Waters & Meredith

Serving Niagara..

ONTARIO PROVINCIAL BUDGET - MARCH 27, 2003

Personal Income Tax Rates

  1. The tax cuts that were originally scheduled for 2003 are scheduled for 2004.


  2. The provincial tax rates are:
    3. 2003 2004
    $0 to $32,435 6.05% 5.65%
    $32,435 to $64,871 9.15% 8.85%
    Over $64,871 11.16% 11.16%

  3. The tax bracket thresholds are for 2003 and will be indexed (increased) for 2004.

Ontario Personal Surtaxes

  1. For 2003, Ontario's surtaxes are:

    20% of the gross tax amount in excess of $3,747 plus
    36% of the gross tax amount in excess of $4,727


  2. For 2004 and subsequent years, a single surtax of 56% will apply at the $4,727 level plus an increase for inflation. For 2005, the threshold will be $5,240.


  3. This is intended to delete the surtax for individuals earning less than $75,000 in 2005.

Top 2003 Rates

Individuals 46.40% (0ver approximately $103,000)
Corporations - General 36.62%
- M & P 33.12%
- Small Business 18.62%

Capital Tax Reduction

  1. The corporate capital tax rate is to be reduced by 10% effective January 1, 2004.


  2. The capital tax is to be eliminated by 2008.

Tax Credits - Disabled and Infirm Dependants

  1. Tax Credit Amounts
    2. 2003 Proposed
    - Disability Credit $6,316 $6,637
    - Caregiver Credit 3,684 6,637
    - Infirm Dependant Credit 3,684 6,637
    - Disability Credit Supplement
    for Disabled Children    		 3,684 6,637

  2. The application of the caregiver credit and the infirm dependant credit will be broadened to include infirm spouses and common-law partners as well as certain relatives who live apart from the caregiver.

Refundable Education Credit

  1. Parents may claim a refundable credit on qualifying tuition payments made to private elementary and high schools.


  2. The tax credit will be:

    20% - 2003
    30% - 2004
    40% - 2005
    50% - 2006

Senior Enhanced Property Tax Credit

  1. Effective July 1, 2003, seniors will qualify for a credit to reimburse them for the full amount of their residential education property tax.


  2. An application form will be required.


  3. The Ontario property tax credit will be reduced accordingly.

Corporations - Self-Generated Electricity

  1. Corporations that generate electricity for their own use are currently eligible for the fast write-off of assets used to generate electricity from alternative or renewable energy sources.


  2. The budget proposes to provide an additional 100% income tax deduction to Ontario corporations for the cost of qualifying assets used to generate electricity for their own use from alternative or renewable energy sources.


  3. The tax deduction would apply to electrical generating facilities where construction begins after November 25, 2002 and is completed before January 1, 2008.


  4. It is further proposed that corporations that are eligible for this incentive will not be eligible for the 10-year income tax holiday for new electricity generation.

Apprenticeship Tax Credit

  1. The government has proposed the introduction of an Apprenticeship Tax Credit for corporations and unincorporated businesses in Ontario.


  2. The tax credit would be a 10% refundable credit for eligible expenditures in respect of apprentices in a qualifying skilled trade.


  3. For businesses with total payroll costs of not more than $400,000, the credit would be 15%.


  4. An employer would be eligible for a tax credit of up to $250 per month per apprentice to a maximum of $6,000 over a 24-month employment period.


  5. Eligible expenditures would be salaries and wages paid after March 27, 2003 to an apprentice in a qualifying skilled trade, which would include designated construction and industrial trades.

Alternative Fuel Vehicles

  1. The current RST rebate would be doubled, to a maximum of $2,000, for vehicles delivered to purchasers after March 27, 2003.

Charities - RST Rebates

  1. The rebate is available to religious, charitable or benevolent organizations that pay for materials incorporated into buildings that they own or lease under a long-term lease.


  2. Effective for contracts entered into after March 27, 2003, the rebate will be expanded to include situations where these organizations enter into an agreement to construct a facility that they will lease on a long-term basis immediately upon completion.

Land Transfer Tax

  1. Certain life leases will be exempt from land transfer tax.


  2. They will qualify for exemption of the life lease is pursuant to an agreement between a registered charity or non-profit organization and the purchaser of the life lease.


