2014 Ontario Budget
Chapter V: A Fair and Efficient Tax System

Highlights

  • A proposed Personal Income Tax increase on taxable incomes above $150,000, affecting the top two per cent of Ontario tax filers.
  • Legislative amendments that would improve the fairness of dividend tax credits.
  • To support public transit, transportation infrastructure and other priority projects:
    • A proposed change to better target the small business deduction; and
    • A proposed increase to the tax rate on aviation fuel.
  • An increase to the tobacco tax rate from 12.350 cents to 13.975 cents per cigarette and per gram of other tobacco products.
  • Enhanced compliance measures to preserve the integrity of the tax administration system.
  • A tax credit for farmers who donate to community food programs to encourage the donation of agricultural products to those in need.
  • Continued review of tax expenditures, including research and development tax credits, the Apprenticeship Training Tax Credit and the Co-operative Education Tax Credit, to achieve better outcomes and improve cost effectiveness.

Introduction

Ontario has taken many steps in the last five years to foster a more competitive business climate, positioning the province as one of the most attractive locations in the industrialized world for new business investment. The government has reduced Corporate Income Tax (CIT) rates for large and small businesses, eliminated the Capital Tax and introduced the Harmonized Sales Tax (HST), removing embedded sales taxes and providing savings to businesses that can be used to help them grow and create jobs. These measures provide savings to businesses of more than $9 billion per year.

The government has also made changes to help low- to moderate-income people with their expenses. For example, the government enhanced property and sales tax credits and combined payment of the credits into the Ontario Trillium Benefit.

Ontario has a progressive Personal Income Tax (PIT) structure where higher tax rates apply as taxable incomes increase. In 2012, the government increased PIT on the top 0.2 per cent of tax filers. To continue funding programs in a fair and balanced way, the Province proposes that those with the greatest ability to pay contribute more through their taxes. The PIT changes proposed in this Budget would only affect the top two per cent of Ontario tax filers — those with taxable incomes over $150,000.

The government is proposing to create two dedicated funds to support public transit and transportation infrastructure projects. Proposed revenue sources for these funds include restricting large corporations from claiming the small business deduction and phasing in a measured increase to the tax rate on aviation fuel. The Province would also dedicate the proceeds from 7.5 cents per litre of the existing provincial gasoline tax to these funds, without increasing the current rate of 14.7 cents per litre, and repurpose revenues from the existing HST charged on the current provincial taxes on gasoline and road diesel. This would be in addition to the significant ongoing funding Ontario currently provides to municipal transit systems across the province by sharing two cents per litre of provincial gas tax revenues. Additional details on these new investments can be found in Chapter I, Section B: Building Modern Infrastructure.

A Technical Panel has been established to review Ontario’s business support programs and provide a framework for ongoing evaluation. The Panel’s final report is expected this spring. The Province will continue to review existing tax credits to ensure that they are effective and efficient.

As part of its commitment to having a fair and efficient tax administration system, the government will take additional measures to address the underground economy, corporate tax avoidance and contraband tobacco. Similarly, the government will continue to explore opportunities for improving services to taxpayers, such as implementing enhanced electronic services. The government will also review its tax collection arrangements with the Canada Revenue Agency on a regular basis to ensure that quality services are provided to Ontarians and that optimal revenues are realized through tax administration and compliance activities.

Income Tax Changes for People

Personal Income Tax Rate Changes

The government proposes to:

  • Lower the taxable income threshold for the 13.16 per cent tax rate from $514,090 to $220,000; and
  • Add a new tax rate of 12.16 per cent on taxable income between $150,000 and $220,000.

These changes would apply to taxation years ending after December 31, 2013.

The following table illustrates how the proposed changes would affect the PIT taxable income thresholds and rates.

The new income thresholds would not be adjusted for inflation each year, unlike the current taxable income thresholds.

