Ontario Budget - 2013 Tax Highlights

Today (May 2, 2013), Ontario Finance Minister, Charles Sousa tabled the province's 2013 Budget. This year's budget, titled "A Prosperous and Fair Ontario" is committed to eliminating the deficit by 2017-18 and then reducing the net debt-to-GDP ratio to the pre-recession level of 27%.

The Wynne government presented a budget that is based on taking a "balanced approach" to eliminating Ontario's deficit. This balanced approach is achieved by keeping growth in program spending at low levels therefore allowing the government to make smart investments for Ontario's long-term prosperity, all the while balancing the budget.

Other than paralleling the tax treatment of non-eligible dividends proposed in the 2013 Federal Budget, no new taxes or tax rate changes were introduced in this Ontario Budget.

The deficit for 2012-13 is now estimated to be $9.8 billion, which is a $5 billion improvement from the deficit forecast in the 2012 Budget. For 2013-14, the deficit is projected to be $11.7 billion.

Here we summarize the major tax measures announced in today's Budget.

Business Tax Measures

Employer Health Tax (EHT)

Employer Health Tax (EHT) of up to 1.95% is paid by employers on their Ontario payrolls. All private sector employers are exempt from paying EHT on up to $400,000 of their Ontario payrolls each year, and groups of associated employers must share the exemption. The 2013 Budget proposes to increase the EHT exemption to provide greater relief for small businesses (including charities and not-for-profit organizations), while eliminating the exemption all together for larger employers.

Beginning January 1, 2014, the exemption will be increased from $400,000 to $450,000 to provide greater EHT relief to the small business sector. \ Moreover, the exemption will be adjusted for inflation every five years using the Ontario Consumer Price Index. Using projected inflation rates, the exemption is expected to rise to $500,000 in 2019.

Also beginning January 1, 2014, the exemption will be eliminated for private-sector employers (including groups of associated employers) with annual Ontario payrolls of over $5 million.

Registered charities, however, regardless of their payroll size, will continue to be eligible to claim the exemption.

Apprenticeship Training Tax Credit (ATTC)

The Apprenticeship Training Tax Credit (ATTC) was introduced in 2004 to encourage businesses to hire and train apprentices in the skilled trades. The ATTC provides businesses with a 35%...

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