Prince Edward Island's budget implementation bill received Royal Assent on November 17, 2021. Bill 37 includes all of the tax measures that were introduced in the province's 2021 budget, including a decrease in P.E.I.'s small business corporate income tax rate to 1% (from 2%) effective January 1, 2022. The bill also includes a consequential decrease to the non-eligible dividend tax credit, among other personal tax measures.

The small business corporate income tax rate reduction is considered enacted for U.S. GAAP purposes, as of November 17, 2021 (the date the bill received Royal Assent). The tax rate reduction of the small business corporate income tax rate was considered substantively enacted under IFRS and Accounting Standards for Private Enterprise on October 26, 2021, the date the bill received first reading (as Prince Edward Island has a majority government).

Personal tax measures

P.E.I. Bill 37 also includes personal tax measures announced in the province's 2021 budget to:

  • Increase the basic personal income tax exemption amount to $11,250 (from $10,500), effective January 1, 2022
  • Increase the low-income threshold to $20,000 (from $19,000), effective January 1, 2022.

In addition, the bill includes a decrease to the provincial non-eligible dividend tax credit to 1.30% (from 1.96%), effective January 1, 2022. As a result, the combined top marginal rate on non-eligible dividends for P.E.I. residents in 2022 is set to increase to 47.04% (from 46.22%).

For more information, contact your KPMG adviser.

Information is current to December 6, 2021. The information contained in this publication 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