These measures would only apply to the top two per cent of Ontario tax filers — those with taxable incomes above $150,000 — and would not apply to 98 per cent of tax filers. About 220,000 people would pay more Ontario PIT in 2014 on their taxable income above $150,000. Of these:

  • About 115,000 people with taxable income between $150,000 and $220,000 would pay $425 more Ontario PIT, on average, or about 0.2 per cent of the average taxable income of this group; and
  • The remaining 105,000 people, with taxable income above $220,000, would pay about $5,500 more Ontario PIT, on average, or about one per cent of the average taxable income of this group.

People with taxable incomes below $150,000 would see no change in their Ontario PIT payable as a result of these changes.

Ontario would continue to provide a charitable donations tax credit rate of 5.05 per cent on the first $200 of donations each year, and 11.16 per cent on donations over that amount.

Dividend Tax Credit Changes

The 2013 federal budget announced changes to the tax treatment of dividends paid from corporate income taxed at the federal small business rate (“non-eligible dividends”), which would automatically reduce the Ontario dividend tax credit rate for non-eligible dividends. When combined with Ontario’s surtax, the federal changes would have inequitable impacts on taxpayers with different incomes. For people with higher incomes, Ontario’s surtax increases the benefit of dividend tax credits — for both non-eligible dividends and dividends paid out of corporate income taxed at higher rates (“eligible dividends”).

To mitigate the impact of the federal changes and improve the fairness of the taxation of dividends, the Province proposed measures in the 2013 Ontario Economic Outlook and Fiscal Review that would change the dividend tax credit rates and the surtax calculation, starting in 2014.

The proposed changes to the calculation of the surtax with respect to dividend tax credits would result in these credits having the same value for all taxpayers, regardless of their incomes. The tax credit rates for non-eligible and eligible dividends would be set at 4.5 per cent and 10 per cent, respectively.

The government will introduce legislation to implement these measures.

Tax Changes for Business

Small Business Deduction

The Ontario small business deduction (SBD) is intended to provide tax relief to small businesses in the province — savings they can use to invest in the growth of their businesses and hire more people. Ontario’s general CIT rate is 11.5 per cent. The SBD reduces the general CIT rate to 4.5 per cent on the first $500,000 of Ontario active business income of Canadian-controlled private corporations (CCPCs). Currently, a CCPC receives a benefit of up to $35,000 per year on the first $500,000 of active business income.

Currently, all CCPCs in Ontario can take advantage of this rate regardless of how large they are. Ontario is the only province that allows large CCPCs to claim this deduction. The government proposes to take action to ensure only small CCPCs can qualify for the deduction, which would bring Ontario in line with every other province and the federal government. This was a recommendation of the Commission on the Reform of Ontario’s Public Services.

Ontario is proposing to parallel the federal SBD phase-out, effective for taxation years ending after Budget day, and pro-rated for taxation years that straddle the Budget day. The SBD would be phased out for large CCPCs (and associated groups of CCPCs) with more than $10 million in taxable capital employed in Canada in the previous year and would be fully eliminated for large CCPCs (and associated groups of CCPCs) with taxable capital employed in Canada in the previous year in excess of $15 million.

The proposed measure would not affect small businesses. It would apply only to large CCPCs, which represent 1.5 per cent of CCPCs currently claiming the SBD.  The revenue generated by this change would be dedicated to public transit, transportation infrastructure and other priority projects across the province. See Chapter I, Section B: Building Modern Infrastructure for more information.

Tax on Aviation Fuel

Aviation fuel has been taxed at a rate of 2.7 cents per litre since 1992. This rate is significantly lower than the rate for gasoline (14.7 cents per litre) and the regular rate for diesel (14.3 cents per litre).

This Budget proposes to increase the tax rate on aviation fuel by one cent per litre each year for four years, beginning in 2014. An amendment to the Gasoline Tax Act would be required to implement the proposed increases. The one cent per litre rate increase for 2014 would be effective the day after the amendment receives Royal Assent. Subsequent rate increases of one cent per litre in 2015, 2016 and 2017 would be effective April 1 of each respective year. Upon full implementation, the tax rate would be 6.7 cents per litre.

The Ministry of Finance would work with the Ministry of Transportation to provide relief to vulnerable communities, especially those in remote and northern areas.

The revenue generated by this change would be dedicated to public transit, transportation infrastructure and other priority projects across the province. See Chapter I, Section B: Building Modern Infrastructure for more information.

