ALBERTA CORPORATE TAX ACT INFORMATION CIRCULAR:
Net File for Alberta Corporate Income Tax: as of July 8, 2011, Tax and Revenue Administration (TRA) offers Alberta corporate income tax filers the option of filing returns electronically. For more information, see Corporate Income Tax - Net File or Frequently Asked Questions .
NOTE: This information circular is intended to explain legislation and provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this information circular and governing legislation, the legislation takes precedence.
This information circular is intended to help corporations and their representatives decide whether the corporation is required to file an Alberta corporate income tax AT1 return and, if so, how to file it. Topics covered include:
- Unless it is exempt, a corporation is required to file an Alberta corporate income tax return if it had a permanent establishment in Alberta at any time during the taxation year. “Permanent establishment” is explained in paragraphs 4 and 5, below.
- A corporation is exempt from filing an AT1 return for a taxation year if it meets all of the following criteria in the year. The corporation
- is a Canadian-controlled private corporation;
- has permanent establishments only in Alberta;
- has no taxable income before:
- applying losses carried back from a following year, or
- excluding any amount resulting from the exercise of an option in a following year;
- is not claiming a refund of tax instalments;
- gross revenue for the year less than $500,000;
- has no amounts to report on Schedule 5, Royalty Tax Deduction;
- filed a federal return;
- had discretionary tax account balances (e.g. undepreciated capital cost, reserves, losses) throughout the year that were the same for Alberta purposes as they were for federal purposes;
- is not claiming the royalty tax credit and has not received royalty tax credit instalments for the taxation year; and
- is not claiming an Alberta scientific research and experimental development (SRED) tax credit.
- Under section 35 of the Alberta Corporate Tax Act (the Act), certain corporations are
not required to pay tax on their taxable incomes. These corporation are not required to file an AT1 return for a taxation year if, throughout the year, they did not have to pay Alberta tax on their taxable income. Examples are crown, pension, and non-profit corporations. However, an Alberta return is required, if a corporation is claiming a royalty tax credit or an Alberta SRED tax credit.
- According to the Act, a corporation has a permanent establishment in Alberta if it meets any of the following requirements. The corporation
- has a fixed place of business in Alberta, including a branch, office, workshop, factory, warehouse, farm, mine, timber land or oil well;
- has no fixed place of business, but Alberta is the principal place in which the corporation's business is conducted;
- carries on business in Alberta through an agent or employee who has general authority to contract for the corporation or who regularly fills orders from a stock of the corporation's merchandise in Alberta;
- owns land in Alberta and has a permanent establishment elsewhere in Canada;
- uses substantial machinery or equipment in Alberta;
- is an insurance corporation registered or licensed to do business in Alberta; or
- is resident in Canada and does not otherwise have a permanent establishment in Canada, but is deemed to have a permanent establishment in Alberta if it has its registered office in Alberta or its articles, charter or bylaws designate Alberta as its office or registered office.
- In some cases, it may not be clear if a corporation meets any of the above criteria. For instance, a corporation may not be sure whether the authority granted to an agent constitutes "general authority to contract" or whether the equipment it uses in Alberta is "substantial" equipment. These types of questions can usually be answered only after an analysis of all of the relevant facts. Interpretation Bulletin CTIB-1, Taxability of a Corporation in Alberta on the Basis of Permanent Establishment provides more information about the criteria for permanent establishment. Tax and Revenue Administration (TRA) will give an opinion on the question of permanent establishment if the corporation provides the relevant facts. For further information, please contact
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