5002-PC Information for Residents of Prince Edward Island

What’s new for Prince Edward Island in 2018?

The basic personal amount has changed.

The spouse or common-law partner amount and the amount for an eligible dependant have changed.

The rate used to calculate the dividend tax credit for other than eligible dividends has decreased to 2.9%.

Prince Edward Island benefits for individuals and families

Prince Edward Island sales tax credit

The Prince Edward Island sales tax credit (PEISTC) is a non-taxable amount paid to help offset the increase in sales tax for households with low and modest incomes. This amount is combined with the quarterly federal GST/HST credit payment.

You do not need to apply for the GST/HST credit or the PEISTC. The Canada Revenue Agency (CRA) will use the information from your return to determine your eligibility and tell you if you are entitled to receive these credits.

File your return

To make sure you get your payments on time, you (and your spouse or common-law partner) need to file your 2018 income tax and benefit return(s) by April 30, 2019. The CRA will use the information from your return(s) to calculate the payments you are entitled to get from these programs.

The PEISTC is fully funded by the Province of Prince Edward Island. For more information about this program, go to Province of Prince Edward Island or call the CRA at 1-800-387-1193.

Completing your Prince Edward Island form

All the information you need to complete Form PE428, Prince Edward Island Tax and Credits, which you need to calculate your Prince Edward Island tax and credits. Complete one copy of Form PE428 and attach it to your return.

Definitions

Spouse refers to a person to whom you are legally married.

Common-law partner refers to a person who is not your spouse but with whom you are in a conjugal relationship, and at least one of the following conditions applies:

• This person has been living with you in a conjugal relationship for at least 12 continuous months (including any period of time where you were separated for less than 90 days because of a breakdown in the relationship).
• This person is the parent of your child by birth or adoption.
• This person has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on them for support.

End of the year means any of the three following dates:

• December 31, 2018
• the date you left Canada if you emigrated in 2018
• the date of death for a person who died in 2018

Form PE428, Prince Edward Island Tax and Credits

Complete Form PE428 if you were a resident of Prince Edward Island at the end of the year.

If you were a non-resident of Canada in 2018, complete Form PE428 if one of the following applies:

• You earned income from employment in Prince Edward Island.
• You received income from a business with a permanent establishment only in Prince Edward Island.

Complete Form T2203, Provincial and Territorial Taxes for 2018 – Multiple Jurisdictions, instead of  Form PE428 if each of the following applies:

• You had income from a business (including income you received as a limited or non-active partner).
• The business has a permanent establishment outside Prince Edward Island.

Part A – Prince Edward Island non-refundable tax credits

The eligibility criteria and rules for claiming most Prince Edward Island non-refundable tax credits are the same as those for the federal non refundable tax credits. However, the value and calculation of most Prince Edward Island non refundable tax credits are different from the corresponding federal credits.

Newcomers to Canada and emigrants

If you reduced your claim for the amounts on lines 300 to 307, 316, 318, 324, and 326 of your federal Schedule 1, you need to reduce the corresponding provincial amounts on lines 5804 to 5820, 5823, 5840, 5844, 5848, 5860, and 5864 in the same manner.

Line 5812 – Spouse or common-law partner amount

You can claim this amount if the rules are met for claiming the amount on line 303 of federal Schedule 1 and your spouse’s or common-law partner’s net income (line 236 of their return, or the amount that it would be if they filed a return) is less than $8,558.

Line 5816 – Amount for an eligible dependant

You can claim this amount if the rules are met for claiming the amount on line 305 of federal Schedule 1 and your dependant’s net income (line 236 of their return, or the amount that it would be if they filed a return) is less than $8,558.

Line 5820 – Amount for infirm dependants age 18 or older

You can claim up to $2,446 for each of your (or your spouse’s or common-law partner’s) dependent children or grandchildren only if they had an impairment in physical or mental functions and were born in 2000 or earlier.

You can also claim an amount for more than one person if each person meets all of the following conditions:

• They were your (or your spouse’s or common law partner’s) parent, grandparent, brother, sister, aunt, uncle, niece, or nephew.
• They were 18 years of age or older.
• They were dependent on you (or on you and others) because of an impairment in physical or mental functions.
• They were a resident of Canada at any time in the year.

You can claim an amount only if the dependant’s net income (line 236 of their return, or the amount it would be if they filed a return) is less than $7,412.

If you had to make support payments for a child, you cannot claim an amount on line 5820 for that child unless each of the following applies:

• You were separated from your spouse or common-law partner for only part of 2018 because of a breakdown in your relationship.
• You do not claim any support amounts paid to your spouse or common-law partner on line 220 of your return.