The government will also propose amendments to the Gasoline Tax Act that would provide the Minister of Finance with the authority to require the completion of an inventory report, and make regulations in respect of the inventory requirement and transitional matters.

Registration Requirements for Road-Building Machines

The Province will propose amendments to the Highway Traffic Act (HTA) to modernize, by 2016, the treatment of unregistered road-building machines that use public roads and highways. Examples of these vehicles include mobile cranes, concrete pumpers and hydrovacs. This measure aims to:

  • Ensure that owners or operators of these vehicles contribute their fair share of tax;
  • Maintain the integrity of related regulatory and legislative requirements such as the application of fuel tax and registration fees; and
  • Help level the playing field between road-building machines and other commercial vehicles that use public roads and highways.

Under the Fuel Tax Act, tax-exempt diesel fuel may be used in unlicensed commercial vehicles, such as road-building machines. Amendments to the HTA would include imposing registration and licensing requirements on road-building machines that use public roads and highways. As such, additional fuel tax revenue would result from licensed road-building machines that would not be permitted to use tax-exempt fuel.

The Ministry of Finance will work with the Ministry of Transportation on reviewing the registration and licensing requirements of these vehicles.

The revenue generated by this change would be dedicated to public transit, transportation infrastructure and other priority projects across the province. See Chapter I, Section B: Building Modern Infrastructure for more information.

Review of Business Tax Expenditures

Business Support Programs Review

As announced in the 2013 Ontario Budget, a Technical Panel is reviewing Ontario’s business support programs, including tax credits, grants and other direct support programs. The Panel’s final report is expected this spring and will include a framework for ongoing evaluation.

Research and Development Incentives

Research and development (R&D) supports labour productivity growth and is an important factor in increasing economic competitiveness. Despite generous provincial tax credits that provided support for R&D in Ontario in excess of $430 million in 2013–14, business spending on R&D as a percentage of gross domestic product (GDP) has lagged that of the United States over the past decade.

As noted in the 2013 Ontario Economic Outlook and Fiscal Review, the government is reviewing options to restructure tax support for R&D, including an incentive for incremental R&D, with the goal of increasing R&D investment in Ontario. An incremental tax incentive would reward increased expenditures on R&D, tying government support directly to increased R&D investments. The U.S. federal government, most U.S. states and other countries, such as Japan, provide tax credits based on incremental R&D investment.

For example, the government will explore the following approach:

  • Companies that increase R&D investment would qualify for an enhanced tax credit on incremental investment in addition to their existing credits;
  • Companies that maintain consistent R&D investment would receive the existing level of tax support; and
  • Companies that significantly decrease R&D investment would have existing provincial tax credit rates reduced.

Depending on the design, the net impact on provincial revenues could be negative in the short term — that is, the amount of enhanced R&D support for businesses investing more would be greater than the savings generated by a less generous tax credit for those that invest less. This investment could result in long-term benefits to the economy at large by encouraging R&D and innovation, and boosting productivity at the firm level and throughout the broader economy. The government will consult with businesses and research organizations on this approach.

Training Tax Incentives

To support employer-based training, Ontario provides refundable tax credits to businesses on the salaries and wages paid to Ontario apprentices and co-op students. Together, the Apprenticeship Training Tax Credit (ATTC) and Co-operative Education Tax Credit (CETC) provided support to employers of about $295 million in 2013–14. The average annual growth rate of these tax credits has been 22 per cent since 2005–06 — the first full year the ATTC was available.

Since these tax credits are refundable, businesses can receive tax support even if no income tax is payable in a year. This differs from federal tax support to business for apprenticeship training, which is in the form of a non-refundable tax credit and is limited to the amount of income tax liability in a year. The government will review training tax credits for large businesses with the intention of limiting these tax credits to the amount a business pays in income tax. Making these tax credits non-refundable would recognize that larger businesses have access to other sources of financing; smaller businesses would be able to continue to claim refundable credits. The government is also continuing to review training tax credits to make them more effective.

