Sales Tax Harmonization
• Ontario will move to a single value-added sales tax of
13% (5% federal portion; 8% provincial portion) for Ontario beginning
July 1, 2010
• Federal government providing transitional funding of $4.3
billion over two years
• Introduction of a sales tax credit of up to $260 to help
low and middle income individuals and families
• One-time transition funding for families with income below
$160,000 of three cheques totalling up to $1000 between June 2010
and June 2011
• Exemptions for provincial portion of harmonized tax: children’s
clothing & footwear, all infant & child car seats, diapers,
books & feminine hygiene products
• Rebates provided to municipalities, academia, schools and
hospitals so that they will not be impacted – also for charities
and non-profit organizations
• Administrative savings for businesses more than $500 million/year
through administration of single tax, instead of two
• Transitional funding for small businesses to compensate
for cost of changing point-of-sale & accounting systems to accommodate
new sales tax system
• Retail sales tax on accommodations currently 5% - would
increase to 8% but additional tax revenue will be funnelled into
destination marketing fund
Rebate on provincial portion of HST on new homes up to $400,000
of 75% of the provincial tax; and a reduced rate for homes up to
$500,000; resale homes not affected by tax
• Businesses will have tax credits on provincial portion of
tax for business inputs – with the exception of certain items
for very large businesses (with annual taxable sales in excess of
$10 million) and financial institutions – this is only for
the first 5 years – after which full credits will be phased
in over a three year period
• Federal government will administer harmonized tax
Corporate Tax Measures
• Rate for small business cut from 5.5% to 4.5% (18 % reduction)
• Elimination of the Small Business Surtax, which was an additional
tax of 4.67% on income earned between $500,000 and $1.5 million.
• July 1, 2010 general corporate income tax rate reduced to
12% (14.3% reduction)
• 2013 general and manufacturing corporate income tax rate
reduced to 10% - a 16.7 per cent cut (down from 14% and 12%, respectively).
• Corporate Minimum Tax will be reduced to 2.7% from 4% -
and the threshold at which it is applied has been increased so that
fewer small and medium businesses will be affected (new threshold
- $50 million in total assets or $100 million in annual gross revenue)
• An expansion of the Ontario Innovation Tax Credit to parallel
the federal Investment Tax Credit for SR&ED
Fiscal Management
Key Messages
• Today’s significant investments, largely through deficit
financing, in Ontario’s infrastructure and economic framework
are responsible decisions given Ontario’s need to emerge from
the current recession in a stronger position domestically and internationally
• The plan to return to a balanced budget is difficult to
assess at this time of economic turbulence
• Our members fully expect the quarterly reports announced
in today’s budget will provide more details and track progress
on the governments’ deficit reduction plan
Key Facts
• Deficit equals 2.4% of Ontario’s GDP whereas the US
deficit to GDP ratio is 8.3%
• Net debt to GDP ratios will rise from roughly 24% to a high
of 32.5% before returning to 30.5%
• 2008/09 3.9 billion dollar deficit
• 2009/10 14.1 billion dollar deficit
• Forecast balanced budget no later than 2015/16
• 1 billion in efficiencies to be realized by 2011/12
• Will keep the growth of core program expenses to less than
the average annual rate of growth in total revenue
Infrastructure Investments
Key Messages:
• Although investments have been made that will provide short
term employment and some long term relief of costly congestion,
there is no long-term plan for infrastructure investments that will
help drive Ontario’s economy forward
• Businesses expect to see a detailed plan on investments
in order to understand the quantifiable benefits of the stimulus
that such investments will create
Key Facts:
• $32 billion will be invested in social housing, capital
investments in Northern and rural Ontario, new highway investments
in Southern Ontario, community infrastructure, new medical infrastructure,
social agencies, post secondary infrastructure (colleges and universities),
capital investments in tourism and research and innovation
Pensions
Key Messages:
• Although some progress has been made with respect to the
applicability of the measures, the measures are not as meaningful
relative to those recently announced in Alberta.
Key Facts:
• Pension solvency relief measures which allow plan sponsors
to defer solvency payment schedules to a maximum of 10 years where
no more than one third of the aggregate of all active, deferred
and retired plan members object;
• Defer solvency payments by one year
• Consolidate existing solvency payment schedules into a new
five-year payment schedule
Skills and Training
Key Messages:
• The improvements to the Co-op Education Tax Credit will
make the co-op program more accessible to many small and medium
businesses
• OCC members have consistently recommended tax credits for
hiring co-op and apprentices as a good stimulus measure
Key Facts:
• Increase the Co-op Education Tax Credit to 25 per cent (30
per cent for small business) and increase the maximum tax credit
to $3,000 immediately.
• Enhance the Apprenticeship Training Tax Credit by increasing
rate to 35 per cent (45 per cent for small business), increasing
the maximum credit to $10,000, making the ATTC a permanent tax incentive
and extending the ATTC to include salaries and wages during the
first 48 months.
• Announcement of future developments in the coming year regarding
skills training including the proposed college of trades act
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