March 15, 2021
Canada: Prince Edward Island issues budget 2021–22
On 12 March 2021, Prince Edward Island Finance Minister Darlene Compton tabled the province’s fiscal 2021–22 budget. The budget contains tax measures affecting individuals and corporations.
The Minister anticipates a deficit of CA$120.0m1 for 2020–21 and projects a deficit of $112.1m for 2021–22, followed by further reduced deficits for each of the next two fiscal years ($45.7m for 2022–23 and $27.9m for 2023–24).
The following is a brief summary of the key tax measures.
Business tax measures
Corporate tax rates
No changes are proposed to the general corporate income tax rate. However, effective 1 January 2022, the small-business tax rate will decrease to 1% from 2%. The $500,000 small-business limit remains unchanged.
Prince Edward Island’s (PEI) current and proposed future corporate income tax rates are summarized in Table A.
Table A – 2021 PEI corporate tax rates
* Rates represent calendar-year rates unless otherwise indicated.
Personal income tax rates
The budget does not include any changes to personal income tax rates.
The 2021 PEI personal tax rates are summarized in Table B.
Table B – 2021 PEI personal tax rates
In addition, there is a 10% surtax on provincial income tax in excess of $12,500.
For taxable income in excess of $99,781, the 2021 combined federal-Prince Edward Island personal income tax rates are outlined in Table C.
Table C – Combined 2021 federal and PEI personal tax rates
*The rate on capital gains is one-half the ordinary income tax rate.
Personal tax credits
This budget proposes changes to the following personal credits/amounts:
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), Toronto
Ernst & Young LLP (Canada), Quebec and Atlantic Canada
Ernst & Young LLP (Canada), Prairies
Ernst & Young LLP (Canada), Vancouver