Financial Corporation Capital Tax

This section provides general information on Financial Corporation Capital Tax including legislative authority, rates and remittance requirements.

What is Financial Corporation Capital Tax?

The Financial Corporation Capital Tax Act was first introduced on July 1, 1988. Under provisions of this Act, all financial corporations that have a permanent establishment within the province are required to pay Financial Corporation Capital Tax on the taxable capital of the corporation.

What is a Financial Corporation?

A financial corporation is defined as a bank, trust company or loan company and includes an agent, assignee, trustee, liquidator, receiver or official having possession or control of any part of the property of the bank, trust company or loan company but does not include a trust company or loan company incorporated without share capital.

What is the rate of Financial Corporation Capital Tax?

Pursuant to section 2 (1) (b) of the Financial Corporation Capital Tax Act the rate of tax is 5% of paid up capital in excess of $2,000,000.

Has the rate of Financial Corporation Capital Tax changed since introduction in 1988?

The historical summary of Financial Corporations Capital Tax is as follows:

April 1, 2004 - 5.0% of paid up capital in excess of $2,000,000
April 10, 1991 - 3.0% of paid up capital in excess of $2,000,000
March 14, 1990 - 2.5% of paid up capital in excess of $2,000,000
July 1, 1988 - 1.5% of paid up capital in excess of $2,000,000

How is Financial Corporation Capital Tax collected?

Resident and non-resident financial corporations that operate a permanent establishment in Prince Edward Island must file a Financial Corporation Capital Tax Annual Return with the Minister of Finance on an annual basis. The return must be filed within six months of the close of their fiscal year, and at that time, any unpaid tax for the fiscal year must be remitted to the Minister.

Financial corporations that are liable to pay the Financial Corporation Capital tax must file a Financial Corporation Capital Tax Monthly Return (505 Kb) and remit tax instalments on a monthly basis. The instalments are equal to one-twelfth of the tax payable for the fiscal year, as estimated by the financial corporation. Payments are to be made to the Minister of Finance on or before the 20th day of each month of the fiscal year. 
 

Disclaimer: This page is prepared for information purposes only, and should not be considered a substitute for the applicable statutes. Should there be any conflict between the contents of this page and the statutes, the statutes shall prevail.
Published date: 
June 29, 2017