March 27, 2013
Prince Edward Island's Minister of Finance Wesley Sheridan tabled the province's 2013 budget on March 27, 2013. The budget forecasts a deficit of $58.9 million for 2013-14 and projects a deficit of $34.5 million for 2014-15. The budget increases the small business income tax rate by 3.5% to 4.5% for 2013, among other changes.
Highlights of tax measures announced in the budget are summarized below.
The budget says the government will increase the small business corporate income tax rate to 4.5% (from 1%), effective April 1, 2013. Thus, the combined small business corporate tax rate will be 15.5% (up from 12%). As a result, the corporate income tax rates effective April 1, 2013 will be as follows:
Corporate Income Tax Rates - As of April 1, 2013:
||Prince Edward Island
||Combined Federal and Prince Edward Island|
M & P
1. The small business rate applies to the first $500,000 of active business income.
The budget announces that the province will adjust the dividend tax credit, but does not include details. Prince Edward Island's current combined federal and provincial top marginal tax rates are as follows:
| Combined Top Marginal Tax Rates for 2013|
Interest and regular income
1. The 2013 budget announced that the dividend tax credit will be adjusted but has not yet provided details.
Effective April 1, 2013, Prince Edward Island will consolidate its provincial sales tax and the goods and services tax (GST) to introduce a 14% harmonized sales tax (HST). This measure was announced in the province's 2012 budget.
The 2013 budget restates the government's intention to introduce point-of-sale exemptions for home heating oil, printed books, and children's clothing and footwear, and to introduce an enhanced refundable tax credit for certain taxpayers of up to $200 per year, with payments beginning in July 2013.
The budget estimates the total provincial tax on gasoline to 23.9 cents per litre, effective April 1, 2013.
The budget also adjusts the tax rate on tobacco, effective April 1, 2013. The provincial tax on a carton of 200 cigarettes will now be $45 and $35 per 200 grams of fine cut tobacco.
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Your KPMG adviser can help you assess the effect of the tax changes in this year's Prince Edward Island budget on your personal finances or business affairs, and point out ways to take advantage of their benefits or ease their impact. We can also keep you abreast of the progress of these proposals as they make their way into law and help you bring any concerns you may have to the attention of the Prince Edward Island Ministry of Finance, Energy and Municipal Affairs. For more information, contact your KPMG adviser.
Information is current to March 27, 2013. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.
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