Prince Edward Island Budget 2018-2019
P.E.I. 2018 Budget
On April 6, 2018, Honourable Heath MacDonald, Minister of Finance presented the Prince Edward Island budget for 2018-19. The budget includes reductions to personal income tax and corporate income tax, a sales tax rebate, an increase in bursaries for Island post-secondary students, and additional help repaying student loans for students who reside on P.E.I. after they graduate.
Personal Income Tax
The Basic Personal Amount is the amount that Islanders do not have to pay P.E.I. income tax on. The Basic Personal Amount is increasing by $500 for 2018, and for 2019. The new Basic Personal Amount will be $8,560 for 2018 and $9,160 for 2019. This change will save Islanders $49 in 2018 and $98 in 2019 compared to their 2017 income tax.
The Spouse/Common Law Spouse tax credit and Eligible Dependent/Equivalent to Spouse tax credit give a tax savings to Islanders whose spouse or eligible dependent has no income or low income. The base used to calculate these P.E.I. tax credits is also increasing for 2018 and 2019. The increase will be proportionate to the increase in the Basic Personal Amount.
Corporate Income Tax
The P.E.I. corporate tax rate for income eligible for the small business deduction will be reduced by 0.5% from 4.5% to 4.0% for this fiscal year. The reduction will be prorated if a company's taxation year straddles the effective date of the change. A company whose taxation year starts on or after the effective date will be able to save up to $2,500. A further unspecified reduction in the small business tax rate was promised for the future.
In the budget address, the Minister said: "The dividend tax credit will also be adjusted to preserve the integration between the corporate and personal income tax systems." This means that the personal income tax rate on dividend income will be increased so that the total corporate and personal income tax collected on income earned through a company remains roughly the same as it was before the reduction in the small business tax rate.
Beginning on May 1, 2018, eligible Island businesses will be able to apply for the new Small Business Investment Grant. This new 15% rebate on up to $25,000 of qualifying investments in the improvement of a business will save an eligible business up to $3,750. Details of who will be eligible and what types of expenditures will qualify are expected to be released soon. You can find additional information about the grant on the Province's website as it becomes available.
A new Clean Energy Price Incentive will begin on July 1, 2018. It will be a point of sale rebate equivalent to the provincial portion of the HST. It will apply to the first block of residential electricity (the first 2,000 kwh consumed per month), firewood, wood pellets, and propane. The Province estimates average annual savings on residential electricity of $120 per household. Households with high electricity consumption (e.g. homes with heat pumps) could save up to $25 per month.
Support for Island Students
Island students earning their first degree at UPEI or Maritime Christian College, or their first diploma at Holland College or Collège de l’Île will be eligible for the new Island Advantage Bursary. Students completing a four-year degree will receive up to $3,600 during their studies. Students completing a two-year diploma will receive up to $1,200. This is in addition to the amounts they are eligible to receive under the existing George Coles Bursary, Island Student Award, Island Skills Award, and George Coles Graduate Bursary.
Additional support will be available to Island students who have a greater financial need. A student attending a P.E.I. publicly-funded post-secondary institution who meets the income requirements for the Canada Student Grant will be eligible for an additional Island Advantage bursary.
Island students are eligible for a grant of up to $2,000 per year of study towards the repayment of their P.E.I. student loans under P.E.I.'s existing Debt Reduction Grant Program. Beginning with the 2018-19 academic year, Island students who reside in P.E.I. within three years of graduation will be eligible for up to $1,500 per year of study of additional grants.
The Province continues to negotiate with the Federal government on a framework for the taxation of cannabis, and a carbon plan to deal with the Federal government's intention to implement carbon taxes in all provinces and territories.