Provinces

Corporate tax in Alberta: the AT1 return, the rates, and no provincial sales tax

Alberta collects its own corporate tax, so you file an AT1 with the province as well as a federal T2. It charges 2% on the first $500,000 of profit, 8% above.

By Matthew Reeves, FounderAugust 23, 2026 · 8 min read

Summary

Alberta is one of only two provinces that collect their own corporate income tax rather than leaving it to the federal government. A company operating there files two corporate returns a year: the T2, the federal corporation income tax return filed with the Canada Revenue Agency, and the AT1, the Alberta Corporate Income Tax Return filed with Alberta’s own tax department.

You file an AT1 if your corporation had a permanent establishment in Alberta at any point in the year, meaning a fixed place it operates from (e.g. an office, a shop or a warehouse). One day of presence pulls the whole year onto an AT1, though Alberta taxes only the share of your profit that gets allocated to Alberta.
Alberta has a filing exemption whose name oversells it. It isn’t a break for small companies: all seven conditions have to hold at once, and one is that the company made no profit at all.
The AT1 is due six months after your year end, the same clock as the federal return (June 30 for a December 31 year end), and almost every corporation now has to file it electronically.
Alberta charges 2% on the first $500,000 of active business income and 8% above that, both current for 2026. Active business income is profit from running a business rather than from investments, and the 2% needs a Canadian-controlled private corporation, broadly a private company based in Canada not controlled by non-residents or public companies. Federal tax comes on top, so you pay roughly 11% of that first $500,000 in combined federal and Alberta corporate tax, and roughly 23% above it.
Alberta charges no provincial sales tax and no employer payroll tax, so a sale there carries only the 5% federal goods and services tax. Workers’ compensation insurance is the one provincial employer cost that does apply.

We’d treat the AT1 as a return you always prepare alongside the federal one, unless the company is dormant, meaning no activity and no money through the bank all year.

Alberta’s separate corporate tax return

Every province except Alberta and Quebec has signed a tax collection agreement with the federal government, which lets the CRA assess and collect that province’s corporate tax as part of the federal return. Alberta has never signed one, so it writes its own corporate tax law, administers it itself, and charges its own penalties on a return paid into its own account.¹

The AT1 goes to Tax and Revenue Administration, a division of Alberta Treasury Board and Finance that does in Alberta what the CRA does federally. The return is due within six months of your year end. Alberta counts it as filed on the day it receives it, not the day you send it, so a return mailed on the deadline is late.² For tax years beginning after December 31, 2024, nearly every corporation has to file electronically, using software Alberta has certified for its Net File service (e.g. the mainstream commercial tax programs, all of them on the list Alberta publishes). Filing on paper when you shouldn’t costs a flat $1,000, even where no tax was owing.³

Who has to file an AT1

Alberta taxes a corporation that had a permanent establishment in the province at any time in the taxation year. A permanent establishment is a fixed place the business operates from, and Alberta’s guidance illustrates it with an office, mine, oil well, farm, factory, workshop or warehouse.⁴ A few situations count with no fixed place at all (e.g. an employee or agent in Alberta with general authority to sign contracts binding the company). Registering to do business in Alberta is a corporate-registry step rather than a tax filing, and isn’t enough on its own.

Alberta also runs the Alberta Corporate Income Tax Filing Exemption, and all seven of its conditions have to hold at once:

The corporation is a Canadian-controlled private corporation, or CCPC.
It has no permanent establishment outside Alberta.
It has no taxable income at all, meaning that after every deduction its profit for tax purposes is zero or negative.
Alberta doesn’t owe it a refund for the year.
Its gross revenue, meaning total sales before any expenses come off, is $500,000 or less. Note this is a different $500,000 from the rate band above, which measures profit.
It files a federal T2.
Its discretionary tax account balances match on the Alberta and federal sides. Discretionary balances are running totals a company carries forward, such as the written-down value of its equipment, reserves claimed, and losses not yet used. They drift apart once a company claims a different amount for Alberta than federally.⁵

Skipping the AT1 saves a preparation fee, but you’re betting all seven conditions held, and nobody reviews that bet until Alberta asks. If one failed, you get 90 days from the day that becomes clear, or from the original deadline if later, to file.

Alberta’s corporate tax rates

Alberta charges 2% on the first $500,000 of active business income earned by a CCPC, and 8% above that, both current for 2026.⁶ The 8% is called the general rate, and it’s also what Alberta charges a company that isn’t a CCPC and what it charges on income that isn’t active business income. Alberta’s rates sit on top of the federal ones, so an Alberta company pays roughly 11% below $500,000, being the federal 9% plus Alberta’s 2%, and roughly 23% above it, being the federal 15% plus Alberta’s 8%.⁷

Alberta’s 8% general rate is the lowest in Canada, and above $500,000 of profit a year it’s worth real money. Below that, the advantage is thinner than Alberta’s reputation suggests. On $200,000 of active business income the whole Alberta layer is $4,000, and Nova Scotia, Manitoba, Saskatchewan and Prince Edward Island all charge less than 2%.⁸ In our view the rate alone is rarely a reason to move. It becomes one only where profit sits consistently well above $500,000 a year.