If each of these conditions is met, you can claim either an amount on line 5820 or an amount on line 220 of your return, whichever is better for you.

How to claim this amount

Complete the calculation for line 5820 using Worksheet PE428. If you are claiming this amount for more than one dependant, enter the total amount on line 5820.

Claim made by more than one person

If you and another person support the same dependant, you can split the claim for that dependant. However, the total amount of your claim and the other person’s claim cannot be more than the maximum amount allowed for that dependant.

Line 5823 – Amount for young children

You can claim this amount if you were a resident of Prince Edward Island at the end of the year and you had a dependent child who was less than six years of age.

You can claim $100 per month for each child if all of the following conditions are met:

• The child was living with you on the first day of the month.
• The child was less than six years of age on the first day of the month you are claiming.
• No one else claimed this amount for the child for the month.
• No one has received a special allowance under the Children’s Special Allowances Act for the child for the month you are claiming.

If you had a spouse or common-law partner at the end of the year, only the person with the lower net income (including zero income) can claim this amount. If you and your spouse or common-law partner have equal net incomes, you have to decide who will claim this amount.

How to claim this amount

Complete the “Details of amount for young children” chart on Form PE428. Give details for each child you are claiming, including the number of months you are claiming for that child.

Enter the total number of months you are claiming for all children beside box 6372 on Form PE428.

Claim $100 for each month, and enter the total amount on line 5823.

The maximum amount you can claim for 2018 is $1,200 for each dependent child.

Line 5836 – Pension income amount

The amount you can claim on line 5836 is the amount on line 314 of your federal Schedule 1 or $1,000, whichever is less.

Line 5840 – Caregiver amount

If, at any time in 2018, you (alone or with another person) kept a dwelling where you and one or more of your dependants lived, you may be able to claim up to $2,446 for each dependant.

Each dependant must have been one of the following:

• your (or your spouse’s or common-law partner’s) child or grandchild
• your (or your spouse’s or common-law partner’s) brother, sister, niece, nephew, aunt, uncle, parent, or grandparent who was resident in Canada

Also, each dependant must meet all of the following conditions:

• They were 18 years of age or older when they lived with you.
• They had a net income in 2018 (line 236 of their return, or the amount it would be if they filed a return) of less than $14,399.
• They were dependent on you because of an impairment in physical or mental functions, or they are your (or your spouse’s or common-law partner’s) parent or grandparent born in 1953 or earlier.

If you had to make support payments for a child, you cannot claim an amount on line 5840 for that child. However, you may be able to claim an amount for that child on line 5840 (in addition to any allowable amounts on lines 5816 and 5848) if each of the following applies:

• You were separated from your spouse or common-law partner for only part of 2018 because of a breakdown in your relationship.
• You do not claim any support amounts paid to your spouse or common-law partner on line 220 of your return.

If each of these conditions is met, you can claim either an amount line 5840 or an amount on line 220 of your return, whichever is better for you.

How to claim this amount

Complete the calculation for line 5840 using Worksheet PE428. If you are claiming this amount for more than one dependant, enter the total amount on line 5840.

Claim made by more than one person

If you and another person support the same dependant, you can split the claim for that dependant. However, the total of your claim and the other person’s claim cannot be more than the maximum amount allowed for that dependant.

If anyone (including you) can claim this amount for a dependant, no one can claim an amount on line 5820 for that dependant.

If anyone other than you claims an amount on line 5816 for a dependant, you cannot claim an amount on line 5840 for that dependant.

Line 5844 – Disability amount (for self)

You can claim this amount if the rules are met for claiming the amount on line 316 of federal Schedule 1.

If you were 18 years of age or older at the end of the year, enter $6,890 on line 5844.

If you were under 18 years of age at the end of the year, complete the calculation for line 5844 using Worksheet PE428.

Line 5848 – Disability amount transferred from a dependant

You can claim this amount if the rules are met for claiming the amount on line 318 of federal Schedule 1.

Line 5850 – Teacher school supply amount

You can claim an amount for expenses incurred to buy eligible school supplies if you meet all of the following conditions:

• You are a teacher or member of the program staff of an early learning and child care centre.
• You resided in Prince Edward Island at the end of the year.
• You bought the supplies with your own money.

Eligible school supplies are listed in the guidelines available from your principal or child care facility operator.

How to claim this amount

List the supplies that you bought on the approval form included with the guidelines.
You can claim up to $500 of the eligible expenses incurred in 2018.

Supporting documents
If you are filing electronically or filing a paper return, do not send any documents. Keep all your documents in case we ask to see them later.

