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Consolidating the Administration of the Provincial and Federal Corporate Tax Compliance and Collection (Co-Sponsored)

Consolidating the Administration of the Provincial and Federal Corporate Tax Compliance and Collection (Co-Sponsored)

Finance & Taxation - Provincial Policy

Sponsor: Edmonton
Co-Sponsor: Medicine Hat

Issue

Alberta and Quebec are the only two remaining jurisdictions in Canada that have not consolidated their corporate income tax administration with the federal government. The duplication of filing requirements imposes an additional tax compliance burden through two returns and creates unnecessary compliance risks for Alberta businesses. From a tax compliance perspective, this continued duplication of functions, including reporting, auditing and returns, is a source of frustration and red tape. 

Background

A competitive tax system is essential to attract and retain business investment, as well as fostering economic growth in a highly competitive global economy. Improving our tax competitiveness, including simplification of compliance, continues to be a matter of crucial importance. 

Since 1962, tax collection agreements (TCAs) have provided an administrative and legislative framework for the harmonization of tax structures, while respective provincial and federal governments’ rights to impose personal and corporate income taxes. The TCAs do not prevent the provinces from continuing to establish their own tax calculations independently of the federal tax calculations. Indeed, personal income taxes in Alberta are collected by the Government of Canada. 

According to a 2006 Ontario Fiscal Review, consolidation of the corporate income tax (which began in Ontario in 2009) was expected to save Ontario businesses $90 million annually from a consolidated tax base and an additional $100 million in compliance costs.1 While Alberta is a smaller province compared with Ontario, the savings for businesses would be substantial and could be reinvested in the provincial economy.

Eleven of 13 provinces have already harmonized corporate tax collection by the federal government. For businesses operating in Alberta, the additional provincial system is an unnecessary regulatory barrier.

Recommendations

The Alberta Chambers of Commerce recommends the Government of Alberta:

  1. Work with the Government of Canada to consolidate the collection and administration of its provincial corporate income tax by the federal government. 

Resources

  1. https://www.fin.gov.on.ca/en/tax/ct/singleadmin.html

Date Approved: May 2018
Date Renewed: May 2021

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