Paying Alberta

Alberta’s tax for the year is due two months after your year end, and a payment counts on the day Alberta receives it. A CCPC gets a third month if it claims the Alberta small business deduction, which delivers the 2% rate, and had taxable income of $500,000 or less this year or last (taxable profit again, not sales). Most owner-managed companies owe no instalments during the year and simply pay the balance then. Where instalments are required, Alberta wants twelve equal monthly payments, stricter than the federal side, where an eligible small CCPC pays quarterly.⁹

Two administrative habits are worth building, because neither will remind you itself. Since April 1, 2026 Alberta has posted notices of assessment, the letters saying what it thinks you owe and what it changed on your return, to an online account called TRA Client Self-Service rather than mailing them. Online mail is the default for corporations incorporated since that date, corporations that already had an account, and corporations whose accountant or bookkeeper has portal access, so somebody has to be logging in.¹⁰ Moreover, if the CRA reopens a year and changes your federal return, you have 90 days from the date on its notice of reassessment, or from the AT1 deadline if later, to send Alberta a copy. No copy is needed where the federal change doesn’t affect your Alberta tax or credits. Alberta normally has a limited period in which to reopen an assessed year, and skipping the copy means that period never starts running.

Sales tax and payroll in Alberta

Alberta has no provincial sales tax, or PST, and no statute that would create one, so a sale in Alberta carries only the 5% federal goods and services tax, the GST.¹¹ There’s no Alberta vendor registration and no provincial return, so registering for sales tax in Alberta means registering for GST with the CRA. Selling into a province that does charge PST is a separate question, because sales tax follows the buyer’s province, and our guide to GST/HST registration covers it.

Alberta levies nothing on employers’ payroll either. British Columbia, Manitoba, Ontario and Newfoundland and Labrador all charge employers a tax on their wage bill above a threshold that varies by province.¹² Canada Pension Plan and Employment Insurance still apply, but those are federal charges remitted to the CRA.

The one provincial employer cost that does exist in Alberta is workers’ compensation insurance. In an industry Alberta requires to carry coverage, you have to open an account with the Workers’ Compensation Board of Alberta within 15 days of hiring your first worker. Most industries are covered and a few aren’t, so check WCB-Alberta’s list before you hire. One point is easy to miss: owners and directors aren’t covered by their company’s account, and optional personal coverage is what fixes that.¹³

How often this changes

Alberta’s rates move by budget, tabled in late February. Budget 2026 changed neither rate, and when this was written, in August 2026, Alberta had announced no future rate change.
You start operating in a second province. A formula then splits your profit between them, half by where your gross revenue was earned and half by where your salaries and wages were paid. A corporation that paid no salaries or wages in the year is allocated on gross revenue alone, with no halving, which is where an owner taking only dividends ends up.¹⁴
Alberta announced a tax on passenger vehicle rentals in its 2026 budget. That tax isn’t in force yet, and we haven’t stated its rate or start date, because neither could be confirmed against an Alberta government page when this page was last checked. If you rent vehicles out, treat it as one to watch.

Closing thoughts

Alberta’s rate is the part of all this that gets written about, and the part that changes the fewest decisions. The bigger risk is the second return going unnoticed: an AT1 nobody prepared, or a reassessment never copied across. Wherever you incorporate, the useful habit is knowing which government is owed what, and by when.

How we handle it

We prepare the AT1 in the same file as the T2, from the same numbers, rather than rebuilding the Alberta return months later. The Alberta payment dates get set alongside the federal ones at year end. Where a corporation operates in Alberta and elsewhere, we run the split of profit between provinces on both returns so they agree. Corporate filings are in all of our service plans, at a fixed annual fee up front.

