Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Ontario Announces More Tax Reductions, Film Tax Credits and Investments in Ontario Business

On December 13, 2007, the Government of Ontario started handing out holiday goodies in the form of investments and tax reduction.

The proposed tax reduction goodies included:

  • The elimination of capital tax rates for Ontario companies primarily engaged in manufacturing and resource activities (includes manufacturing and processing businesses, mining, logging, farming, fishing businesses, etc.) (effective January 1, 2008)
  • The reduction of capital tax rates for all businesses by 21% (retroactive to January 1, 2007) - in the way to full elimination in 2010
  • The acceleration of a write-off (to two years) for manufacturing and processing machinery and equipment relating to purchases made after March 18, 2007 and before January 1, 2009
  • The increase in the small business deduction threshold to $500,000 from $400,000 (retroactive to January 1, 2007);
  • The increase in the Ontario Film and Television Credit rate from 30% to 35% for labour expenditures incurred after December 31, 2007 and before January 1, 2010 (effective January 1, 2008) - note that the 10% regional bonus for filming outside the Greater Toronto Area will continue.  Also, the enhanced rate of 40% remains available to eligible first-time producers on the first $240,000 of labour expenditures;
  • The increase in the Ontario Production Services Tax Credit rate from 18% to 25% for labour expenditures incurred after December 31, 2007 and before January 1, 2010;
  • The extension (by one year) of the phase out of the Labour-Sponsored Investment Fund tax credit and the increase in the maximum eligible investment
    • maintaining the 15% tax credit rate until the end of the 2009 taxation year
    • lowering the rate to 10% for the 2010 taxation year
    • lowering the rate to 5% for the 2011 taxation year
    • eliminating the credit for years after 2011
    • increasing the maximum investment that qualifies for the credit from $5,000 to $7,500.

To read more about the Ontario tax reductions and film credits, please click on December 13, 2007 Ontario Ministry of Finance Backgrounder.

The proposed investments in Ontario Businesses include:

  • Investing $90 million in the Ontario Venture Capital Fund and signing a letter of intent with leading Canadian corporate and institutional investor for the $165 million first round of the fund
  • Investing $50 million of strategic investments in 2007-2008 to further strengthen Ontario's environment for world-class scientific research
  • Investing $40 million in skills development through Employment Ontario
  • Investing $1.4 billion in building strategic infrastructure (including transit projects, municipal infrastructure, the Highway 407 extension, etc).

To read more about the investments, please click on December 13, 2007 Ontario Ministry of Finance News Release.

If you would like to find out more on how to take advantage of the tax reductions, film tax credits or government funding for investments, please contact us.

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