2009 Ontario Economic Outlook and Fiscal Review

Transparency in Taxation, 2009

TRANSPARENCY IN TAXATION

Tax expenditure reporting is an important element of improved fiscal accountability. It increases fiscal transparency by providing a complete picture of revenue forgone in the tax system.

STRUCTURE OF THE REPORT

This report provides the most current estimates of revenue forgone with respect to provisions in the following taxes:

• Personal Income Tax
• Corporate Tax
• Sales and Commodity Tax
• Education Property Tax
• Employer Health Tax
• Estate Administration Tax
• Gross Revenue Charge.

This report includes descriptions only of tax provisions that are new or have been modified since the 2008 Transparency in Taxation report. The descriptions are intended to provide a basic understanding of the provisions and do not replace the relevant legislation or regulations.

SCOPE

Given the absence of a universally accepted definition of a “tax expenditure,” this report continues the broad approach adopted in previous reports of listing estimates of forgone revenue that could potentially be included under a broad-based tax system.

Personal and Corporate Income Tax expenditures identified in this report include tax expenditures shared with the federal government and Ontario-only tax expenditures.

Under a tax collection agreement between Ontario and Canada, the federal government determines the Personal Income Tax and Corporate Income Tax bases. Under this agreement, Ontario has limited policy control over the individual components of taxable income and the associated tax expenditures related to the federally defined tax base.

METHOD

The estimates in this report were developed using the latest available taxation or economic data, forecast to the 2009 calendar year. The data used to estimate the values of the tax provisions come from a variety of sources. The estimated value of a tax provision may differ from the amount reported in a prior year for a variety of reasons including amendments to the provision, changes in economic factors, revisions to the underlying data and improvements to the estimation method. Some tax provision estimates are particularly sensitive to economic conditions or other variables and, therefore, can fluctuate significantly from year to year.

It is important to note that the estimates in this report are not intended to represent the potential revenue gain for the Province if the tax provisions were not in place. Each estimate has been determined separately and in isolation of other factors, such as the economic impact of any change, behavioural responses, the interaction among various tax provisions, or any modifications in policy that might reasonably accompany the change. As a result, the estimates cannot be added together to determine the total cost of a particular group of tax expenditures.

This report rounds estimates to the nearest $5 million for estimates above $10 million. Tax expenditure estimates of less than $1 million are denoted by the letter “s” (small). This report also includes tax provisions for which relevant data from the tax system are not currently available to the Ministry of Finance. Although estimates may not be available, these items are listed to ensure greater accountability and transparency.

Future annual reports will continue to refine Ontario’s tax expenditure estimates.

PERSONAL INCOME TAX

Table 1 provides estimates of tax provisions relating to the Ontario Personal Income Tax system. Business provisions listed here are for unincorporated businesses.

