October 16, 2009
To further encourage efficiencies and promote investment in Ontario's electricity sector, Finance Minister Dwight Duncan today announced the government intends to make the transfer tax exemption permanent for transfers of electricity assets within the public sector.
EXEMPTION FOR TRANSFERS WITHIN THE PUBLIC SECTOR
Transfer tax payable is equal to 33 per cent of the value of the municipality's/MEU's interest in property transferred to any other entity.
Certain transfers of an interest in real or personal property that has been used in connection with generating, transmitting, distributing or retailing electricity (electricity assets) that occur after October 16, 2009, will be exempt from transfer tax.
The exemption applies to transfers of electricity assets made to any of
- a municipal corporation,
- a municipal electricity utility,
- Hydro One Inc., or Ontario Power Generation Inc., or a subsidiary of either,
that is exempt from federal income tax under subsection 149 (1) of the Income Tax Act (Canada), will be exempt from transfer tax if made as described above.
When filed, the regulation to implement this exemption will be effective October 17, 2009.
BACKGROUND
As part of the restructuring of the electricity sector, municipalities were given ownership of their municipal electricity utilities (MEUs), which has provided them with a source of income and the potential to realize significant proceeds if they sell their MEUs.
The exemption from the electricity transfer tax provides publicly-owned electricity utilities with relief from paying the tax when they sell electricity assets to other publicly-owned electricity utilities in Ontario.
Since the first exemption period, which began in 1998, approximately 240 consolidations have occurred, resulting in efficiencies in operations, maintenance and administration costs.
Further information regarding this announcement may be directed to:
Alicia Johnston, Minister’s Office, 416-325-3645
Scott Blodgett, Ministry of Finance, 416-325-0324