  3. In addition, the exemption from land transfer tax for the transfer of farmland into a family farm corporation will be expanded to include transfers of farmland between family members, effective for transfers after March 27, 2003.

Transfer of Local Hydro

  1. Municipalities and municipal electricity utilities are currently subject to a 33% transfer tax on the value of electricity assets upon the transfer of an interest in those assets to another person.


  2. The government proposes to re-introduce a two-year transfer tax exemption.


  3. The exemption will be available for transfers of electricity assets from a municipality or a municipally-owned electricity utility to another municipality or publicly-owned electricity utility, effective for transfers occurring after March 27, 2003 and before March 28, 2005.

Ontario's Economic and Revenue Outlook

Revenue (in Millions) Interim
2002-2003		 Plan
2003-2004
Taxation Revenue:
- Personal Income Tax $18,800 $19,905
- Retail Sales Tax 14,090 14,885
- Corporations Tax 6,520 6,845
- All Other Taxes 8,991 9,120
Total Taxation Revenue

 $48,401

 $50,755
Government of Canada 9,694 10,177
Income from Government Enterprises 3,889 4,416
Other Revenue 4,407 6,218
TOTAL REVENUE

 $66,391
=======

 $71,566
=======
Revenue - Expenditures - Surplus (in Millions)

 Interim
2002-2003

 Plan
2003-2004
Revenue $66,391 $71,566
Expenditures:
- Programs $55,271 $59,390
- Gross Capital Expenditure 2,467 3,170
- Less Net Investment in Capital Assets 576 702
- Public Debt Interest - Provincial 8,225 8,188
- Public Debt Interest - Electricity Sector 520 520
Total Expenditures $65,907

 $70,566
Less Reserve 000 $1,000
Add Decrease (Increase) in Stranded Debt from
Electricity Sector Restructuring to be Recovered
From Ratepayers		 40 000
SURPLUS $ 524
=======		 $ 000
=======

Gaming Revenues

  1. Provincial proceeds from gaming activities support provincial priorities, including the operation of hospitals, charities, communities and the agricultural sector.


  2. Support in Millions
    3. Interim
    2002-2003    		 Plan
    2003-2004
    Lotteries, Charity Casinos and Slot Machines at
    Racetrack Revenue:
    - Operation of Hospitals $1,466 $1,634
    - Ontario Trillium Foundation 100 100
    - Problem Gambling and Related Programs 29 36
    Commercial Casinos Revenue:
    - General Government Priorities 680 636
    TOTAL $2,275
    =======    		 $2,406
    =======


  3. The Ontario Lottery and Gaming Corporation Act, 1999, requires that the net Provincial revenue generated from lotteries, charity casinos and racetrack slot machines support services such as the operation of hospitals, problem gambling and related programs, and funding for charitable organizations through the Ontario Trillium Foundation.


  4. In 2003-2004, net Provincial revenues from commercial casinos, estimated at $636 million, will be used to support general government priorities including health care, education, justice and social programs.


  5. Since the commencement of commercial casino operations, 27,000 direct and indirect jobs have been created in Ontario. Commercial casino operations and the additional tourists they attract contribute an estimated $2.4 billion annually to the Ontario economy.


  6. Twenty per cent (20%) of gross revenue from slot machines at racetracks is provided to promote economic growth of the horse-racing industry. Since 1998, this initiative has preserved and enhanced 45,000 jobs in Ontario's horse-racing industry, providing over $840 million to a key component of the Province's agricultural sector. For 2003-2004, additional support is estimated at $320 million.


  7. A portion of gross slot machine revenue estimated at $78 million in 2003-2004 will be provided to municipalities that host charity casinos and slot operations at racetracks, including funding to help offset local infrastructure and service costs.


Provincial Election

  1. A provincial election could be called before the legislature reconvenes. Consequently is it not clear at this point that the measures discussed in this report will be introduced as a formal budget.

The information herein is provided for your general information and action should not be taken on the basis of this budget memo, but only on the advice of your own individual advisor, applying this advice to your individual situation. Please call if you have any questions.

4673 Ontario Avenue, Suite 301
Niagara Falls, Ontario L2E 3R1
Tel: (905) 356-4324
Fax: (905) 356-0964

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