Table 1
Personal Income Tax¹

Tax Provisions	2009 Estimates2 ($ Millions)
Ontario Non-refundable Tax Credits
Adoption Expense Credit	s
Age Credit	275
Amounts Transferred from a Spouse or Common-law Partner	25
Basic Personal Credit	4,400
Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) Contributions Credit	560
Caregiver Credit	20
Charitable Donations Credit	645
Disability Credit	100
Eligible Dependant Credit	100
Employment Insurance (EI) Premiums Credit	195
Infirm Dependant Credit	1
Medical Expense Credit	160
Ontario Overseas Employment Tax Credit	7
Pension Income Credit	125
Spouse or Common-law Partner Credit	190
Student Loan Interest Credit	8
Tuition and Education Credits	330
Ontario Tax Reduction (OTR)
OTR — Basic Reduction	190
OTR — Reduction for Dependent Children Under 19	185
OTR — Reduction for Disabled or Infirm Dependants	10
OTR — Total	325
Ontario Labour Sponsored Investment Fund Tax Credits
Labour Sponsored Investment Fund (LSIF) Tax Credit	15
Research Oriented Investment Fund (ROIF) Tax Credit	1
Ontario Refundable Tax Credits
Ontario Focused Flow-through Share Tax Credit	4
Ontario Political Contribution Tax Credit	6
Ontario Property and Sales Tax Credits (OTCs)
OTCs — Non-seniors	460
OTCs — Seniors3	500
OTCs — Total3	960
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Business
Items for Which an Estimate is not Available
Assistance for Artists and Deduction for Canadian Art Purchased by
Unincorporated Businesses
Assistance for Prospectors and Grubstakers
Deduction of Accelerated Capital Cost Allowance
Deferral Through Use of Billed-basis Accounting by Professionals
Employment
Deduction for Clergy Residence	15
Deduction of Home Relocation Loans	s
Deduction for Military and Police Deployed to High-risk International Missions	7
Deduction of Other Employment Expenses	280
Deduction of Union and Professional Dues	155
Employee Security Options	170
Moving Expense Deduction	20
Northern Residents Deductions	2
Items for Which an Estimate is not Available
Deduction for Artists and Musicians
Deduction for Tradespersons' and Apprentice Vehicle Mechanics' Tools
Deduction for Tuition Assistance for Adult Basic Education
Deferral of Salary Through Leave of Absence/Sabbatical Plans
Employee Benefit Plans
Non-taxation of Business-paid Health and Dental Benefits
Non-taxation of Certain Non-monetary Employment Benefits
Special Tax Computations for Certain Retroactive Lump-sum Payments
Farming and Fishing
Items for Which an Estimate is not Available
Cash-basis and Flexibility in Inventory Accounting
Deduction of Farm Losses for Part-time Farmers
Deferral of Income for Farmers
Income Stabilization Account for Farmers
Investment
$750,000 Lifetime Capital Gains Exemption for Farm or Fishing Property and Small Business Shares	85
Deduction of Allowable Business Investment Losses	10
Deduction of Carrying Charges Incurred to Earn Income	250
Deduction of Resource-related Expenditures	180
Partial Inclusion of Capital Gains	730
Tax-Free Savings Accounts (TFSAs) – Non-taxation of Investment Income	70
Items for Which an Estimate is not Available
Capital Gains Exemptions — $1,000 on Personal-use Property and $200 on Foreign Exchange Transactions
Deduction of Limited Partnership Losses
Deferral of Capital Gains Through Five-year Reserves
Deferral of Capital Gains Through Rollovers
Deferral of Capital Gains Through 10-year Reserves for Farm or Fishing Property and Small Business Shares
Deferral of Capital Gains Through Transfers to a Spouse or Spousal Trust
Exemption for Capital Gains Arising from Certain Donations
Non-taxation of Capital Gains on Principal Residences
Taxation of Capital Gains Upon Realization
Non-taxable Income
Guaranteed Income Supplement and Allowance Benefits	40
Social Assistance Benefits and Provincial Supplements	25
Workers' Compensation Benefits	175
Items for Which an Estimate is not Available
Certain Federal Government Pensions and Allowances
Damages With Respect to Personal Injury or Death
Death Benefits of Up to $10,000
Employer-paid CPP/QPP Contributions and EI Premiums
Gifts and Bequests
Income from the Office of the Governor General and Allowances for Diplomats and Other Government Employees Posted Abroad
Income of Status Indians on Reserves
Investment Income on Life Insurance Policies
Lottery and Gambling Winnings
Strike Pay
Special Circumstances
Child Care Expense Deduction	180
Pension Income Splitting	200
Treatment of Alimony, Maintenance and Child Support Payments	40
Items for Which an Estimate is not Available
Deduction Related to Vows of Perpetual Poverty
Disability Supports Deduction
Exemption of Scholarship, Fellowship and Bursary Income
Tax-free Amount for Emergency Service Volunteers
Tax-deferred Savings
Registered Pension Plans (RPPs) — Deduction for Contributions	710
Registered Retirement Savings Plans (RRSPs) — Deduction for Contributions	2,200
Items for Which an Estimate is not Available
Deferred Profit-sharing Plans
Registered Disability Savings Plans (RDSPs) — Non-taxation of Investment Income and Federal Contributions
Registered Education Savings Plans (RESPs) — Non-taxation of Investment Income and Federal Contributions
RPPs — Non-taxation of Investment Income
RRSPs — Non-taxation of Investment Income

• ¹ Estimates do not include the impact of revenue forgone from Personal Income Tax provisions for trusts, which are taxed as individuals under the Taxation Act, 2007.
• ² Estimates are based on 2006 tax filer data forecast to represent the 2009 taxation year, unless otherwise noted.
• ³ Estimate includes the enrichment of the income threshold for senior couples, from $24,300 to $24,750, proposed in the 2009 Ontario Budget.

