HST Will Spark High-Tech Growth
McGuinty Government’s Tax Reform Benefits High-Tech Industry
Ontario’s high-tech sector is poised to benefit from the Ontario’s Tax Plan for Jobs and Growth.
High-tech businesses like software and IT companies have seen a reduction in their expenses since July 1. They are now receiving 13 per cent input tax credits (ITCs) for the HST they pay on things like computer hardware and software, storage equipment, servers and other business purchases. With business costs down, companies are better able to expand and innovate in this important sector which ultimately creates more jobs and boost the economy.
Similarly, many businesses dependent on the high-tech sector now also receive ITCs on their software purchases, helping this sector to grow. And like 83 per cent of goods and services in Ontario, there will be no new taxes on high-tech goods, such as smartphones, laptops and GPS systems, for Ontario consumers with the implementation of the HST.
Cuts to Corporate Income Tax (CIT) rates are also creating conditions for a flourishing high-tech sector in Ontario. A key component of the five-year Open Ontario plan, this tax package gives high-tech companies in Ontario strong incentives to grow and contribute to the province’s economy.
QUICK FACTS
- Research and development (R&D) tax credits mean that $100 spent on R&D by a high-tech company in Ontario can be reduced to as little as $36.
- Ontario is home to over 5,500 innovative IT companies.
- The general Corporate Income Tax rate was cut from 14 per cent to 12 percent on July 1 and will be cut to 10 per cent by 2013.
- The CIT rate for small businesses was cut to 4.5 per cent from 5.5 per cent on July 1.
- Ontario is the only province to eliminate the small business deduction surtax, a barrier to business growth.
