the federal Act applied to the insurer, the greater of

(a) the amount it claimed or deducted under those provisions for that preceding year, and

(b) the greatest amount that could have been claimed or deducted under those provisions to the extent that the total of them does not exceed the amount that would be its taxable income for that preceding year if no amount had been claimed or deducted under those provisions.

(3) Where, at any time (in this subsection referred to as “that time”), a corporation referred to in subsection (1)(a) becomes or ceases to be exempt from tax under this Act on its taxable income otherwise than by reason of paragraph 149(1)(t) of the federal Act, as it applies for the purposes of this Act, the following rules apply:

(a) the taxation year of the corporation that would otherwise have included that time is deemed to have ended immediately before that time, a new taxation year of the corporation is deemed to have begun at that time and, for the purpose of determining the corporation’s fiscal period after that time, the corporation is deemed not to have established a fiscal period before that time;

(b) for the purpose of computing the corporation’s income for its first taxation year ending after that time, the corporation is deemed to have claimed or deducted, under sections 20, 138 and 140 of the federal Act, as they apply for the purposes of this Act, in computing its income for its taxation year ending immediately before that time, the greatest amount that could have been claimed or deducted for that year as a reserve under those sections;

(c) the corporation is deemed to have disposed, at the time (in this subsection referred to as the “disposition time”) that is immediately before the time that is immediately before that time, of each property that was owned by it immediately before that time for an amount equal to its fair market value at that time and to have reacquired the property at that time at a cost equal to that fair market value;

(d) for the purposes of applying section 23 of this Act and sections 37, 65 to 66.4, 66.7 and 111 of the federal Act, as they apply for the purposes of this Act, to the corporation, the corporation is deemed to be a new corporation the first taxation year of which began at that time;

(e) where, immediately before the disposition time, the corporation’s cumulative eligible capital in respect of a business exceeds the total of

(i) 3/4 of the fair market value of the eligible capital property in respect of the business, and

(ii) the amount otherwise deducted under paragraph 20(1)(b) of the federal Act, as it applies for the purposes of this Act, in computing the corporation’s income from the business for the taxation year that ended immediately before that time,

the excess shall be deducted under paragraph 20(1)(b) of the federal Act, as it applies for the purposes of this Act, in computing the corporation’s income from the business for the taxation year that ended immediately before that time.

(4) Repealed 2001 c1 s26.

(5) Notwithstanding subsection (3), if at any time (the “particular time”) a corporation that is a federal Crown corporation prescribed under the federal regulations for the purposes of section 27 of the federal Act or a wholly‑owned corporation subsidiary to such a corporation ceases to be exempt from tax under this Act, the following rules apply:

(a) the taxation year of the corporation for the purposes of the federal Act that includes the particular time is the first taxable taxation year of the corporation for the purposes of this Act;

(b) the taxable income of the corporation for the first taxable taxation year is the taxable income of the corporation under the federal Act for the same taxation year;

(c) the income tax payable with respect to the amount taxable in Alberta of the corporation for the first taxable taxation year is that proportion of the tax otherwise payable that the number of days in the first taxable taxation year following the particular time bears to the total number of days in the first taxable taxation year;

(d) the corporation is, for the purposes of this Act, deemed to have amalgamated at the beginning of the first taxable taxation year with another corporation which immediately before that time is deemed to have had no shares, paid‑up capital, assets, liabilities or tax balances, so that the rules of section 87 of the federal Act, as made applicable by this Act, will apply to the corporation as if it were a “new corporation” within the meaning of section 87 of the federal Act, except that the taxation year of the corporation referred to in paragraph 87(2)(a) of the federal Act is the same as the taxation year for federal purposes that includes the particular time.

RSA 2000 cA‑15 s35;2001 c1 s26;2002 c28 ss23,34;
2005 c25 s4

Part 8
General

Division 1
Returns

Return to be filed

36(1) A return of a corporation in the prescribed form and containing the prescribed information shall be filed for each taxation year with the Provincial Minister within 6 months from the end of the taxation year by or on behalf of the corporation.

(1.1) Subsection (1) does not apply to the following corporations:

(a) a corporation that is a registered charity throughout the taxation year;

(b) a corporation that

(i) is a Canadian‑controlled private corporation throughout the taxation year,

(ii) has no permanent establishments outside Alberta at any time during the taxation year,

(iii) has no taxable income for the taxation year before any of the amounts referred to in section 39(3)(a) are excluded or deducted for the year,

(iv) is not entitled to the refund of any overpayment for the taxation year,

(v) has gross revenues not exceeding $500 000 as disclosed in its financial statements prepared for the taxation year,

(vi) has no pool amounts available to be carried forward as defined in section 20(1),

(vii) files a return for the taxation year with the Minister of National Revenue under Part I of the federal Act,

(viii) in each taxation year that this Act applies to it, has taxable income or a loss that is the same as and that has been computed in the same manner as its taxable income or loss determined under the federal Act, and

(ix) does not receive payment under section 26.4 of any royalty tax credit instalments in respect of the taxation year;

(1.11) Subsection (1.1) does not apply to a qualified corporatio

About Us

Questions and Comments