Additional tax relief coming to Islanders

Small businesses may also benefit financially from changes announced Tuesday

As a result of changes to tax policy on P.E.I., 5,200 Islanders no longer pay any provincial income tax, the government says. The adjustment is the result of new changes to the Basic Personal Amount and Business Tax Credit.

In Budget 2018 the basic amount was raised by an additional $500, bringing the total to $8,660. In a release Tuesday, the government said it will again raise the amount by an additional $500 bringing the new total to $9,160. This change will be made retroactively to Jan. 1, 2018.

“Our economy is stronger than ever and we are continuously looking at ways Islanders can benefit from this success,” said Finance Minister Heath MacDonald.

The finance department said the move will benefit about 84,000 Islanders, saving them an extra $4.1 million a year. Combined with the previously-announced increase for this year, that represents a total savings of $8.2 million.

This represents the fifth increase to the basic personal exemption since 2015, after seven years of no changes. Building on the commitment in Budget 2018 to reduce tax on small business and the new capital investment grant, an additional reduction of 0.5 per cent will be added. This will come into effect Jan. 1, 2019.

“A further reduction in the small business tax will help our vibrant Island businesses continue to thrive and grow,” said Minister MacDonald. “These businesses are the backbone of our provincial economy, they are putting Prince Edward Island and our renowned products on the world map.”

This represents a further $1.2 million in savings for approximately 2,600 small businesses, for a total savings of $2.4 million. This means a savings of up to $5,000 for an individual business.