At some point, most businesses operating in Canada will likely have some activity in Ontario, a province that represents 38.9% of Canada’s population and more than 39% of the country’s Gross Domestic Product, and whose economy is expected to grow by 2.5% in 2007.
Here is some basic information a business should be aware of when entering Ontario:
- The 2007 corporate tax rate is 14% for General, 12% Manufacturing and Processing, and 5.5% for Small Business.
- Ontario offers a number of programs and incentives for qualified activities. Some examples: significant refundable income tax credits for publishers of books written by Canadian authors and for companies engaging in qualified research and development.
- In addition to the 6% federal Goods and Services Tax, Ontario levies its own sales tax of: 5% on hotel accommodations of less than one month; 8% on manufactured goods and most services; 10% on amusement-place admissions and alcoholic beverages sold through licensed establishments and 12% if they are sold through retail stores.
- Ontario’s land-transfer tax is between 0.5% and 2%, depending on the cost and use of a particular property. The tax on commercial and industrial property does not exceed 1.5%.
- The current minimum wage in Ontario is $8.00 and the 2007 provincial budget proposes three annual increases of 75 cents, bringing the hourly minimum to $10.25 by 2010.
- Ontario employers must collect Employment Insurance premiums and Canada Pension Plan contributions from both the employer and employee. The CPP rate is 4.95 per cent of wages for employers and employees, up to a maximum of $1,989.90 per employee. For 2007, the employers’ share of Employment Insurance premiums payment is at a rate of 2.52 per cent of wages up to a maximum of $1,008 per employee.
- The employer health tax contribution per year is equal to the taxable total Ontario remuneration paid by the employer, multiplied by a particular rate (not to exceed 1.95%) based on the total annual Ontario remuneration.