Highlights from the 2007 Ontario Budget - Income Tax Related Programs
Information Notice 1-07, March 2007
- On March 22, 2007, a number of measures relating to the Income Tax Act (Ontario) were announced in the 2007 Ontario Budget. The proposed amendments must be passed by the Legislature and receive Royal Assent to become law. This notice provides general information and is not a substitute for the legislation.
Property & Sales Tax Credits for Seniors
Income threshold increase
Ontario Property and Sales Tax Credits for seniors provide property and sales tax assistance to seniors with modest incomes. It is proposed that the income threshold of the Ontario Property and Sales Tax Credits for senior couples be increased beginning in 2007 so that seniors receiving the minimum level of income guaranteed by the government from Old Age Security (OAS), Guaranteed Income Supplement (GIS) and the Ontario Guaranteed Annual Income System (GAINS) get the full benefit of the Credits. The new threshold would be determined when the federal government finalizes OAS and GIS amounts for 2007.
Apprenticeship Training Tax Credit
Background
In 2004, the Apprenticeship Training Tax Credit (ATTC) was introduced to encourage businesses to hire apprentices in certain skilled trades. The ATTC currently provides businesses with a 25 or 30 per cent refundable tax credit on salaries and wages paid to eligible apprentices who commence employment before January 1, 2008. Eligible apprentices must be in their first 36 months of an apprenticeship training program in designated construction, industrial, motive power and service trades.
Extension of the program
The Budget proposes to extend the ATTC to eligible apprentices who commence employment before January 1, 2012. Eligible expenditures would be salaries and wages paid prior to January 1, 2015.
Additions to the list of qualifying skilled trades
In addition, the following six trades will be added to the list of 117 skilled trades that currently qualify for the ATTC:
- entertainment industry power technician
- process operator – power
- tractor-trailer commercial driver
- exterior insulated finish systems mechanic
- information technology call centre inside sales agent
- information technology call centre customer care agent.
The ATTC tax information bulletin will be updated, and eligibility for each of these trades will be retroactive to the date the Ministry of Training, Colleges and Universities introduced the apprenticeship program.
Pension Income Splitting Proposal
Ontario pension income splitting proposal
The federal government announced it would allow the splitting of pension income between spouses and common-law partners for tax purposes. Beginning with the 2007 taxation year, it is proposed that couples would be allowed to split certain types of pension income for Ontario income tax purposes, subject to the relevant federal proposals receiving Royal Assent.
Enhanced Dividend Tax Credit
Federal enhancement
The federal government reduced federal income taxes payable on dividends from income subject to the federal general corporate income tax rate (eligible dividends) by providing an enhanced gross-up and Dividend Tax Credit (DTC) for eligible dividends.
For 2006 and future tax years, eligible dividends are grossed up by 45 per cent, meaning that shareholders include in income a taxable dividend equal to 145 per cent of the dividend received. The federal DTC for eligible dividends is 18.9655 per cent, which is based on the 2010 federal corporate income tax rate.
Provincial enhancement
To better integrate corporate and personal income taxes and to ensure greater consistency with taxes on other types of investments, Ontario has enacted legislation to provide an enhanced provincial Dividend Tax Credit (DTC) on eligible dividends that is being phased in from 2006 to 2010.
| Taxation Year | Rate for Eligible Dividends (%) | Rate of Other Canadian Dividends (%) |
|---|---|---|
| 2005 | 5.13 | 5.13 |
| 2006 | 6.5 | 5.13 |
| 2007 | 6.7 | 5.13 |
| 2008 | 7.0 | 5.13 |
| 2009 | 7.4 | 5.13 |
| 2010 | 7.7 | 5.13 |
The 25 per cent gross-up and 5.13 per cent DTC continue to apply to Canadian dividends that are not eligible for the enhanced gross-up and DTC.
Universal Child Care Benefit
Legislation enacted
In recognition of the importance of maintaining support for families and children in need of government assistance, legislation has been enacted to ensure eligibility for the Ontario Child Care Supplement for Working Families, Ontario Property and Sales Tax Credits, and other income-tested provincial programs are not affected by the new federal Universal Child Care Benefit. The government has also ensured eligibility for means tested programs, like social assistance, does not change because of the introduction of this federal benefit.
Technical Amendments
Technical amendments
In order to enhance legislative clarity, certain amendments will be proposed to the Community Small Business Investment Funds Act.
Further information
To obtain the most current version of this publication, or additional information, visit our website at ontario.ca/revenue or contact the Ministry of Revenue at:
- 1 866 ONT-TAXS (1 866 668-8297)
- 1 800 263-7776 teletypwriter (TTY)
© Queen's Printer for Ontario, 2007
ISBN 978-1-4249-3944-2
