Ontario is proposing to scrap nine existing tax credits, establish a few others, and eventually phasing out the capital tax.

The Budget Measures Act, 2004, introduced in the Ontario Legislature today, implements many of the measures contained in the 2004 provincial Budget.

The act to proposes to:

    create the Apprenticeship Training Tax Credit;

    provide a maximum of $36 million to leverage up to $120 million in new pools of seed capital for spin-off technology companies through the Ontario Commercialization Investment Funds program;

  • adopt a proposed Northern Ontario Grow Bonds pilot program to help new and expanding businesses in northern communities;
  • gradually eliminate the capital tax by 2012; and,
  • eliminate or replace nine tax credits.

The government says that scrapping the nine tax credits will save the province $85 million over four years. The plan includes eliminating the PST rebate for modified vehicles, eliminating some corporate tax incentives/credits, and scrapping the Ontario Research Employee Stock Option Credit and the Ontario Home Ownership Savings Plan.

Under the plan to get rid of the capital tax, by 2008 more than 13,000 medium-sized corporations would no longer pay capital tax. Starting Jan. 1, 2009, capital tax rates would be reduced each year until the tax is fully eliminated Jan. 1, 2012.

The bill also reintroduces civil liability for secondary market disclosure, and it proposes to increase the Capital Cost Allowance rate for computer equipment and for data network infrastructure equipment acquired after March 22, 2004. This initiative would bring Ontario into line with enhancements to the CCA announced in the 2004 federal budget.

“Our budget laid out a comprehensive four-year plan to encourage economic growth, restore the province to financial health, invest in education and improve health care,” finance minister Greg Sorbara said. “This bill contains initiatives that will continue to strengthen Ontario’s economy, while beginning to modernize government and find savings through the elimination or replacement of nine tax incentives.”

“Ontario is on track with the plan laid out in this year’s budget,” Sorbara said. “This bill is a key element in our plan to build a stronger, more prosperous economy, transform our health care and education systems, support investment and job creation in Ontario.”

News release

http://www.gov.on.ca/FIN/english/media/2004/bke11-budget.htm

Budget Measures Act backgrounder
http://www.gov.on.ca/FIN/english/media/2004/bke11-budget.htm