Helping Ontario’s Small Businesses Grow
October 26, 2010
McGuinty Government Supports Small Businesses With Transition Payments
Starting this week, the province is helping 800,000 Ontario businesses with support of transition payments of $300 up to $1000 as they adapt to the Harmonized Sales Tax (HST).
By harmonizing its two sales taxes, Ontario modernized an outdated, 50-year-old tax system resulting in savings of about $4.5 billion a year in embedded taxes. Previously, hidden taxes were passed on to Ontarians with higher prices at the cash register. The HST eliminates these hidden costs making businesses more efficient and freeing up funds for reinvestment and new jobs. It is estimated that these changes will help create almost 600,000 net new jobs within the next 10 years.
Modernizing Ontario’s tax system is a key part of the five-year Open Ontario Plan, which supports job creation, and enhances programs and services that matter to Ontario families such as education, health care and skills training.
QUICK FACTS
- In total, Ontario will provide an estimated $400 million in one-time transition payments to Ontario businesses under the Small Business Transition Support Program
- Fewer small- and medium-sized businesses are paying the Corporate Minimum Tax (CMT), and the CMT rate is cut from 4 to 2.7 per cent
- The small business Corporate Income Tax rate is cut from 5.5 to 4.5 per cent
- The small business deduction surtax is eliminated
- Together, the tax cuts and HST reduce the tax burden on new small business investment by more than half, from almost 29 per cent to just over 13 per cent
- A study by the TD Bank estimates that about 80 per cent of cost savings to business will be passed on to consumers in the first year the HST comes into effect, rising to 95 per cent by the third year