PERSONAL INCOME TAX — DESCRIPTION OF TAX PROVISIONS

The following Personal Income Tax provisions have been introduced or changed since the Transparency in Taxation, 2008 report.

ONTARIO NON-REFUNDABLE TAX CREDITS

The non-refundable tax credits listed in the following table are based on amounts that are adjusted for inflation each year.

Table 2
Amounts on Which Indexed Non-refundable Tax Credits Are Based for 2009 ($)

Non-Refundable Tax Credits
Adoption Expense Credit, maximum claim	10,835
Age Credit, maximum claim	4,336
Reduced by 15 per cent of individual's net income in excess of $32,280
Fully phased out when individual's net income reaches $61,187
Basic Personal Credit	8,881
Caregiver Credit, maximum claim	4,186
Reduced by dependant's net income in excess of $14,321
Fully phased out when dependant's net income reaches $18,507
Disability Credit	7,175
Disability supplement for individuals under 18 years of age, maximum claim	4,185
Eligible Dependant Credit, maximum claim	7,541
Reduced by dependant's net income in excess of $754
Fully phased out when dependant's net income reaches $8,295
Infirm Dependant Credit, maximum claim	4,186
Reduced by dependant's net income in excess of $5,950
Fully phased out when dependant's net income reaches $10,136
Medical Expense Credit
Qualifying medical expenses of self, spouse or common-law partner, and dependent children in excess of the lesser of three per cent of net income and $2,010	no limit
Qualifying medical expenses of other dependants in excess of the lesser of three per cent of the dependant's net income and $2,010, maximum claim for each	10,835
Pension Income Credit, maximum claim	1,228
Spouse or Common-law Partner Credit, maximum claim	7,541
Reduced by spouse's or common-law partner's net income in excess of $754
Fully phased out when spouse or common-law partner's net income reaches $8,295
Tuition and Education Credits
Education Credit, full time or eligible for Disability Credit (per month)	478
Education Credit, part time (per month)	143
Maximum transfer	6,141

ONTARIO REFUNDABLE TAX CREDITS

Ontario Property and Sales Tax Credits (OTCs) — The refundable OTCs may be claimed by low- and moderate-income tax filers to offset the cost of property taxes and provincial retail sales taxes. The calculation of these credits is described in the tables below. For senior couples, the 2009 Ontario Budget proposed to increase the adjusted family net income threshold above which the credits are jointly reduced, from $24,300 to $24,750. The tax expenditure estimate includes this proposed increase to the income threshold for senior couples. Starting in 2010, the OTCs would be replaced with a new Ontario Sales Tax Credit and a new Ontario Property Tax Credit.

Table 3
2009 Ontario Property and Sales Tax Credits — Seniors

Property Tax Credit	Occupancy cost to a maximum of $625 plus 10% of occupancy cost.1
+ Sales Tax Credit	The credit is equal to the total of $100 for an individual; $100 for his or her cohabiting spouse or common-law partner; and $50 for each child.
– Reduction of the Credits	The combined credits are reduced by 4% of adjusted family net income in excess of $22,000 for single seniors and $24,7502 for senior couples.
= Ontario Tax Credits	The maximum credit that can be claimed is capped at $1,125.3

• ¹ Occupancy cost is property taxes paid or 20% of rent paid, plus $25 if residing in a student residence.
• ² Threshold proposed in 2009 Budget.
• ³ Senior homeowners may be eligible for both the OTCs and the Senior Homeowners’ Property Tax Grant. In a few cases, their OTCs may be reduced when reconciled with the grant.

Table 4
2009 Ontario Property and Sales Tax Credits — Non-Seniors

Property Tax Credit	Occupancy cost to a maximum of $250 plus 10% of occupancy cost.1
+ Sales Tax Credit	The credit is equal to the total of $100 for an individual; $100 for his or her cohabiting spouse or common-law partner; and $50 for each child.
– Reduction of the Credits	The combined credits are reduced by 2% of adjusted family net income in excess of $4,000.
= Ontario Tax Credits	The maximum credit that can be claimed is capped at $1,000.

