3-23-06 – 2006 Ontario Budget Commentary

Posted on December 28, 2011 by admin | Posted in Federal / Provincial Budgets

BUDGET HIGHLIGHTS

  • Corporate Tax Measures
  • Retails Sales Tax Measures
  • Property Tax Credit

The Honourable Dwight Duncan presented his first budget as the Ontario Minister of Finance on March 23, 2006. The following is a summary of some of the more relevant measures announced:

CORPORATE TAX MEASURES

Extending the Carry-Forward Period for Business Losses

The November 2005 Federal mini-budget proposes to extend the non-capital loss carry-forward period from 10 to 20 years. Subject to Federal implementation, this budget proposes to parallel the federal extension and effective date.

Ontario Capital Tax Elimination Plan

The 2004 Ontario budget introduced a plan to eliminate Ontario’s capital tax by 2012. This budget has proposed a 5% capital tax cut for 2007 and 2008 taxation years.

Rates (%)
Deduction ($M) Current Budget Proposal
01-Jan-06 10 0.300 0.300
01-Jan-07 12.5 0.300 0.285
01-Jan-08 15 0.300 0.285
01-Jan-09 15 0.225 0.225
01-Jan-10* 15 0.150 0.150
01-Jan-11 15 0.075 0.075
01-Jan-12 Eliminated

*The government intends to eliminate the capital tax in 2010, should the fiscal position of Ontario allow.

RETAIL SALES TAX MEASURES

Destination Marketing Fees

The 2004 budget introduced a one year sales tax exemption for destination marketing fees to support the hotel industry’s initiative in promoting tourism in Ontario. This temporary exemption was extended in the 2005 budget and this budget extends the relief to June 30, 2007.

Hybrid Electric Vehicles

To encourage energy conservation in Ontario, the government currently refunds the retail sales tax paid on an eligible hybrid electric vehicle, to a maximum of $1,000. The government proposes to double that rebate to $2,000 for qualifying vehicles delivered to purchasers after March 23, 2006. This measure will come to an end on March 31, 2012.

TAX MEASURES FOR INDIVIDUALS

Property Tax Credits

The maximum Property Tax Credit for seniors is $625. This credit is reduced for senior couples when their net income is greater than $22,250. The government plans to increase this income threshold so couples with minimum level income continue to receive the full $625. The amount of the increase will be announced at a later date.

Taxation of Dividends

On November 23, 2005 the federal government proposed changes to the taxation of dividends received by individuals. The Ontario government will review the federal legislation when it becomes available and then determine how to respond at that time.