Line 5856 – Your tuition and education amounts

Complete Schedule PE(S11), Provincial Tuition and Education Amounts.

Transferring amounts

If you do not need to use all of your 2018 tuition and education amounts to reduce your provincial income tax to zero, you can transfer all or some of the unused part to your spouse or common-law partner (who would claim it on line 5864), or your parent or grandparent, or your spouse’s or common-law partner’s parent or grandparent (who would claim it on line 5860).

The student must complete the “Transfer or carryforward of unused amount” section of Schedule PE(S11) to transfer an amount. The student must also complete any of the following applicable forms to designate who can claim the transferred amount and to specify the provincial amount this person can claim:

• T2202A, Tuition and Enrolment Certificate
• TL11A, Tuition and Enrolment Certificate – University Outside Canada
• TL11B, Tuition and Enrolment Certificate – Flying School or Club
• TL11C, Tuition and Enrolment Certificate – Commuter to the United States

The transferred amount may be different than the amount calculated for the same person on your federal Schedule 11. Enter the provincial amount you are transferring on line 20 of your Schedule PE(S11).

Carrying forward amounts

Complete the “Transfer or carryforward of unused amounts” section of Schedule PE(S11) to calculate the amount you can carry forward to a future year. This amount is the part of your tuition and education amount that you do not need to use for the year and are not transferring to your spouse or common-law partner, your parent or grandparent or your spouse’s or common-law partner’s parent or grandparent.

Supporting documents
If you are filing electronically, keep all your documents in case we ask to see them later.

If you are filing a paper return, attach your completed Schedule PE(S11), but do not send your other documents. Keep all your documents in case we ask to see them later.

Line 5860 – Tuition and education amounts transferred from a child

The student may be able to transfer all or part of their unused tuition and education amounts for 2018 to their parent or grandparent or their spouse’s or common-law partner’s parent or grandparent.

The maximum amount each student can transfer is $5,000 minus the amount they use even if there is an unclaimed part.

How to claim this amount

Enter on line 5860 the total of all provincial amounts that each student has transferred to you as shown on their Form T2202A, TL11A, TL11B, or TL11C.

Supporting documents
If you are filing electronically or filing a paper return, do not send any documents. Keep all your documents in case we ask to see them later.

The student must attach Schedule PE(S11) to their paper return.

Line 5868 – Medical expenses for self, spouse or common-law partner, and your dependent children born in 2001 or later

The medical expenses you can claim on line 5868 are the same as those you can claim on line 330 of your federal Schedule 1. They have to cover the same 12 month period ending in 2018, and must be expenses that were not claimed for 2017.

The total expenses need to be more than 3% of your net income (line 236 of your return) or $1,678, whichever is less.

Line 5872 – Allowable amount of medical expenses for other dependants

You can claim medical expenses for other dependants in addition to the medical expenses claimed on line 5868.

The medical expenses you can claim on line 5872 are the same as those you can claim on line 331 of your federal Schedule 1. They have to cover the same 12-month period ending in 2018 and must be expenses that were not claimed for 2017.

The total expenses for each dependant need to be more than either 3% of that dependant’s net income (line 236 of their return) or $1,678, whichever is less.

Part C – Prince Edward Island tax

Line 41 – Prince Edward Island tax on split income

If you need to pay federal tax on split income on line 424 of your federal Schedule 1, complete Part 3 of Form T1206, Tax on Split Income, to calculate the Prince Edward Island tax that applies to this income and enter the amount on line 428 of your return.

For more information on tax on split income, see the Federal income tax and benefit guide.

Line 48 – Prince Edward Island additional tax for minimum tax purposes

If you need to pay federal minimum tax as calculated on Form T691, Alternative Minimum Tax, complete the calculation on line 48 of Form PE428 to determine your Prince Edward Island additional tax for minimum tax purposes.

For more information about minimum tax, see the Federal income tax and benefit guide.

Prince Edward Island low-income tax reduction

You can claim the Prince Edward Island low-income tax reduction if you were a resident of Prince Edward Island on December 31, 2018, and any of the following conditions applied to you:

• You were 19 years of age or older.
• You had a spouse or common-law partner.
• You were a parent.

If you had a spouse or common-law partner on December 31, 2018, you and your spouse or common-law partner need to decide who will claim the low-income tax reduction for your family. The other spouse or common-law partner can claim any unused amount on their Form PE428.

You cannot claim this tax reduction if, on December 31, 2018, you were confined to a prison or a similar institution for a total of more than six months during 2018.

You cannot claim the tax reduction for a person who died in 2018.