Canada Revenue Agency, “Corporation tax rates”, whose table of provincial and territorial rates is headed as excluding Quebec and Alberta because neither has a corporation tax collection agreement with the CRA. Verified 2026-08-23. Confirmed on the Alberta side by Government of Alberta, Tax and Revenue Administration, “Corporate income tax”, verified 2026-08-23, which is the source our provincial dataset cites for Alberta. ↩
Government of Alberta, Tax and Revenue Administration, Information Circular CT-2R11, “Corporate Income Tax Filing and Payment Requirements” (September 2025), paragraphs 12 and 13. Verified 2026-08-23. A year end falling mid-month is due on the same numeric date in the sixth month. A deadline landing on a weekend or holiday rolls forward to the next Alberta business day. ↩
Government of Alberta, Tax and Revenue Administration, “Corporate income tax”, with Information Circular CT-2R11 (September 2025), paragraphs 9 and 14 to 17. Verified 2026-08-23. Paragraph 9 requires certified software, and Government of Alberta, “Alberta Corporate Tax Act: software certified for AT1 returns” (September 17, 2025) is the published list. Insurance corporations, non-resident corporations, corporations reporting in a functional currency and bodies exempt under section 35 of the Alberta Corporate Tax Act are excepted. The former exception for corporations with gross revenue under $1 million has been removed. A paid preparer of more than five AT1s prepared for payment in a calendar year faces $100 for each failure to file electronically. ↩
Government of Alberta, Tax and Revenue Administration, Interpretation Bulletin CTIB-1R2, “Taxability of a Corporation in Alberta on the Basis of Permanent Establishment” (October 2017). Verified 2026-08-23. Paragraphs 2 to 10 carry the fixed-place test and the employee-or-agent extension, paragraph 12 the land-ownership rule, and paragraphs 13 and 14 substantial machinery. The fixed place need not be owned or rented, so long as the corporation maintains a presence in the jurisdiction (paragraph 3). Paragraph 2 is where being registered or licensed, listed in the telephone directory or using letterhead is said not to amount to carrying on business. Authority to contract has to be general, meaning exercised repeatedly over most of the company’s revenue transactions. An order-taker who sends everything to head office for approval doesn’t create a permanent establishment on that ground alone. Owning Alberta land also counts where the corporation has a business location elsewhere in Canada. Machinery counts only where the corporation itself uses it, not where it is rented out or left to a subcontractor. Paragraph 19 adds that a temporary field office on a construction site could, in certain circumstances, be a fixed place of business. ↩
Government of Alberta, Tax and Revenue Administration, Information Circular CT-2R11 (September 2025), paragraphs 2 to 5, with the Alberta Corporate Income Tax Filing Exemption Checklist (January 2025). Verified 2026-08-23. Condition (c) tests taxable income before the application of a loss for a later taxation year and before an amount resulting from an option exercised in a later year. Condition (g) is stated in the circular as discretionary tax account balances (for example, undepreciated capital cost, reserves, losses) being the same for Alberta as for federal purposes. Claiming Alberta’s agri-processing investment tax credit, qualifying environmental trust credit, film and television tax credit or innovation employment grant removes the exemption on its own. Registered charities and bodies exempt under section 35 of the Act are separately excused from filing. Paragraph 18(c) gives a corporation that believed it was exempt and later finds it wasn’t 90 days from that determination, or from the original deadline if later, in which to file. ↩
Government of Alberta, Treasury Board and Finance / Tax and Revenue Administration, “Tax, levy, and prescribed interest rates”, the source our provincial dataset cites for Alberta’s rates. Verified 2026-08-23, and verified 2026-08-13 for the dataset entry itself. The current-rates table showed an 8% general rate, a 2% small business rate and a $500,000 Alberta small business threshold, all effective since July 1, 2020, with nothing pending. Alberta Budget 2026, tabled February 26, 2026, made no corporate rate change. Alberta gives no separate reduced rate for manufacturing and processing. ↩
Federal inputs, both for 2026, from Canada Revenue Agency, “Corporation tax rates”, verified 2026-08-23. The federal small business rate is 9% on the first $500,000 of active business income for an eligible CCPC. The federal general rate is 15% after the federal abatement and the general tax reduction. Our guide to what changed for 2026 covers the federal rates in more detail. The roughly 11% and 23% totals and the $4,000 of Alberta tax on $200,000 of active business income are our own arithmetic on top of those federal rates and the Alberta rates above. Neither government publishes them. ↩
Lower corporate rates for 2026, from the same provincial dataset and each verified against its own provincial issuer on 2026-08-13: Nova Scotia 1.5%, Manitoba 0%, Saskatchewan 1% and Prince Edward Island 1%. Nova Scotia, Prince Edward Island and Saskatchewan also apply their lower rates to a provincial small business limit above the federal $500,000, at $700,000, $600,000 and $600,000 respectively, and our guide to moving provinces sets those out. Alberta’s own $500,000 threshold shrinks whenever the federal small business limit shrinks for passive investment income, which our guide to the corporate investing grind covers. ↩
