TAXES

Businesses have a choice where they locate their facilities and the City of Stratford, Province of Ontario and the Government of Canada understands this. While the Province of Ontario legislates that municipalities can not provide direct cash incentives or special tax arrangements (known as bonusing under the Municipal Act), all three levels of government provide specialized incentives to enhance a municipality’s pro-business environment.

Municipal Taxes

The amount of property taxes paid in Stratford is calculated using two variables: the Current Value Assessment of a property as calculated by the Ontario Property Assessment Corporation and the tax rate as determined by the revenue requirements of the City of Stratford. The Current Value Assessment reflects the current market-based value of the property and is similar to the real estate value of the property. The Assessed Value multiplied by the appropriate tax rate will result in an approximation of taxes for a given year.

Stratford’s Tax Rates (2011)

Taxation

The level of taxation in Canada compares favourably with that of other major industrialized countries. Canada has a comprehensive social security system, as well as excellent public health care, training and educational services. Yet, with all of these publicly financed benefits, corporate and business taxes are still competitive with the U.S. and the G-7 average.

Effective January 1, 2011 the Federal corporate tax rate is 16.5% and Ontario’s basic CIT rate of 12% after June 30, 2010 and before July 1, 2011 means most corporations operating in Ontario are generally taxed at a rate of 28.5%. Ontario's manufacturing and resource industries are subject to a lower 10% provincial tax rate after June 30, 2010 and before July 1, 2013. When combined with the federal Manufacturing & Processing (M&P) 2011 rate of 16.5 per cent, a corporation earning manufacturing income in Ontario is taxed at a rate of only 26.5 per cent.

Canadian-controlled private corporations carrying on business in Ontario are also eligible for a much more favourable combined federal/Ontario rate on the first C$500,000 of active business income earned.

Corporate Minimum Tax

Ontario's Corporate Minimum Tax (CMT) applies only to groups of companies with gross revenues in excess of C$10 million, or total assets in excess of C$5 million. Income for CMT purposes is based upon the income reported on the company's financial statements, which must be prepared in accordance with generally accepted accounting principles. Financial statement income is adjusted for a few specific items and taxed at a rate of 2.7 per cent after June 30, 2010 and at 4 per cent before July 1, 2010. If the CMT calculation is higher than the corporation's regular Ontario tax, the excess is payable as CMT. This excess may be carried forward for up to 10 years to offset regular Ontario tax in a year to the extent it exceeds the CMT calculation. Seven states in the U.S. have an alternative minimum tax on corporations that is more complex and onerous than Ontario's CMT.

Payroll Taxes

Ontario corporations must collect Employment Insurance premiums and Canada Pension Plan (CPP) contributions, from both the employer and the employee, to provide support for loss of employment (including maternity leave) and retirement. The CPP rate is 4.95 per cent of wages for employers and employees, up to a maximum of C$2,217.60 per employee. For 2011, employees pay Employment Insurance premiums at a rate of 1.73 per cent of wages, ranging up to a maximum of C$786.76 per employee; while employers pay at a rate of 2.49 per cent of wages up to a maximum of C$1,101.46 per employee. 

Harmonized Sales Tax

On July 1, 2010 the Harmonized Sales Tax (HST) took effect in Ontario and is applied to most purchases and transactions. The 13 per cent HST replaces the federal goods and services tax (GST) and the provincial sales tax (PST).

Previously, the PST was charged on most purchases made by businesses in manufacturing goods and providing services. It penalized business by generally taxing them at every step in the production, distribution and retail processes – making the PST a tax on a tax on a tax.

The PST resulted in about $4.5 billion in embedded taxes, hidden in the cost of doing business in Ontario. It drove up costs to consumers and was a big disadvantage to Ontario's businesses. Most countries we compete with for jobs don't have that disadvantage.

The HST removes this hidden tax by refunding sales taxes paid on most business inputs. These refunds mean lower prices for many consumer purchases and lower business costs, which will result in increased business investment, more jobs and higher incomes.

Consumers do not have to pay the provincial portion (eight per cent) of the HST for:
• Qualified prepared food and beverages sold for a total of $4 and under
• Print newspapers
• Children's clothing and footwear
• Children's car seats and car booster seats
• Diapers
• Feminine hygiene products
• Books (including audio books)