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Supporting a Dynamic and Innovative Business Climate

Archived Backgrounder

Supporting a Dynamic and Innovative Business Climate

Ministry of Finance

The government is introducing a new three-part plan to grow the economy and create jobs. This plan invests in people, builds modern infrastructure and supports a dynamic and innovative business climate.

Forces outside Ontario continue to affect the economy, leading many Ontarians to worry about their job security and their future. The recovery from the global recession remains uncertain. What is certain is the government's determination to help Ontario families and businesses succeed.

The government's plan is focused and strategic. The new plan will help create jobs and grow the economy -- at a time of global economic uncertainty -- which is causing many families to feel unsure about job security and their financial future.

Encouraging More Business Investment Activity

There is heated competition among jurisdictions like Ontario to attract the jobs and industries of tomorrow. Ontario is committed to succeed in this effort on behalf of the countless families who will rely on these good, well-paying jobs in the future.

To attract more investment, the government has put in place a competitive tax system for business, made regulations less burdensome and enhanced the safety and efficiency of capital markets, while delivering lower-than-forecasted deficits. The government's actions have helped to reduce red tape and create more opportunity for businesses to invest in Ontario.


To create a more competitive tax system for business, the Ontario government has:

  • Reduced Ontario's Corporate Income Tax (CIT) rates and eliminated the Capital Tax
  • Replaced the Retail Sales Tax with the Harmonized Sales Tax, a more modern value-added tax
  • Streamlined CIT and sales tax administration, saving businesses more than $635 million per year in reduced compliance costs
  • To support small businesses, the Employer Health Tax exemption for private-sector employers would be increased from $400,000 to $450,000 of annual Ontario payroll. This change would be effective January 1, 2014, if passed in the legislature.

The Bank of Canada and many analysts have pointed to the generally strong balance sheets of Canadian businesses and concluded that the business sector is now well positioned to make increased investments to improve innovation and productivity.

The Province will study various "pay or play" approaches, including those taken by other jurisdictions, to encourage higher levels of business investment, such as:

  • Replacing existing Research and Development (R&D) tax credits with an incentive that would reward incremental business R&D spending
  • A special corporate tax that could be eliminated or reduced through investments in new equipment or other eligible investment expenses
  • A payroll tax that could be eliminated or reduced by employer investments in employee training and/or by funding training programs.

Other jurisdictions have similar programs. For example, Quebec, a number of U.S. states and France have payroll taxes that encourage or support training expenditures.

Leveraging Partnerships with Ontario's Diverse Industries

Ontario's industries are well positioned to take advantage of opportunities in the global economy. The government will work with these industries to develop successful strategies for increased jobs and growth:

  • Aerospace and Manufacturing - Establish Ontario as a top supplier to next-generation aerospace programs
    • Supporting Centennial College as it partners with the private sector to train the next generation of aerospace workers that will help create the jobs of tomorrow.
    • Support a permanent Industry Innovation Centre at Niagara College that will allow Ontario-based manufacturers to access services and expertise provided by the faculty and students at Niagara College.
  • Agri-Food - Support Ontario's large food sector and work to increase overall exports
    • The government recently issued a challenge to the agri-food industry to double its exports and create 120,000 jobs by 2020.
  • Auto - Enhance Ontario as a true global leader in the manufacturing sector
    • Ford Motor Company recently announced an investment of more than $700 million in its Oakville facility to upgrade the assembly plant. The investment, supported by a grant of up to $70.9 million from the government, will help to secure more than 2,800 jobs and will anchor new R&D activities.
    • General Motors announced that it is keeping its Consolidated Line assembly plant in Oshawa open until 2016.
  • Financial Services - Enhance an engine of growth for Ontario, the economy's second-largest sector based on output
    • Toronto is the second-largest financial services cluster by employment in North America.
    • Ontario is working with other levels of government to create a common securities regulator. Ontario, British Columbia and Canada have reached an agreement in principle to establish a cooperative capital markets regulatory system.
  • Forestry - Support the transformation of the forest sector toward production of higher value-added products to preserve and create jobs through existing funding programs.
  • Mining - Provide incentives and special deductions through the mining tax system to encourage investment.
  • Film and Music - Establish the Ontario Music Fund, with funding of $45 million in grants over three years, which launched in October 2013.
  • Information and Communications Technologies (ICT) - Grow Ontario's ICT sector
    • Supporting Ericsson, a Swedish-based multinational corporation, to expand its R&D centre in Ottawa.

Other measures to create jobs include:

  • Building Modern Infrastructure- More than $35 billion over the next three years that would support over 100,000 jobs on average each year in construction and related industries across the province.
  • Leveraging regional economic development funds:
    • The Northern Ontario Heritage Fund Corporation (NOHFC) - Leveraged more than $3.2 billion, creating and retaining 22,915 jobs (including internships and co-op placements).
    • The Southwestern Ontario Development Fund (SWODF) - Leveraged a total investment of $285 million, creating and protecting over 7,000 jobs.
    • The Eastern Ontario Development Fund (EODF) - Leveraged a total investment of nearly $650 million. These investments are helping to create and protect more than 15,100 jobs in eastern Ontario.
  • Reducing the number of businesses that pay the Employer Health Tax (EHT) - The government recently introduced legislation to increase the exemption for over 60,000 smaller employers. With this change, an estimated 88 per cent of Ontario private-sector employers would not pay EHT.
  • Creating the Investment Ready Program - Program to pre-certify industrial sites that are investment ready. This ensures that sites have the proper services a business needs to start up its operations on day one.
  • Reducing the regulatory burden through Open for Business - Reduced regulations, which resulted in a reduced burden on business and stakeholders of more than 80,000 regulatory requirements.
  • Creating the Going Global Trade Strategy - Will help Ontario companies increase their success exporting to global markets and create jobs.
  • Supporting Entrepreneurship - Many small businesses are founded and led by entrepreneurs who bring new ideas, products and services to the marketplace. The Ontario Network of Entrepreneurs has consolidated three support networks into a unified one-window approach. This will help to more easily connect entrepreneurs across the province with organizations such as Waterloo's Communitech.

Recent success stories include:

  • Newterra Group Ltd., a manufacturer of advanced water treatment solutions, received an Eastern Ontario Development Fund grant to support a retrofit for an Advanced Water Treatment facility in Brockville.
  • Sault College received funding from the Northern Ontario Heritage Fund Corporation for its Sault Ste. Marie campus redevelopment and aviation centre.  
  • Cementation, an underground mine contracting and engineering company in North Bay, received funding from the Northern Ontario Heritage Fund Corporation for an expansion of its mine construction business.  
  • MetalCraft Marine Inc. received an Eastern Ontario Development Fund grant to support a world-class boat manufacturing facility to produce innovative new hybrid boats.  
  • Dr. Oetker announced expansion into London to build its first North American frozen pizza production facility with support from the Southwestern Ontario Development Fund.
  • Conestoga Meat Packers is increasing capacity with support from the Southwestern Ontario Development Fund.

Common Securities Regulator

Ontario has long been a leader in advocating for the creation of a common securities regulator. It sees a cooperative securities regulator as key to the country's ability to sustain and grow its financial services industry.

Moving to a cooperative securities regulator would foster more efficient and globally competitive capital markets in Canada through streamlined, less burdensome regulation for market participants. It would strengthen Canada's capacity to identify and manage risks to its financial system on a national basis. It would provide better protection for investors through more integrated compliance and enforcement activities to allow households to save and invest with confidence.

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