AB Individual Return

Alberta residency test

Alberta provincial tax applies if the individual is resident in Alberta on December 31 of the tax year. Residency is determined by significant residential ties (dwelling, spouse/dependants in province).

T1 Structure

| Schedule | Purpose | |---|---| | T1 General | Federal return | | Form AB428 | Alberta Tax and Credits | | Schedule AB(S12) | Alberta Tax (calculation) | | Schedule 1 | Federal tax calculation |

Provincial Credits (Form AB428)

| Credit | Amount (2025) | Type | |---|---|---| | Basic personal amount | $21,003 | Non-refundable | | Spousal / common-law partner | $21,003 (reduced by spouse income) | Non-refundable | | Eligible dependant amount | $21,003 | Non-refundable | | CPP/QPP contributions (employee) | Actual contributions | Non-refundable | | EI premiums | Actual premiums | Non-refundable | | Age amount (65+) | $5,853 | Non-refundable (income-tested) | | Pension income amount | Up to $1,636 | Non-refundable | | Disability amount | $16,494 | Non-refundable | | Tuition and education | Actual tuition | Non-refundable | | Medical expenses | Excess over 3% of net income (or $2,635) | Non-refundable | | Donations and gifts | First $200 at 10%; excess at 21% | Non-refundable | | Political contributions (Alberta) | 75% of first $200 + 50% next $900 + 33.33% above | Non-refundable |

Credit rate

10% (Alberta's flat rate applies to convert credit amounts to tax reductions).

Alberta Family Employment Tax Credit (AFETC)

| Element | Detail | |---|---| | Eligibility | Working families with children under 18, family income below threshold | | Maximum benefit | Varies by number of children (up to ~$1,469 for 4+ children) | | Reduction rate | Phases out at 4% of family income above ~$43,295 | | Type | Refundable credit | | Claim | Automatic through T1 filing |

Taxable income basis

Same taxable income as federal (Line 26000 of T1).

Alberta tax formula

Alberta tax = Taxable income × 10%.

Credit reduction and basic tax formula

Total credit amounts × 10% = credit reduction. Alberta basic tax = Step 2 − Step 3.

TOSI addition

If applicable, additional tax at highest federal rate on split income.

Refundable credits application

Subtract AFETC and other refundable credits.

Net provincial tax payable

Result of Steps 1-5 = Alberta tax payable on Form AB428.

Alberta Dividend Tax Credit

| Dividend Type | Federal Gross-Up | AB Credit Rate | |---|---|---| | Eligible dividends (public corps) | 38% gross-up | 8.12% of taxable amount | | Non-eligible dividends (CCPCs) | 15% gross-up | 2.31% of taxable amount |

Capital gains inclusion rate

50% inclusion rate for all capital gains; the proposed 66.67% increase and $250,000 threshold were cancelled March 21, 2025

Combined rate on capital gains (50% inclusion, top bracket, AB)

21.5%

Lifetime Capital Gains Exemption (qualifying small business shares, 2025)

$1,250,000

LCGE on qualified farm/fishing property

$1,250,000

Self-Employment Considerations

| Item | Detail | |---|---| | CPP contributions | Both portions: 11.9% on pensionable earnings $3,500 -- $71,300 | | CPP2 | Additional 4% on earnings $71,300 -- $79,400 (2025) | | No provincial payroll tax | Alberta does not levy employer payroll tax | | Business expenses | Deducted against federal + provincial income | | Home office | Federal rules apply; reduces both federal and provincial income |

Income Patterns

| Pattern | Treatment | Notes | |---|---|---| | T4 EMPLOYMENT INCOME | Taxable | Box 14 of T4 | | T4A PENSION, RETIREMENT | Taxable | May qualify for pension income amount | | T5 INVESTMENT INCOME (interest, dividends) | Taxable | Eligible dividends get enhanced gross-up and credit | | T3 TRUST INCOME | Taxable | Various character allocations | | RENTAL INCOME (T776) | Taxable | Net rental income | | SELF-EMPLOYMENT (T2125) | Taxable | Net business income | | CAPITAL GAINS (Schedule 3) | 50% taxable | Inclusion rate for individuals |

Alberta-Specific Considerations

| Item | Treatment | |---|---| | Resource royalties (farm/oil) | May have Alberta Royalty Tax Credit implications | | Farm income | Small farm tax credit may apply | | Scientific research credits | Alberta SRED top-up (10% of qualifying SR&ED expenditures) |

Multi-province residency rule

If the individual moved provinces during the year, provincial tax is based on province of residence on December 31. Income earned in another province while resident there does NOT change this -- all income is taxed by the province of residence on Dec 31 (with some exceptions for business income allocation).

No PST does not affect income tax

Alberta residents benefit from no PST on purchases but this is a consumption tax matter -- it does not affect income tax computation.

Federal Canada Carbon Rebate applies

The federal Canada Carbon Rebate (formerly Climate Action Incentive) applies to Alberta residents. Claimed automatically on return.

Filing Requirements

| Item | Detail | |---|---| | Form | T1 General + Form AB428 (Alberta Tax and Credits) | | Deadline | 30 April 2026 (15 June if self-employed; balance due remains 30 April) | | Instalments | Required if net tax owing > $3,000 in current and either of prior two years | | Penalty (late filing) | 5% of balance owing + 1% per month (max 12 months) | | Interest | Prescribed rate compounded daily on balance owing |

Prohibition 1

NEVER apply provincial tax rates for another province to an Alberta resident

Prohibition 2

NEVER apply PST calculations to Alberta transactions

Prohibition 3

NEVER claim Alberta credits without confirming Alberta residency on December 31

Prohibition 4

NEVER apply bracket-based rates -- Alberta uses a single 10% flat rate

Prohibition 5

NEVER ignore the federal tax calculation -- provincial tax is in addition to federal

Prohibition 6

NEVER present tax calculations as definitive -- always label as estimated