Ontario’s Tax Plan Will Help Manufacturers Build Economic Growth
June 21, 2010 10:00 AM
McGuinty Government Providing Tax Relief to Bolster the Manufacturing Sector
Ontario’s manufacturers are expected to receive over $1 billion in tax relief annually as a result of the Tax Plan for Jobs and Growth.
Beginning July 1, manufacturers will be eligible for input tax credits covering all 13 per cent of the Harmonized Sales Tax (HST) on production inputs. These credits alone are expected to provide $510 million for the manufacturing sector. Ontario’s Marginal Effective Tax Rate on income earned from new business investment will also be cut in half, to 16.2 per cent, by 2018.
In addition, income from most manufacturing and resource activities will be taxed less under Ontario’s tax reforms. Manufacturers will see their Corporate Income Tax rate drop from 12 per cent to 10 per cent effective July 1. Together these measures will allow manufacturers to reinvest in the sector, hire new staff and become more competitive.
Support for the manufacturing sector is an important part of Ontario’s modernization of an out-dated, 50-year-old, tax system. The new plan also includes permanent income tax cuts for families and new permanent sales tax credits.
This tax package is a key component of the five-year Open Ontario plan, which supports job creation and enhances the programs and services, including education, health care and skills training, that Ontarians value.
QUICK FACTS
- Mining, utilities, and oil and gas companies will get $315 million in annual tax relief when the tax plan is fully implemented.
- More small and medium-sized manufacturers will be exempt from the Corporate Minimum Tax, and the rate will be cut from 4 per cent to 2.7 cent in 2010.
- Capital Tax was eliminated for manufacturing and resource firms on January 1, 2007.
- The general Corporate Income Tax rate will be cut from 14 per cent to 10 per cent over the next three years starting on July 1.