• ¹ Occupancy cost is property taxes paid or 20% of rent paid, plus $25 if residing in a student residence.

EXEMPTIONS, DEDUCTIONS, DEFERRALS AND OTHER MEASURES SHARED WITH THE FEDERAL GOVERNMENT

Investment

Tax-Free Savings Accounts (TFSAs) – Non-taxation of Investment Income — Starting with the 2009 tax year, up to $5,000 may be contributed to a TFSA each year by individuals aged 18 and over. Capital gains and investment income earned within and withdrawals from the account are not taxable. Withdrawals and unused room may be carried forward for contributions in the future. Individuals may hold similar qualified investments in the account as in a Registered Retirement Savings Plan, such as bonds, stocks, mutual funds and Guaranteed Investment Certificates.

Tax-deferred Savings

Item for Which an Estimate is not Available

Registered Retirement Savings Plans (RRSPs) – Non-taxation of Investment Income — Investment income earned in these plans is not taxed as it accrues. Individuals benefit from a deferral of tax on investment income and capital gains until funds are withdrawn, with certain exceptions.

In its 2009 budget, the federal government increased the Home Buyers’ Plan withdrawal limit from $20,000 to $25,000, effective for withdrawals from RRSPs made after January 27, 2009. This measure is adopted automatically for Ontario Personal Income Tax purposes. The increase to the withdrawal limit will also be available to those who purchase or build a more accessible home for the benefit of a related person with a disability, and to persons with disabilities who purchase or build a more accessible home.

The 2009 federal budget allowed the amount of post-death decreases in the value of an RRSP or Registered Retirement Income Fund (RRIF) to be carried back and deducted against the year-of-death RRSP/RRIF income inclusion where the final distribution of property of a deceased annuitant occurs after 2008. This measure is also automatically adopted for Ontario Personal Income Tax purposes.

CORPORATE TAX

Estimates of tax provisions relating to the Ontario Corporate Income Tax, Capital Tax and Mining Tax systems are presented in Table 5.

Table 5
Corporate Tax

Tax Provisions	2009 Estimates1 ($ Millions)
Corporate Income Tax
Ontario Refundable Tax Credits
Ontario Apprenticeship Training Tax Credit2	120
Ontario Book Publishing Tax Credit	4
Ontario Business Research Institute Tax Credit	8
Ontario Computer Animation and Special Effects Tax Credit	25
Ontario Co-operative Education Tax Credit2	20
Ontario Film and Television Tax Credit	100
Ontario Innovation Tax Credit	275
Ontario Interactive Digital Media Tax Credit	20
Ontario Production Services Tax Credit	130
Ontario Sound Recording Tax Credit	1
Ontario Deductions, Non-Refundable Tax Credits and Exemptions
Ontario Credit Union Tax Reduction	3
Ontario Political Contributions Tax Credit	3
Ontario Research and Development Tax Credit3	200
Ontario Small Business Deduction4	850
Ontario Tax Credit for Manufacturing and Processing (M&P)5	115
Ontario Tax Exemption for Commercialization	s
Item for Which an Estimate is not Available
Ontario Resource Tax Credit
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government6
Allowable Business Investment Losses7	3
Deductibility of Charitable Donations	70
Deductibility of Gifts of Cultural Property and Ecologically Sensitive Land	3
Deductibility of Gifts to the Crown	s
Deferral of Income for Farmers	s
Holdback on Progress Payments to Contractors	10
Partial Inclusion of Capital Gains	995
Items for Which an Estimate is not Available
Accelerated Write-off of Capital Assets and Resource-related Expenditures
Temporary Incentive for Computers
Temporary Incentive for Manufacturing and Processing (M&P) Machinery & Equipment8
Cash-basis and Flexibility in Inventory Accounting
Deductibility of Countervailing and Anti-dumping Duties
Deferral Through Capital Gains Rollovers
Deferral Through Use of Billed-basis Accounting by Professionals
Donations of Medicine for the Developing World
Exemption for Capital Gains Arising from Certain Donations
Expensing of Advertising Costs
Non-taxation of Provincial, Municipal and Federal Crown Corporations
Non-taxation of Registered Charities
Non-taxation of Non-profit Organizations
Taxation of Capital Gains upon Realization
Tax Exemption on Income of Foreign Affiliates of Canadian Corporations
Capital Tax9
Capital Tax Deduction	415
Exemption for Family Farm Corporations, Family Fishing Corporations, Credit Unions and Other Specified Entities	s
Small Business Investment Tax Credit for Financial Institutions	15
Mining Tax10
Mining Tax Exemption	s
Mining Tax Holiday for Mines (other than remote mines)	s
Mining Tax Holiday for New Remote Mines	s
Mining Tax Rate for Remote Mines	s
Processing Allowance	40
Item for Which an Estimate is not Available
Fast Write-off of Exploration Costs

