Canada: Ontario Budget - 2013 Tax Highlights

Last Updated: May 3 2013
Article by Crowe Soberman LLP

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% to 45% refundable tax credit on the salaries and wages paid to eligible apprentices in designated construction, industrial, motive power and services trades.

The 2012 Budget proposed to better target the ATTC and help students improve their completion rates among ATTC eligible trades by eliminating the ATTC eligibility on certain programs. Consistent with the 2012 proposals, effective for expenditures incurred after March 31, 2014, the following apprenticeship trades will not be eligible for the ATTC:

  • Information technology – Contact Centre – Technical Support Agent;
  • Information technology – Contact Centre – Inside Sales Agent;
  • Information Technology – Contact Centre – Customer Care Agent.

This measure is projected to save the government $45 million in the next fiscal year.

Renewable Fuels and Elimination of Biodiesel Exemption

In 2002, biodiesel was made exempt from the 14.3 cent per litre fuel tax under the Fuel Tax Act to encourage its use in Ontario.

The federal government introduced the renewable-content requirements, in respect of diesel fuel, effective on July 1, 2011. As a result of the federal government's initiatives, Ontario's fuel exemption for biodiesel no longer serves its intended purpose. As such, Ontario will take steps to update its green transportation-fuels policies by proposing to:

  • Repeal the fuel tax exemption for biodiesel effective April 1, 2014; and
  • Consult with stakeholders on a provincial mandate for greater diesel fuels.

Mining Tax System Review

The Mining Tax Act levies a 10% tax (5% for remote mines) on profits earned from the extraction of minerals (other than diamonds) in Ontario.

The 2012 Budget announced that the government would conduct a review to determine whether these rates provide Ontario with fair compensation for its non-renewable resources. The 2013 Budget affirms that the government will work with stakeholders over the next several months to ensure that the province is supporting the exploration and production of minerals while receiving a fair return on its resources.

Closing Tax Loopholes

The Ontario and federal governments have negotiated a new agreement for enhanced compliance activities focused on aggressive international tax planning. This agreement builds on an existing agreement that has generated an additional $500 million in revenue for Ontario over the past several years, including more than $200 million in 2012-13.

The 2013 Budget further proposes legislation to introduce new disclosure rules for aggressive tax avoidance transactions similar to the rules introduced by the federal government in November 2012. This new measure will require taxpayers to report aggressive tax avoidance transactions that attempt to avoid Ontario tax. Initiatives related to closing tax loopholes are expected to generate more than $300 million in incremental tax revenues over the next four years.

Underground Economy

The Ontario and federal governments recently negotiated an agreement to enhance compliance activities that will improve the integrity of the tax system and generate incremental tax revenues from individuals and corporations who are not complying. These measures are consistent with the 2012 Budget commitment and a recommendation by the Commission on the Reform of Ontario's Public Services.

Despite the measures implemented to date, Ontario is calling on the federal government to do more to combat the underground economy, including the release of its strategy on the underground economy as soon as possible.

Enhancing Audit

Ontario will expand the use of its automated risk assessment system to identify tax accounts that pose the highest risk of tax loss. This initiative will generate an additional $65 million annually.

Clearance Certificates

All businesses are required to obtain a clearance certificate from the Minister of Finance under the Retail Sales Tax Act (RSTA) for sales to which the Bulk Sales Act applies. To enhance the effectiveness of clearance certificates, the 2011 Budget amended the RSTA to allow the minister to withhold clearance certificates until tax debts under other statutes (Alcohol and Gaming Regulation and Public Protection Act, 1996; Fuel Tax Act; Gasoline Tax Act, Race Tracks Tax Act and Tobacco Tax Act) were paid or secured. These amendments were made effective until June 30, 2013. The 2013 Budget is now proposing to repeal this sunset date.

Accelerated Capital Cost Allowance (CCA) for Manufacturing and Processing Machinery and Equipment

Capital Cost Allowance (CCA) is the tax depreciation expense in respect of a capital asset that is used in a business. Ontario and the federal government currently provide a temporary 50% accelerated CCA for manufacturing and processing machinery and equipment acquired after March 18, 2007, and before 2014.

Ontario will parallel the 2013 federal budget proposal to extend the accelerated CCA for manufacturing and processing machinery and equipment acquired in 2014 or 2015. The assets qualifying for this accelerated CCA will be subject to the half-year rule in the year they are acquired.


Ontario Trillium Benefit (OTB)

The 2011 Ontario Budget introduced the Ontario Trillium Benefit (OTB), which combined the Ontario Sales Tax Credit, Ontario Energy and Property Tax Credit and Northern Ontario Energy Credit into one payment. The OTB is currently paid in monthly instalments. The 2013 Budget proposes to modify the OTB so that, beginning in 2014, each recipient will have the choice to receive their benefit in one of two ways:

1. In a single payment at the end of the benefit year, or

2. In monthly payments throughout the year.

Specifically, taxpayers will have the choice to receive their 2014 OTB benefit in monthly instalments or in one single payment. If a taxpayer chooses the monthly payments, he/she will start to receive his/her OTB payments in July 2014. If, instead, the taxpayer chooses the single payment, he/she will receive the full amount in June 2015. In the latter case, the taxpayer would not receive any OTB payments from July 2014 to May 2015.

If the total OTB for the year is $360 or less, the taxpayer will receive the total amount in the first payment month, i.e., July 2014.

Dividend Tax Credit

The 2013 Federal Budget proposed changes to the tax treatment of dividends distributed from corporate income taxed at less than the general corporate tax rate (i.e., income taxed at the small business rate), starting in 2014. Ontario will mirror this measure, subject to federal implementation.

After factoring these dividend tax measures, the combined federal and Ontario dividend tax rates applicable to an Ontario taxpayer, who is already taxed at the highest marginal tax rate, are summarized as follows. These rates are applicable to dividends received in calendar year 2014 and beyond.

Pooled Registered Pension Plans (PRPPs)

In response to calls for new, more flexible retirement savings plans, the federal government recently implemented legislative changes to support the introduction of pooled registered pension plans (PRPPs). These plans are intended to make it easier to save for retirement by providing employees and self-employed individuals with a new low-cost savings vehicle that is professionally managed and portable. The Ontario government announced that it will be consulting with interested parties to determine how PRPPs should be implemented before introducing legislation.


The 2013 Federal Budget, which was tabled in March 2013, proposed several other tax measures that, under the terms of the Canada-Ontario Tax Collection Agreement, will be adopted by the Ontario government. These include proposals relating to:

  • Lifetime capital gains exemption increase from $750,000 to $800,000;
  • Restriction on claiming farm losses;
  • Elimination of the deduction for safety deposit boxes;
  • Corporate and trust loss trading;
  • Mining expenses;
  • Accelerated CCA for clean energy generation equipment; and
  • Character conversion transactions and leveraged life insurance arrangements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Crowe Soberman LLP
Similar Articles
Relevancy Powered by MondaqAI
Collins Barrow National Incorporated
Crowe Soberman LLP
Crowe Soberman LLP
Collins Barrow National Incorporated
Crowe Soberman LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Collins Barrow National Incorporated
Crowe Soberman LLP
Crowe Soberman LLP
Collins Barrow National Incorporated
Crowe Soberman LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions