The Honourable Charles Sousa, Minister of Finance, presented Ontario’s 2013 budget on May 2, 2013. This year’s budget, the first under Premier Kathleen Wynne, focuses on eliminating the deficit, supporting businesses, generating prospects for growth, and job creation.
While the province appears to be on track, having exceeded its deficit target for 2012-13, it is also projecting to completely eliminate the deficit by 2017-2018, with real gross domestic product (GDP) growth expected to be 1.5 percent in 2013, and rising to 2.4 percent by 2015.
Ontario has announced a number of significant tax changes in this year’s budget, which have been summarized below. Please note that all of the measures discussed below are proposed and the budget must still be passed by the province’s minority government.
Commodity Tax Measures
Elimination of Biodiesel Fuel Tax Exemption
With the implementation of the federal government’s renewable-content requirements for diesel fuel in July 2011, Ontario’s fuel tax exemption for biodiesel is no longer considered necessary. Accordingly, this exemption will be repealed, effective April 1, 2014. In consultation with stakeholders, Ontario also plans to further develop its policies regarding greener fuels, renewable fuel content, and greenhouse gas emissions.
Tobacco Tax Compliance Initiatives
Among other compliance initiatives designed to curb the availability of illegal tobacco, the government is proposing to move forward with the following measures, effective January 1, 2014:
- implementation of a raw leaf tobacco oversight process that will require the registration of tobacco growers, importers, exporters, certain transporters, processors and dealers; and
- replacement of the federal stamp on cigarettes and fine-cut tobacco for retail sale with a single integrated stamp.
Retail Sales Tax Clearance Certificates
In the 2011 budget, the government amended the Retail Sales Tax Act to allow the Minister to withhold clearance certificates (for sales to which the Bulk Sales Act applies) until tax debts under certain other provincial statutes were paid or secured. The government is proposing to repeal the end-date for these amendments, which were originally to be in effect until June 30, 2013.
The Underground Economy
As with most other provinces, Ontario is looking to close tax loopholes and ensure that all individuals and corporations pay their fair share of tax. This applies equally to both income and sales taxes. Working together with the federal government, the province intends to focus on compliance and anti-avoidance issues.
Indeed, the province also used this year’s budget as an opportunity to call on the federal government to do more, including the provision of a framework for better information sharing among provinces and territories, and additional investment to help identify technological solutions to deal with “sales zappers” and other devices designed to avoid the collection of tax. Over the next four years, Ontario expects initiatives to close tax loopholes and inhibit the underground economy to generate combined additional revenues of $700 million.
Payroll Tax Measures
The government is proposing to make the following Employer Health Tax changes, effective January 1, 2014:
- the annual payroll exemption would be increased from $400,000 to $450,000, and would be indexed for inflation every five years; and
- the annual payroll exemption would be eliminated for private-sector employers (including groups of associated employers) with annual Ontario payrolls over $5 million (registered charities would continue to qualify for the exemption, regardless of the size of their payrolls).
Mining Tax Measures
As announced in last year’s budget, the government plans to work with stakeholders in the coming year to review Ontario’s mining tax system, with a particular focus on whether the province receives equitable compensation for its non-renewable resources through current levies on profits from the extraction of minerals in Ontario, while adequately supporting exploration and production activities in the province.
Further details on the 2013 Ontario budget may be found on the province’s web site at:
2013 Ontario Budget.