• ¹ Estimates are forecast to the 2009 calendar year based on preliminary 2008 and 2007 tax administration data, unless otherwise noted. Estimates do not include the revenue forgone from Corporate Income Tax (CIT) provisions for mutual fund corporations.
• ² Estimates include the impact of both the Corporate and Personal Income Tax provisions.
• ³ Estimate is net of any recapture of the R&D tax credit.
• ⁴ Estimate includes the impact of the Small Business Deduction Surtax. The 2009 Budget proposed to reduce the small business CIT rate from 5.5 per cent to 4.5 per cent and eliminate the Small Business Deduction Surtax effective July 1, 2010.
• ⁵ The 2009 Budget proposed to reduce the M&P CIT rate to 10 per cent and the general CIT rate to 12 per cent effective July 1, 2010. The general CIT rate would be further reduced to 10 per cent over the next three years so that when fully implemented, Ontario would have a single CIT rate of 10 per cent.
• ⁶ Estimates, where available, are based on assessed 2007 federal tax administration data and forecast to 2009.
• ⁷ Estimate could overstate the true value as it does not reflect the future reduction in tax revenues that would occur if those losses were instead deducted from future capital gains.
• ⁸ The 2009 cash flow impact of this provision, based on the 2009 Ontario Budget estimate and adjusted to a calendar-year basis, is $90 million.
• ⁹ Ontario has legislated a plan to eliminate the Capital Tax effective July 1, 2010 and has already eliminated Capital Tax, effective January 1, 2007, for Ontario corporations primarily engaged in M&P and resource activities.
• ¹⁰ Estimates are forecast to the 2009 calendar year based on 2007 Ontario Mining Tax administration data.

CORPORATE TAX — DESCRIPTION OF TAX PROVISIONS

The following Corporate Income Tax provisions have been introduced or have changed since the Transparency in Taxation, 2008 report.

CORPORATE INCOME TAX

Ontario Refundable Tax Credits

Ontario Apprenticeship Training Tax Credit (ATTC) — The ATTC is a refundable tax credit available to incorporated and unincorporated businesses on the labour expenses of qualifying apprentices in industrial, construction, motive power, and certain service trades.

The 2009 Budget proposed to increase the ATTC rate from 25 per cent to 35 per cent (and from 30 per cent to 45 per cent for small businesses) as well as increase the $5,000 annual maximum tax credit to $10,000. The Budget also proposed to extend the tax credit to salaries and wages paid during the first 48 months of an apprenticeship program (from 36 months) and make the tax credit a permanent tax incentive. These enhancements would be effective for qualifying expenditures incurred after March 26, 2009.

Ontario Book Publishing Tax Credit (OBPTC) — The OBPTC is a 30 per cent refundable tax credit available to Ontario book publishing corporations for publishing and promoting the first three books by a Canadian author in each eligible category of writing.

The 2009 Budget proposed to expand eligibility to qualifying expenditures incurred after March 26, 2009 for:

• any number of books by a Canadian author in an eligible category of writing; and
• direct expenses that reasonably relate to publishing an electronic version of an eligible book.

Ontario Computer Animation and Special Effects (OCASE) Tax Credit — The OCASE tax credit is a 20 per cent refundable tax credit available to corporations for eligible labour expenditures related to digital animation and special effects in qualifying Ontario film and television productions.