Line 52 – Unused low-income tax reduction from your spouse or common-law partner

If you had a spouse or common-law partner on December 31, 2018, and they did not need to use all of the low-income tax reduction to reduce their Prince Edward Island tax to zero, you can claim their unused amount (from their Form PE428) on line 52 of your Form PE428.

Adjusted family income for the calculation of the Prince Edward Island low-income tax reduction

To calculate your adjusted family income, complete columns 1 and 2 (lines 54 to 59 of Form PE428) using the information from your and your spouse’s or common-law partner’s returns for the year.

Line 62 – Age reduction for self

Claim $250 if you were 65 years old or older on December 31, 2018.

Line 63 – Reduction for spouse or common-law partner

Claim $350 if you had a spouse or common-law partner on December 31, 2018.

Line 64 – Age reduction for spouse or common-law partner

Claim $250 if your spouse or common-law partner was 65 years of age or older on December 31, 2018.

Line 65 – Reduction for an eligible dependant

Claim $350 if you claimed the amount for an eligible dependant on line 5816 of Form PE428 and you did not claim an amount on line 63.

Line 66 – Reduction for dependent children born in 2000 or later

Enter beside box 6099 the number of dependent children you have who were born in 2000 or later.

Claim $300 for each child but do not include a child you already claimed the eligible dependant reduction for on line 65 of Form PE428.

Only one person can claim the tax reduction for a child.

Who is a dependent child?

A dependent child is a child who, on December 31, 2018, met all of the following conditions:

• They were 18 years of age or younger.
• They did not have a spouse or common-law partner.
• They were not a parent.
• They lived with you or were claimed as a dependant only by you or your spouse or common-law partner.

Unused low-income tax reduction that can be claimed by your spouse or common-law partner

If you had a spouse or common-law partner on December 31, 2018, they can claim, on their Form PE428, any amount of the low-income tax reduction that you do not need to use to reduce your Prince Edward Island tax to zero.

Complete the calculation at lines 85 to 87 on your Form PE428 to determine the unused amount that your spouse or common-law partner can claim on line 52 on their Form PE428.

Line 75 – Provincial foreign tax credit

If your federal foreign tax credit on non-business income is less than the related tax you paid to a foreign country, you may be able to claim a provincial foreign tax credit.

To claim the credit, complete Form T2036, Provincial or Territorial Foreign Tax Credit.

Enter, on line 75 of Form PE428, the tax credit calculated on line 5 of Form T2036.

Supporting documents
If you are filing electronically, keep all your documents in case we ask to see them at a later date.

If you are filing a paper return, attach your Form T2036.

Lines 77 and 78 – Prince Edward Island political contribution tax credit

You can claim a credit for the contributions you made in 2018 to a recognized political party of Prince Edward Island or to a candidate seeking election to the Prince Edward Island Legislative Assembly.

How to claim this amount

Enter your total contributions on line 77 of Form PE428 and calculate the amount to enter on line 78, as follows:

• For contributions of $1,150 or less, complete the calculation for line 78 using Worksheet PE428.
• For contributions of more than $1,150, enter $500 on line 78 of Form PE428.

Supporting documents
If you are filing electronically, keep all your documents in case we ask to see them later.

If you are filing a paper return, attach the official receipt (signed by an official of the recognized political party or by the candidate’s agent) for each contribution.

Line 80 – Equity tax credit

You can claim this credit for investments in eligible shares you acquired in 2018 (that you did not claim on your 2017 return) or in the first 60 days of 2019.

Enter, on line 80 of Form PE428, the amount shown on Certificate PE-ETC.

The maximum you can claim is $7,000.

Supporting documents
If you are filing electronically, keep all of your documents in case we ask to see them later.

If you are filing a paper return, attach your Certificate PE-ETC.

Unused equity tax credit

You can carry forward your unused credits for seven years or carry them back three years.

The maximum credit you can claim is $7,000 per tax year, including any unused amounts from other years.

To claim an unused amount shown on your last notice of assessment or reassessment, enter the amount on line 81 of your Form PE428.

To claim a carry-back amount, you must ask the CRA to adjust your prior-year return. For more information, read How to change a return.

Line 84 – Prince Edward Island volunteer firefighter tax credit

You can claim this refundable tax credit if you met the rules for claiming the amount on line 362 of federal Schedule 1. If you qualify for this credit, enter $500 on line 84 of Form PE428.

If you are preparing a return for a person who died in 2018, you can claim this credit on their final return if they were a resident of Prince Edward Island on the date of death and met the rules for claiming the amount on line 362 of federal Schedule 1.

Link to Source:https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package/prince-edward-island/5002-pc/information-residents-prince-edward-island.html