Government of Alberta, Tax and Revenue Administration, Information Circular CT-2R11 (September 2025), paragraphs 21, 22 and 45 to 49. Verified 2026-08-23. A CCPC also gets the third month, on paragraph 46, where its Alberta tax payable for the year or its first instalment base is $2,000 or less. Paragraph 21 sets the late-filing penalty at 5% of the tax unpaid at the filing deadline. A further 1% of that amount is added for each complete month the return is late, to a maximum of 12 months. The circular states it as a penalty Alberta may assess rather than one that follows automatically. A corporation that isn’t a CCPC gets the same $2,000 exemption but only a two-month deferral. A new corporation other than one formed by amalgamation owes no instalments in its first tax year. Instalments fall due on the last day of each month. A corporation with a floating year end can owe a thirteenth at year end, where the last day of the year falls more than 27 days after the previous instalment date. Where a corporation didn’t file because it believed it was exempt, Alberta uses the date the federal T2 was filed in deciding whether to charge the late-filing penalty, though interest still runs. ↩
Government of Alberta, Tax and Revenue Administration, “Corporate income tax”. Verified 2026-08-23. Online mail through TRA Client Self-Service became the default channel on April 1, 2026. The issuer scopes the change to new corporations incorporated with Alberta Corporate Registry from that date, existing corporations with a TRACS account, and corporations that have given access to a third-party organization. A paper-delivery request lasts two years before it has to be renewed. The 90-day duty to report a federal reassessment sits in section 36.2 of the Alberta Corporate Tax Act, described at Information Circular CT-2R11 (September 2025), paragraphs 18 and 19. The 90 days run from the later of the assessment or determination date and the AT1 deadline. The same duty applies to a Revenu Québec assessment or loss determination. No copy is required where the other jurisdiction’s action doesn’t affect the calculation of Alberta tax or credits. Paragraph 19 is what extends the reassessment period indefinitely where the copy never arrives. ↩
Excise Tax Act, RSC 1985, c E-15, section 165, Justice Laws consolidation, the source behind our provincial dataset’s no-PST entry. Verified 2026-08-13. Subsection 165(1) imposes the tax at 5%, and subsection 165(2) adds a provincial component only for a supply made in a participating province, which Alberta isn’t. Government of Alberta, Treasury Board and Finance, Budget 2026 Fiscal Plan 2026-29 shows no sales tax for Alberta in its table of major provincial tax rates for 2026. Verified 2026-08-23. The Government of Alberta list of provincial taxes and levies contains no sales tax either. An Alberta company selling into a province that does charge one (e.g. British Columbia or Saskatchewan) can still have to register there. ↩
Government of Alberta, Treasury Board and Finance, Budget 2026 Fiscal Plan 2026-29, table of major provincial tax rates for 2026. Verified 2026-08-23. It shows no payroll tax for Alberta, against maximum rates for British Columbia, Manitoba, Ontario, Quebec and Newfoundland and Labrador. Checked negatively as well against the Government of Alberta list of provincial taxes and levies, which contains no employer payroll or health levy of any kind. The table lists maximum rates, and each of the four provinces named in the text exempts payroll below its own threshold, so a small employer there can fall outside the tax. Those thresholds were not verified against each province’s own issuer for this page and are deliberately not stated here. ↩
Workers’ Compensation Board of Alberta, “Worker coverage”, the source our provincial dataset cites. Verified 2026-08-13. The 15-day deadline is stated for employers in an industry Alberta requires to carry coverage, and some industries are exempt and may buy coverage voluntarily. Workers’ Compensation Board of Alberta, “Personal coverage”, verified 2026-08-23, for the position that proprietors, partners and directors of an incorporated business aren’t covered by the company’s account unless they buy optional personal coverage. Neither page ties personal coverage to lawsuit exposure. WCB-Alberta puts that on a different mechanism, in “Coverage for contractors and subcontractors”. Hiring a contractor without a WCB-Alberta account can leave the hiring company responsible for that contractor’s coverage and premiums. A clearance letter obtained before the work starts is what settles which position you’re in. ↩
Government of Alberta, Tax and Revenue Administration, Interpretation Bulletin CTIB-3R2, “Allocating Income to Permanent Establishments” (September 2022), paragraphs 6, 7, 20 and 21. Verified 2026-08-23. Alberta applies the same formula as Part IV of the federal Income Tax Regulations, being half the Alberta share of gross revenue plus half the Alberta share of salaries and wages. Paragraph 7 removes the averaging where a factor is nil. A corporation that paid no salaries and wages for the year is allocated on the gross revenue factor alone. A corporation with no allocable gross revenue is allocated on the salaries and wages factor alone. Neither amount is multiplied by one half in those cases. A corporation with a permanent establishment only in Alberta allocates everything to Alberta and skips the allocation schedule, per Information Circular CT-1R3 (September 2025), paragraphs 11 to 13. Revenue from services is allocated to where the services are performed rather than to where the client is. ↩

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