The 2009 Budget proposed enhancements to the OCASE tax credit, effective for qualifying expenditures incurred after March 26, 2009, that would:

• increase eligible labour expenditures to 100 per cent from 50 per cent of amounts paid to arm’s-length unincorporated individuals and partnerships providing freelance services;
• expand eligible labour expenditures to include 100 per cent of amounts paid to arm’s-length incorporated individuals providing freelance services while ensuring that incorporated individuals cannot claim the credit directly; and
• streamline administration by relaxing the requirement that an eligible animation or visual effect be created primarily with digital technologies.

Ontario Co-operative Education Tax Credit (CETC) — The CETC is a refundable tax credit available to corporations and unincorporated businesses on the labour expenses of qualifying postsecondary co-op students.

As announced in the 2009 Budget, the CETC rate increased from 10 per cent to 25 per cent and the enhanced rate available to small businesses increased from 15 per cent to 30 per cent. The Budget also increased the maximum credit available from $1,000 to $3,000 per work placement. These enhancements are effective for qualifying expenses incurred after March 26, 2009.

Ontario Film and Television Tax Credit (OFTTC) — The OFTTC is a 35 per cent refundable tax credit available to corporations on the labour expenditures related to certified domestic film and television productions in Ontario.

As announced on February 20, 2009, the 35 per cent OFTTC rate (which was set to expire on January 1, 2010) was made permanent. First-time producers are eligible for a 40 per cent credit on the first $240,000 of eligible labour expenditures. A 10 per cent regional bonus credit is available where certain production activities occur outside the Greater Toronto Area.

Ontario Innovation Tax Credit (OITC) — The OITC is a 10 per cent refundable tax credit for small and medium-sized corporations performing qualifying Scientific Research and Experimental Development (SR&ED) in Ontario.

The 2009 Budget proposed to extend the taxable income phase-out range of between $400,000 and $700,000 to a new phase-out range of between $500,000 and $800,000. This measure would parallel the enhancement of the federal Investment Tax Credit for SR&ED proposed in the 2009 federal budget.

Ontario Interactive Digital Media Tax Credit (OIDMTC) — The OIDMTC is a refundable tax credit that is available for the creation, marketing and distribution of interactive digital media products in Ontario. As proposed in the 2009 Budget, the tax credit rate would be enhanced from 25 per cent (30 per cent for small corporations) to 40 per cent for qualifying corporations, regardless of size, that develop and market their own eligible products.

The 2009 Budget also proposed to enhance the credit rate from 25 per cent to 35 per cent for corporations that develop products under fee-for-service arrangements.

In addition to the OIDMTC rate enhancements, the 2009 Budget proposed to expand eligible labour expenditures to allow corporations to claim 100 per cent of the amount paid to eligible arm’s-length contractors. The Budget also proposed to extend the tax credit to digital media game developers that incur at least $1 million of eligible expenditures over a 36-month period for fee-for-service work on an eligible product.

Ontario Production Services Tax Credit (OPSTC) — The OPSTC is a 25 per cent refundable tax credit for labour expenditures available to corporations for qualifying foreign film and television production services and non-certified domestic film and television productions in Ontario.

As announced on February 20, 2009, the 25 per cent OPSTC rate (which was set to expire on January 1, 2010) was made permanent.

As announced on June 29, 2009, effective for expenditures incurred after June 30, 2009, the government proposed to expand the OPSTC to additional production expenditures incurred in Ontario, including eligible service contracts as well as the purchase or rental of qualifying tangible properties such as equipment and studio rentals.

Ontario Deductions, Non-Refundable Tax Credits and Exemptions

Ontario Political Contributions Tax Credit — At the start of 2009, Ontario moved to the single administration of Corporate Income Tax (CIT) by the federal government’s Canada Revenue Agency. As a result of this harmonization with the federal corporate income tax base, the CIT deduction for political contributions expired for taxation years ending after December 31, 2008.

Corporations are now eligible for a non-refundable tax credit, based on the general CIT rate, for eligible Ontario political contributions of up to $18,600 for taxation years ending after December 31, 2008.

Ontario Research and Development Tax Credit — For taxation years ending after 2008, a 4.5 per cent non-refundable tax credit on qualifying Ontario SR&ED expenditures replaced the CIT exemption of the federal Investment Tax Credit related to qualifying Ontario SR&ED expenditures.