Revenue Integrity

In today’s global environment, a competitive tax system is fundamental to economic growth and prosperity. Equally important is the need to have a fair and efficient tax administration system that ensures everyone pays their fair share of taxes. If the integrity of the tax administration system is compromised, it has several consequences, including, most directly, the loss of tax revenues and the loss of confidence in the overall tax system. The Ontario government is determined to tackle areas where there are schemes and practices that avoid the payment of required provincial taxes.

Underground Economy

A recent study by Statistics Canada revealed that the underground economy remains a significant issue. It is estimated that the underground economy accounts for approximately 2.3 per cent of gross domestic product (GDP), which translates into approximately $15 billion for the Ontario economy.

While the most direct impact of the underground economy is the loss of significant revenue to governments, there are also implications for business competitiveness, vulnerable workers are exposed to unsafe working conditions, and consumers may be put at risk where there are cash transactions.

The ministries of Finance, Labour and Consumer Services are collaborating to develop an action plan focused on addressing illegal activities in high-risk sectors. The approach will focus on increasing public awareness, coordinating enforcement activities and working with industry partners to encourage businesses to operate in accordance with the Province’s laws.

The government is also working with the Canada Revenue Agency (CRA) on enhancing compliance activities to address the underground economy. As part of a multi-year agreement negotiated in 2013, the CRA has been able to generate more than $60 million in additional tax revenues for Ontario in 2013–14. In addition, through the Tender Contract Tax Compliance initiative launched in February 2014, businesses that are engaged in procurement activity with the Ontario government must demonstrate (via certification of tax compliance) that they are compliant with their provincial tax obligations prior to being awarded government contracts.

While the government is encouraged by some of the recent initiatives to tackle the underground economy undertaken by the federal government, including those announced in the 2014 federal budget, the absence of a national strategy presents a major gap in addressing this problem. Once again, Ontario is calling on the federal government to release its proposed national strategy to raise public awareness of this issue and to coordinate efforts with all provinces.

Corporate Tax Avoidance

Recent media attention has raised concerns about a growing number of individuals and corporations engaged in schemes to avoid paying taxes. Some of the stories have focused on large corporations paying little or no corporate tax in their jurisdictions.

It is important to understand the distinction between tax evasion and tax avoidance. Tax evasion refers to the use of illegal means to reduce or avoid tax liability. Tax avoidance is the use of planning techniques to reduce or eliminate tax liability. Where tax avoidance becomes an issue is when planning techniques are employed in an aggressive manner that are inconsistent with and undermine the intent of tax legislation. Like many countries, Canada has adopted a general anti-avoidance rule (GAAR) to control aggressive tax avoidance. The Organisation for Economic Co-operation and Development (OECD) has been directed by G20 countries to develop proposals to improve tax transparency, combat tax evasion, and reduce base erosion and profit shifting, given the global implications.

Reducing corporate tax avoidance and closing tax loopholes is a priority for the Ontario government. The government supports the principle that everyone should pay their fair share of taxes, including corporations.

To this end, the government is supportive of the various initiatives undertaken by the federal government, including those in the 2014 federal budget, to address aggressive international tax planning. The government will introduce legislative amendments to the Taxation Act, 2007, that would require corporations in Ontario to disclose aggressive tax avoidance transactions to the federal Minister of National Revenue, who administers Ontario’s corporate taxes. This approach parallels those taken by the federal and Quebec governments on reportable transaction rules.

Subject to federal implementation, Ontario would also automatically parallel the following federal initiatives to address aggressive international tax planning:

  • Captive insurance — an amendment to an anti-avoidance rule intended to prevent Canadian taxpayers, e.g., financial institutions, from shifting income from the insurance of Canadian risks offshore.
  • Offshore regulated banks — an amendment related to the calculation of income for regulated foreign financial institutions owned by Canadian taxpayers.

Through the multi-year enhanced compliance agreement signed with the CRA last year to address aggressive international tax planning, Ontario received increased revenues of more than $150 million in 2013–14.

