Financial Statutes Amendment Act, 2025 ($)*

Summary#

• Bill 39 makes a wide set of changes to Alberta’s tax, budget, and program laws. The main goals are to cut personal income taxes, tighten corporate tax avoidance rules, adjust how budget surpluses are used, and change funding and oversight rules for several programs and agencies.

• Key changes include a lower income tax rate on the first slice of income, new anti‑avoidance rules for corporations, a small increase to the locomotive fuel tax, new rules for income support amounts, a shift in how surplus cash is saved or used, and changes to legal aid funding and audit oversight.

• Personal income tax: drops the rate to 8% on the first $60,000 of taxable income (10% from $60,000 to $151,234). Creates a new “supplemental tax credit.”

• Corporate tax: adds stronger anti‑avoidance rules and lets the province reassess some cross‑border transactions for a longer time.

• Fuel tax: raises the locomotive fuel tax by 1 cent per litre (from 5.5¢ to 6.5¢), effective March 1, 2025.

• Income support: keeps set amounts for learners and annual increases starting in 2026; moves most other amounts into regulation (set by government rather than in the law).

• Legal system funding: requires Minister approval for Alberta Law Foundation grants over $250,000 and raises the default share for Legal Aid to 50% of trust‑interest revenue (Minister can set a lower share).

• Budget surpluses: allows Treasury Board to put up to half of any surplus cash into the Heritage Fund or debt repayment (their choice), and the other half into the Alberta Fund.

• Oversight: removes the Auditor General’s Audit Committee and changes how reports are delivered. Ends a program that provided health benefits for some privately placed adoptions (start date to be set).

What it means for you#

• Workers and families

  • Lower income tax: You pay 8% (not 10%) on your first $60,000 of taxable income. If you have at least $60,000 in taxable income, you save about $1,200 a year. If you earn less, you save less.
  • Middle incomes: Income between $60,000 and about $151,000 stays at 10%. Higher tax rates above that are unchanged.
  • New supplemental tax credit: People who claim many non‑refundable credits (for example, spouse, age, disability) may get an extra credit. Most people claiming only the basic personal amount will not see a change from this part.

• Students and apprentices on Income Support (learners)

  • Core essential payment amounts are set in the law and start January 1, 2025. Examples: single adult $536/month; two adults $851/month; one adult with one child $920/month. These are maximum core essential amounts, not including shelter. Amounts index (adjust) each year starting in 2026.

• Other Income Support clients (expected to work, working, or barriers to full employment)

  • Core essential, shelter, and most supplementary amounts will be set by regulation (government rule) rather than written into the law. This can change amounts faster, but gives less certainty in advance.

• Adoptive parents (private/agency placements)

  • The province will no longer offer health benefits for children adopted through licensed private agencies. This change will start on a future date set by government.

• Train operators and shippers

  • Locomotive fuel tax rises by 1¢/L. Rail companies pay this; some costs could be passed to shippers.

• People who rely on Legal Aid and law‑related non‑profits

  • Legal Aid Alberta is set to receive a larger default share (50%) of interest from lawyers’ trust accounts, unless the Minister sets a lower amount.
  • Large Alberta Law Foundation grants (over $250,000) need Minister approval or an exemption order. This could affect timing or size of grants to community legal clinics and other groups.

• Tax‑paying businesses

  • Stronger anti‑avoidance rules mean transactions that lack economic substance are more likely to be denied for tax benefits, including some retroactive dates. Some cross‑border cases can be reassessed for longer.

• Citizens following budgets and savings

  • When the province has extra cash at year‑end, half must go to the Alberta Fund. The other half can be split between paying down debt and adding to the Heritage Fund, as Treasury Board decides.

• Government oversight

  • The Auditor General’s Audit Committee is removed. Auditor General reports are sent to the Finance Minister at least 15 days before going to the Legislature’s committee.

Expenses#

Estimated net impact: lowers provincial income tax revenue; other changes have smaller offsetting effects.

• Personal income tax cut reduces provincial revenue starting with the 2025 tax year.
• Corporate anti‑avoidance measures may increase revenue by limiting tax avoidance and allowing more reassessments in specific cases.
• Locomotive fuel tax increase slightly raises revenue.
• Ending health benefits for certain private adoptions likely reduces spending modestly.
• Income Support changes do not set new amounts for most clients in law; costs will depend on future regulations.
• Shifting surplus allocations does not change the size of any surplus; it changes where the money goes (debt, Heritage Fund, Alberta Fund).
• Legal Aid/Alberta Law Foundation changes shift funds within the justice system, not from general tax revenue.

Proponents' View#

• Puts more money in people’s pockets: A simple, broad tax cut helps workers, especially those under $60,000.
• Protects the tax base: Stronger corporate anti‑avoidance rules and longer reassessment in certain cross‑border cases make the system fairer.
• Builds savings and flexibility: Allows Alberta to grow the Heritage Fund while still paying down debt and funding one‑time priorities through the Alberta Fund.
• Supports access to justice: A larger, stable share of trust‑interest revenue for Legal Aid helps people who cannot afford a lawyer.
• Modernizes program management: Setting Income Support amounts by regulation lets government adjust faster to changing needs and costs.
• Streamlines oversight: Removing an extra audit committee step keeps reporting clear while maintaining legislative review.

Opponents' View#

• Less revenue for services: The income tax cut may reduce funding available for health care, education, and other services; higher‑income taxpayers save more dollars than low‑income taxpayers.
• Uncertain benefits from new credit: The supplemental tax credit is complex and may help relatively few people with large credit claims.
• Weaker independence and transparency: Requiring Minister approval for large Alberta Law Foundation grants, and removing the Auditor General’s Audit Committee, could be seen as reducing arm’s‑length oversight.
• Risk to community legal programs: Directing a bigger share to Legal Aid may leave less for other law‑related non‑profits funded by the Foundation.
• Adoption support reduced: Ending health benefits for privately placed adoptions could increase costs for some adoptive families.
• Income Support certainty: Moving most amounts into regulation may reduce predictability and automatic indexation for many clients.
• Business uncertainty: Retroactive and broader anti‑avoidance rules could create uncertainty for legitimate tax planning.
• Shipping costs: A higher locomotive fuel tax may raise shipping costs that flow through to consumers.