As an entrepreneur, there are a few things you just can’t neglect, including your taxes. However, as a new business owner, you might find yourself stuck on how to calculate your tax rates and pay your taxes on time to avoid interest or penalties. Alberta’s tax system is similar to other provinces in Canada, but there are some unique tax credits available for Alberta residents that you can access to reduce your tax payments.
Let’s dive into the details of Alberta’s tax rates so you can pay your taxes on time and be in good financial standing with the provincial government.
How do I calculate my personal income tax rate in Alberta?
To get a better sense of the taxes you pay on personal income, let’s look at how your income is determined according to the provincial government. Your personal income is calculated based on the total of all of your income streams for the year, including employment, self-employment, pension, saving plans, investments, benefits, dividends, etc. The Alberta government then subtracts any applicable tax credits or deductions from your income to come up with your taxable income amount.
In Alberta, there is a specific amount of income you can earn before you have to start paying taxes, called your “basic personal” or “personal amount.” For the 2019 fiscal year, the federal basic personal amount is $12,069, and the Alberta personal amount is $19,369. Lucky for Alberta residents, Alberta has the highest basic personal amount in Canada.
Personal income tax brackets and rates in Alberta
To determine your personal tax amounts, you will need to look at Alberta’s tax brackets. A tax bracket is the tax rate that’s applied to a set range of personal income. Alberta is similar to most provinces in Canada when it comes to tax brackets and uses a progressive tax structure that mirrors the federal tax structure. This means Alberta’s tax brackets are not static and will increase each year based on inflation.
Launch Your Business for Just $49
Take your side hustle