Ontario remains concerned about the lack of action by the federal government on the issue of interprovincial income shifting that allows corporations to shift profits and losses across provincial boundaries, often resulting in significant loss of corporate tax revenues for provinces, but not for the federal government. In March 2013, Finance Minister Charles Sousa wrote to the federal government urging them to address the issue of interprovincial profit and loss shifting but, to date, that request has not been addressed.

Enhanced Audit Activity

With the federal government collecting PIT, CIT and the provincial portion of the HST on behalf of the Province, other taxes such as Employer Health Tax, Tobacco Tax, Gasoline and Fuel Tax are administered by the Ministry of Finance. Building on its existing compliance programs, the ministry will direct additional resources to its Flexible and Integrated Risk System (FAIRS) program to identify high-risk audit cases across several tax statutes and expects to generate an additional $10 million in tax revenue annually. Cumulatively, the new compliance activities introduced over the past three years now contribute an additional $75 million annually in tax revenues.

Ontario’s Tobacco Strategy

Statistics related to the health effects of tobacco in Ontario are alarming — more than 13,000 smoking-related deaths annually and health care costs of more than $2.2 billion annually. The government will continue to take action to improve the health outcomes of Ontarians.

Smoke-Free Ontario Strategy

Ontario’s Smoke-Free Strategy, which is aimed at protecting Ontarians, is central to the government’s overall tobacco strategy. The goal remains unchanged: to have the lowest smoking rates in Canada and to reduce the supply of low-cost, illegal tobacco available to young people.

Tobacco Tax Increase

Tobacco tax is an important component of the campaign to reduce smoking. Several studies1 indicate that tobacco taxes are effective at reducing tobacco consumption.

Ontario’s tobacco tax rate on cigarettes was last adjusted in 2006, and today it is the lowest provincial rate in Canada. Consistent with the actions recently taken by several provincial governments and the federal government, Ontario is increasing the tobacco tax rate from 12.350 cents to 13.975 cents per cigarette (i.e., from $24.70 to $27.95 per carton of 200 cigarettes) and per gram of tobacco products other than cigarettes and cigars, effective 12:01 a.m. the day after Budget day. This increase accounts for inflation since 2006 and will help restore the effectiveness of the Ontario tobacco tax. The tax rate for cigars remains unchanged at 56.6 per cent of the taxable price.

Wholesalers of tobacco products that are not collectors of tobacco tax are required to take an inventory of all tobacco products (except cigars) they hold at the end of Budget day and remit the additional tax on the inventory to the Ministry of Finance.

First Nations Partnership

Tobacco has considerable ceremonial value as well as economic development importance to First Nation communities in Ontario. The government recognizes and respects this. It is within this context that the government has endeavoured to build a new partnership with First Nation communities. Progress continues to be made on the two pilot projects with the Chippewas of the Thames First Nation and the Mohawk Council of Akwesasne, with the goal of reaching agreements on community-based tobacco regulation on-reserve and a revenue-sharing agreement. Through information sharing and extensive dialogue, government officials and First Nation leaders are reviewing regulatory regimes from other jurisdictions. Ontario and its partners are looking for a sustainable,
made-in-Ontario solution.

In the 2013 Ontario Economic Outlook and Fiscal Review, the government committed to conduct a formal review of the current system of allocating unmarked cigarettes, commonly referred to as the First Nations Cigarette Allocation System. In the coming months, the government plans to appoint a facilitator to engage with First Nation communities and leaders, and other organizations to listen and seek their advice on the current allocation system, including possible ways to modernize it.

Contraband Tobacco Enforcement

Several recent studies have suggested that the supply of contraband tobacco in Ontario is increasing and is undermining the Province’s health objectives. The government is concerned about this trend and is taking appropriate action to address it. The Ministry of Finance’s enforcement activities have resulted in the successful seizure of more than 235 million illegal cigarettes, 3.2 million untaxed cigars and 95 million grams of untaxed fine-cut or other tobacco products over the past six years. Furthermore, over the same period, approximately $35 million in penalties has been assessed under the Tobacco Tax Act.

