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PEI Dividend Tax Credit

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Atlantic Provinces   ->   Prince Edward Island  -> Dividend Tax Credit
Prince Edward Island Income Tax Act s. 20

Prince Edward Island Dividend Tax Credit

Prince Edward Island's dividend tax credit rates are stated in their Income Tax Act as a percentage of the gross-up on the dividends.

The PEI government indicated in their 2006 budget that the dividend tax credit would be adjusted to preserve the integration between the corporate and personal income tax systems.

PEI Eligible Dividends

Dividends eligible for the enhanced dividend tax credit currently have a gross-up of 45%.  This means that 145% of the actual dividend amount is included in taxable income.  The Federal 2008 Budget reduced the gross-up rate and the dividend tax credit rate for dividends eligible for the enhanced dividend tax credit.  This increased the marginal tax rate on eligible dividends, beginning in 2010.  See the Enhanced Dividend Tax Credit article for details.

The PEI dividend tax credit on eligible dividends was set at 33.8333% of the gross-up amount for years up to 2009, so as the gross-up rate is reduced, the dividend tax credit rate would have been reduced.  However, Bill No. 26, Income Tax (Dividend Tax Credits) Amendment Act was passed.  This bill revises the % of gross-up each year, as shown in the table below.

     PEI Dividend Tax Credit (DTC) for Eligible Dividends

Year Gross-up % DTC as
% of Dividend
Gross-up
DTC as
% of Taxable
Dividend
DTC as % of Actual
Dividend
2007 to 2009 45% 33.8333% 10.50% 15.225%
2010 44% 34.36% 10.50% 15.118%
2011 41% 36.11% 10.50% 14.805%
2012 + 38% 38.13% 10.50% 14.489%

To see the marginal tax rate for eligible dividends, see the marginal tax rates page.

PEI Non-Eligible (Regular, or Small Business) Dividends

The Federal 2017 Fall Economic Statement announced that the gross-up rate for non-eligible dividends (also know as regular dividends, or small business dividends) would be reduced to 16% for 2018, and to 15% for 2019 and later years.

See the tables of non-eligible dividend tax credit rates by province.

The rates for non-eligible, or small business dividends, if the PEI tax credit rate remains at 21% of the federal gross-up, are reflected in the following table.

     PEI Dividend Tax Credit (DTC) for Non-Eligible Dividends

Year Gross-up
Rate
DTC as
% of Dividend
Gross-up
DTC as
% of Taxable
Dividend
DTC as
% of Actual
Dividend
2019 + 15% 21% 2.74% 3.15%
2018 16% 21% 2.90% 3.36%
2016/2017 17% 21% 3.05% 3.57%
2014/2015 18% 21% 3.2% 3.780%
2013 25% 14.5% 2.9% 3.625%
2011/2012 25% 5.0% 1.0% 1.250%
2010 25% 10.5% 2.1% 2.625%
2009 25% 16.0% 3.2% 4.000%
2008 25% 21.5% 4.3% 5.375%
2007 25% 32.5% 6.5% 8.125%

The PEI table of marginal tax rates shows the marginal tax rates for eligible and non-eligible dividends and other income.

The dividend tax credit rate is normally adjusted to reflect the changes in the small business corporate tax rate.

PEI Small Business
Corporate Tax Rate
Year Rate
2013/2014 4.5%
2010-2012 1.0%
2009 2.1%
2008 3.2%
2007 4.3%

Revised: October 24, 2017

 

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