Item for Which an Estimate is not Available

Ontario Resource Tax Credit — As a result of harmonization with the federal definition of taxable income, for taxation years ending after December 31, 2008, the Ontario Resource Allowance was replaced with a tax credit/debit mechanism. The Ontario Resource Tax Credit is a non-refundable tax credit available where a corporation’s notional resource allowance exceeds the amount paid with respect to Crown royalties.

Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government

Items for Which an Estimate is not Available

Temporary Incentive for Computers — Computers are eligible for a 55 per cent capital cost allowance (CCA) rate on a declining-balance basis. As announced in the 2009 Budget, a 100 per cent accelerated CCA rate is available for eligible computers and software acquired after January 27, 2009 and before February 2011.

Temporary Incentive for Manufacturing and Processing (M&P) Machinery and Equipment — An accelerated CCA rate of 50 per cent on a straight-line basis is available to corporations for assets acquired after March 18, 2007 and before 2010. Accelerated declining-balance CCA rates are available for assets acquired in 2010 and 2011. As announced in the 2009 Budget, the 50 per cent straight-line accelerated CCA rate is extended for eligible assets acquired in 2010 and 2011.

SALES AND COMMODITY TAX

RETAIL SALES TAX

As announced in the 2009 Ontario Budget, Ontario proposes to replace the Retail Sales Tax with a value-added tax, combined with the federal Goods and Services Tax (GST) to create a federally administered Harmonized Sales Tax (HST) at a 13 per cent rate, starting July 1, 2010. Ontario’s Retail Sales Tax Act would be wound down, with the exception of certain provincially levied taxes, such as the sales tax on specified insurance premiums and private sales of used vehicles.

In harmonizing with the GST, Ontario would adopt the GST base, with certain exceptions. In addition, to provide targeted relief while maintaining the single administration of sales taxes under the proposed HST, the 2009 Ontario Budget proposed point-of-sale rebates for the provincial portion of the tax for the following items:

• books;
• children’s clothing and footwear;
• children’s car seats and car booster seats;
• diapers; and
• feminine hygiene products.

This treatment would also preserve retailers’ ability to claim input tax credits on these items.

The Transparency in Taxation, 2010 report will provide estimates for Ontario HST tax expenditures. Federal GST tax expenditures can be found at:

[http://www.fin.gc.ca/taxexp-depfisc/2008/taxexp08-eng.asp].

COMMODITY TAX

Estimates of tax provisions relating to commodity taxes, including the Fuel Tax, Gasoline Tax, Land Transfer Tax and Tobacco Tax, are presented in Table 6.

Table 6
Commodity Tax

Tax Provisions	2009 Estimates ($ Millions)
Fuel Tax
Exemptions/Reduced Rates
Exemption for Biodiesel1	5
Exemption for Coloured Fuel2	355
Reduced Rate for Railway Diesel3	55
Refunds
Auxiliary Power Take-off Equipment4	6
Gasoline Tax
Exemptions/Reduced Rates
Exemption for Methanol and Natural Gas5	10
Reduced Rate for Aviation Fuel6	290
Reduced Rate for Propane6	5
Refunds
Auxiliary Power Take-off Equipment4	s
Aviation Fuel4	s
Tax-exempt Use in Unlicensed Equipment4	6
Land Transfer Tax
Exemptions
Deferrals and Exemptions for Corporate Reorganizations4	20
Family Business Conveyances4	s
Family Farms7	4
Life Leases2	s
Items for Which an Estimate is not Available
Hospital Restructuring
Oil/Pipeline Easements and Mineral Lands
Other Transfers and Dispositions
Refunds
Refund for First-time Home Buyers4	155
Tobacco Tax
Compensation for Tax Collectors8	s

• ¹ Based on estimated amount of biodiesel sold in Ontario.
• ² Based on best tax administration data currently available.
• ³ Forgone revenue estimated as difference from the general fuel tax rate.
• ⁴ Based on refunds filed or rebates/deferrals claimed.
• ⁵ Forecast to the 2009 calendar year based on preliminary 2005 provincial Input–Output tables from Statistics Canada.
• ⁶ Forgone revenue estimated as difference from the general gasoline tax rate.
• ⁷ Based on the best information currently available from a variety of sources, such as industry data and Statistics Canada surveys, projected to 2009.
• ⁸ Based on returns filed by registered tax collectors.