To protect youth from cheap illegal products, improve community health and safety, and ensure appropriate taxes are paid, the government will be strengthening tobacco enforcement. Accordingly, the government will be proceeding with the implementation of the raw leaf oversight system effective January 1, 2015. This is consistent with the government’s intent from Bill 186, Supporting Smoke-Free Ontario by Reducing Contraband Tobacco Act, 2011. The government also plans to introduce amendments to the Tobacco Tax Act that will increase fines for offences related to marked tobacco products, impound vehicles used to transport illegal tobacco and strengthen other enforcement measures.

Land Transfer Tax

Land Transfer Tax applies to all transfers of land in Ontario, both registered and unregistered, with few exceptions. The Ministry of Finance is reviewing aggressive tax avoidance structures and issuing assessments as appropriate. In particular, the Ministry is concerned that some structures attempt to use Ontario Regulation 70/91, made under the Land Transfer Tax Act, in a manner inconsistent with its intent. The regulation provides a “de minimis” partnership exemption that is intended to apply to small changes in partnerships that own land. The exemption is not to be used as a vehicle to acquire land without payment of tax.

The Province also proposes to introduce a general anti-avoidance rule into the Land Transfer Tax Act, applicable to transactions that are completed after Budget day and transactions that are part of a series of transactions that is completed after Budget day. Other legislative options to further ensure the integrity of the land transfer tax system are also under consideration.

Federal Tax Measures

Paralleling Federal Tax Measures

The 2014 federal budget proposed several personal and corporate income tax measures, including proposals related to:

  • medical expenses;
  • tax changes for farmers and fishers;
  • amateur athlete trusts;
  • estate donations;
  • non-resident trusts;
  • pension transfer limits;
  • new limitations on shifting income to a minor child;
  • donations of ecologically sensitive land and certified cultural property;
  • clean energy generation equipment; and
  • tax on insurance swaps and offshore regulated foreign financial institutions.

Under the terms of the Canada–Ontario Tax Collection Agreement, Ontario will adopt these measures and their effective dates once federal legislative and regulatory changes have been approved.

Similarly, the 2014 federal budget proposed an exemption from HST for certain health-related services and medical devices, that, once federal legislative changes are made, will apply in Ontario.

Taxation of Graduated Rate Trusts

In its 2014 budget, the federal government proposed to change the taxation of certain trusts and estates that pay income tax at graduated rates. This measure, which is proposed to take effect as of the 2016 taxation year, is under review.

Other Measures

Provincial Land Tax

The government is moving forward with its plan to reform the Provincial Land Tax (PLT).

Provincial Land Tax is a property tax that applies in unincorporated areas outside municipal boundaries in Northern Ontario. The Province has not adjusted PLT revenues in several decades and, as a result, PLT rates in unincorporated areas are now significantly lower than municipal property tax rates in neighbouring municipalities.

The 2013 Ontario Economic Outlook and Fiscal Review announced that the Province would be reviewing the PLT to address the inequities that northern municipalities have identified between taxpayers within their boundaries and those outside. While the review is underway, PLT rates for 2014 have been frozen at 2013 levels.

The Province will ensure PLT reform addresses the concerns of northern municipalities in a fair and balanced manner. In addition to consulting northern municipalities, the Province will seek input from residents and other stakeholders in the unincorporated areas.

The consultations will be completed in 2014 and solutions will be brought forward to address tax fairness in Northern Ontario for the 2015 tax year.

Hospices

Ontario recognizes that end-of-life or palliative care encompasses a spectrum of activities beyond administering medicine. It is therefore making regulatory amendments to clarify the scope of the property tax exemption announced in the 2011 Ontario Budget for non-profit hospices providing end-of-life care. The amendments would ensure that facilities providing supportive services for the care of terminally ill patients continue to receive fair treatment from the property tax system.

Tax Credit for Farmers Who Donate to Community Food Programs

The Local Food Act, 2013, which received Royal Assent on November 6, 2013, introduced a new non-refundable income tax credit for farmers who donate food to community food programs, including food banks. The credit is worth 25 per cent of the value of the agricultural goods donated and can be claimed for donations made beginning January 1, 2014. The government will bring forward regulations to implement the credit.

