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2016 Combined Federal and Provincial Marginal Tax Rates for PEI

Based on information announced by government to April 30, 2016

Note: These rates apply to regular income, such as employment, interest and business income. Taxable Canadian dividends are taxed at lower rates (see approximate tax rates below), and only 50% of capital gains are taxable. Effects of various clawbacks are excluded, which can have a substantial impact.

Personal Taxable Income Bracket Tax Rate
Up to $11,474 (the federal basic personal amount is $11,474) 0.00%
$11,475 to $11,571 (PEI low income tax reduction ends at $11,571) 9.80%
$11,571 to $17,000 24.80%
$17,001 to $23,000 (clawback of PEI low income tax reduction) 29.80%
$23,001 to $31,984 24.80%
$31,985 to $45,282 28.80%
$45,283 to $63,969 34.30%
$63,970 to $90,563 (Note: OAS clawback starts at $73,757) 37.20%
$90,564 to $98,314* 42.70%
$98,315 to$140,388 44.37%
$140,389 to $200,000 47.37%
$200,001 and above 51.37%

*P.E.I. surtax starts at $98,315 assuming the only credit claimed is the basic amount  

Important: When an individual changes tax brackets, their additional income is taxed at the higher rate, but income earned up to the new bracket is still taxed at the lower rates.  Rates vary by province and territory, and may be changed at any time by legislation.  In addition, certain types of income may be taxed differently (e.g. foreign income, dividends, capital gains, etc.), and certain tax credits and income are subject to clawbacks (e.g. age credit, Old Age Security, Employment Insurance).  Contact your tax advisor for the most current information.

Table of Approximate Marginal Tax Rates

Taxable Income Bracket  Normal Income Eligible Dividends* Ineligible Dividends
Rounded Approximations only
Up to $10,000 0% 0% 0%
$10,000 to $45,000 27% 5% 18%
$45,000 to $91,000 36% 15% 27%
$91,000 to $140,000 43% 24% 35%
$140,000 to $200,000 47% 29% 39%
$200,000 and above 51% 34% 44%

*Eligible dividends are typically those paid by public companies and certain qualifying amounts paid by private companies.

Frequently used tax credits, with the amount claimed and tax savings are as follows:

Federal amount PEI amount Combined tax savings
Basic Personal Amount $11,474 $8,000 $2,505**
Amount for spouse or common-law partner (nil income) $11,474 $6,795 $2,387**
Amount for children under age 18 Cancelled Nil Nil
Age amount (up to net income of $35,466 / $28,019, reducing thereafter) $7,125 $3,764 $1,438**
Disability amount (excluding child supplement) $8,001 $6,890 $1,875

** The combined tax savings is slightly higher for incomes above $98,315 (because of PEI surtax).

Blair Corkum, CPA, CA, R.F.P., CFP, CFDS, CLU, CHS holds his Chartered Professional Accountant, Chartered Accountant, Registered Financial Planner, Chartered Financial Divorce Specialist as well as several other financial planning related designations. Blair offers hourly based fee-only personal financial planning, holds no investment or insurance licenses, and receives no commissions or referral fees. This publication should not be construed as legal or investment advice. It is neither a definitive analysis of the law nor a substitute for professional advice which you should obtain before acting on information in this article. Information may change as a result of legislation or regulations issued after this article was written.©Blair Corkum