EDUCATION PROPERTY TAX

Table 7 provides estimates of tax provisions relating to the Education Property Tax system.

Education Property Tax¹

Tax Provisions	2009 Estimates2 ($ Millions)
Brownfields Financial Tax Incentive Program3	s
Charity Rebate	8
Conservation Land Property Tax Exemption Program	3
Eligible Convention Centres Exemption	s
Eligible Live Performance Theatres Exemption and Professional Sports Facility Tax Rate Reduction	15
Farmlands Awaiting Development Sub-class Tax Rate Reduction	s
Farm Property Class Tax Rate Reduction	65
Heritage Property Tax Rebate	s
Managed Forest Tax Incentive Program	4
Seniors and Persons with Disabilities Property Tax Relief4	s
Tax Exemptions Under Private Statutes	6
Vacant Commercial and Industrial Unit Rebate	30
Vacant Land and Excess Land Sub-class Tax Rate Reduction	45
Items for Which an Estimate is not Available
Other Tax Exemptions Under Public Statutes
Discretionary exemptions granted by municipalities to special purpose properties (e.g., legions, navy leagues, public–private capital facilities)
Mandatory exemptions granted to special purpose/institutional properties (e.g., places of worship, cemeteries, Boy Scouts Association of Canada and Canadian Girl Guides Association, charitable institutions including Canadian Red Cross, St. John Ambulance and charitable, non-profit philanthropic corporations organized for the relief of the poor)
Relief from Property Taxes That Are Unduly Burdensome for Residential, Farm or Managed Forest Properties

• ¹ Expenditures related to provincial land taxes or payments made in lieu of taxes have not been included.
• ² Estimates based on 2009 education tax rates, 2009 Assessment Roll, 2007 Municipal Financial Information Returns and municipal tax policies.
• ³ Effective October 1, 2004, municipalities may pass bylaws cancelling municipal property taxes on eligible brownfields properties. The Province may match the municipal reduction with an education property tax reduction.
• ⁴ Estimate does not include expenditures due to the exemption from taxation on 10 per cent of the assessment of improvements to accommodate seniors and persons with disabilities in newly built homes or the expenditure on such improvements in existing homes.

EMPLOYER HEALTH TAX

Table 8 provides an estimate of the tax exemption under the Employer Health Tax.

Table 8
Employer Health Tax (EHT)

Tax Provision	2009 Estimate ($ Millions)
$400,000 Exemption for Private-sector Employers1	700

• ¹ Estimate is based on 2006 remuneration data forecast to represent the 2009 taxation year.

ESTATE ADMINISTRATION TAX

Table 9 provides an estimate of an exemption under the Estate Administration Tax.

Table 9
Estate Administration Tax

Tax Provision	2009 Estimate ($ Millions)
Exemption Where the Value of the Estate Does Not Exceed $1,000	s
Item for Which an Estimate is not Available
Exemption for Portion of Estate in an Eligible Plan with a Designated Beneficiary

ESTATE ADMINISTRATION TAX — DESCRIPTION OF TAX PROVISIONS

The following Estate Administration Tax provision has changed since the Transparency in Taxation, 2008 report.

Exemption for Portion of Estate in an Eligible Plan with a Designated Beneficiary — A regulation has been made under the Succession Law Reform Act to allow for beneficiary designation of Tax-Free Savings Accounts (TFSAs). Designated beneficiaries will be able to receive TFSAs outside of a will in the same way that beneficiaries can receive proceeds from RRSPs. The TFSA can also pass to the designated beneficiary without being subject to Estate Administration Tax.

GROSS REVENUE CHARGE

Table 10 provides an estimate of the tax provision under the Gross Revenue Charge.

Table 10
Gross Revenue Charge (GRC)¹

Tax Provision	2009 Estimate ($ Millions)
Gross Revenue Charge 10-year Holiday	s

• ¹ Expenditure does not include the provincial water rental portion of the GRC.