Summary of Measures

TABLE 5.2 2014 Budget Tax Measures
($ Millions)
  2014–15 2015–16 2016–17
Income Tax Changes for People      
Personal Income Tax Rate Changes 635 685 745
Tax Changes for Business      
Small Business Deduction 40 50 50
Tax on Aviation Fuel 25 45 65
Registration Requirements for
Road-Building Machines1
25
Revenue Integrity      
Tobacco Tax Increase2 140 135 130
Federal Tax Measures      
Paralleling Federal Tax Measures 60 120 120
Total 900 1,035 1,135
1 Amount shown is the additional fuel tax revenue that would result from changing registration and licensing requirements for road-building machines (made through amendments to the Highway Traffic Act).
2 Impacts reflect an estimated decrease in smoking prevalence over time.

Technical Amendments

To improve administrative effectiveness and enforcement, and maintain the integrity and equity of Ontario’s tax and revenue collection system, as well as enhance legislative clarity and regulatory flexibility to preserve policy intent, amendments will be proposed to various statutes, including:

  • Alcohol and Gaming Regulation and Public Protection Act, 1996
  • Assessment Act
  • Broader Public Sector Accountability Act, 2010
  • Building Code Act, 1992
  • Children’s Law Reform Act
  • Commodity Futures Act
  • Compulsory Automobile Insurance Act
  • Electricity Act, 1998
  • Environmental Bill of Rights, 1993
  • Family Law Act
  • Family Responsibility and Support Arrears Enforcement Act, 1996
  • Financial Administration Act
  • Housing Development Act
  • Income Tax Act
  • Insurance Act
  • Land Transfer Tax Act
  • Legislation Act, 2006
  • Liquor Control Act
  • Lobbyists Registration Act, 1998
  • Long-Term Care Homes Act, 2007
  • Ministry of Energy Act, 2011
  • Ministry of Municipal Affairs and Housing Act
  • Ministry of Revenue Act
  • Ontario Energy Board Act, 1998
  • Ontario Mortgage and Housing Corporation Act
  • Pension Benefits Act
  • Prepaid Hospital and Medical Services Act
  • Securities Act
  • Taxation Act, 2007
  • Taxpayer Protection Act, 1999
  • Tobacco Tax Act

1 These studies include: “Cigarette Taxes and Smoking Participation: Evidence from Recent Tax Increases in Canada,” Concordia University (2011); “The Impact of the 2009 Federal Tobacco Excise Tax Increase on Youth Tobacco Use,” University of Illinois at Chicago (2012); “Differential Effects of Cigarette Price Changes on Adult Smoking Behaviours,” Washington University School of Medicine (2012); and “Global Effects of Smoking, of Quitting, and of Taxing Tobacco,” Centre for Global Health Research, sponsored by St. Michael’s Hospital and the University of Toronto (2014).

Chart Descriptions

Table 5.1: Ontario Personal Income Tax: Taxable Income Thresholds and Rates

The chart on the left displays the current statutory tax rates of 5.05 per cent for the taxable incomes below $40,120, 9.15 per cent on taxable income between $40,120 and $80,242, 11.16 per cent on taxable incomes between $80,242 and $514,090, and 13.16 per cent on taxable incomes above $514,090.

The chart on the right displays the measures that the government proposes to implement for 2014 and beyond. The lower part of the chart shows that there would be no change to statutory tax rates on taxable incomes of $150,000 and below. Above is a box that shows the proposed statutory tax rate of 12.16 per cent that would apply on taxable incomes between $150,000 and $220,000. On the very top of the chart, another box shows that the current top tax rate of 13.16 per cent would apply to taxable incomes above $220,000.

Notations to the far right of the chart indicate that the proposed changes would affect the top two per cent of tax filers, and that 98 per cent of tax filers would not be affected.

Return to Table 5.1

Chart 5.1: Ontario Business R&D Spending Below the U.S.

Business R&D as a percentage of GDP in Ontario has continuously lagged behind the U.S. Between 2001 and 2011, Ontario’s business R&D as a percentage of GDP declined from 1.7 per cent to 1.2 per cent, while the U.S. remained at 1.9 per cent.

Return to Chart 5.1