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Ontario's Tax Plan For Farmers, Rural Communities, And Agri-Food Businesses

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Ontario's Tax Plan For Farmers, Rural Communities, And Agri-Food Businesses

As part of its plan to make Ontario more competitive, the province is implementing the most important tax reform in a generation. This tax package will help Ontario attract new investments and create jobs by:

  • Cutting taxes for people.
  • Cutting taxes for businesses.
  • Combining two existing sales taxes into one - the HST - and removing the hidden taxes that we all pay.

These tax changes will do three things:

  • Make Ontario businesses more competitive by removing hidden taxes and reducing the cost of making products.
  • Help Ontario businesses sell more products and hire more people.
  • Permanently cut people's taxes to help balance out the new sales tax system.

Ontario's tax plan will deliver a stronger, more competitive economy and independent experts say it will help create almost 600,000 new jobs.

As of July 1, 2010, the Retail Sales Tax (RST) will be replaced with a modern value-added tax that will be combined with the federal Goods and Services Tax (GST) to create the federally administered HST.

The HST is modernizing an out-dated, 50-year-old, tax system. It puts Ontario on a level playing field with four other provinces and 140 other countries that already have the HST.

The provincial portion of the HST will be the current eight per cent and the federal portion will be five per cent, for a combined HST rate of 13 per cent.  

The HST will save Ontario businesses more than $500 million annually and there will be no new tax on 83 per cent of the things you buy. Many common expenses - like basic groceries, residential rent, cable and phone bills - will not see a new tax under the HST. In fact, on many items, prices will eventually come down as businesses will be able to pass their tax savings on to their customers.

The HST will also strengthen Ontario's agri-food industry. Estimates show that Ontario's farmers, rural communities and agri-businesses will save roughly $45 million a year as a result of tax reforms. This includes $30 million through the HST plus $15 million through corporate income tax savings.

BENEFITS FOR FARMERS

Ontario farmers will save on items that are currently not exempt from the Retail Sales Tax such as trucks, light vans and parts, furniture, lawnmowers, computers, freezers and other equipment. Farmers will continue to pay no tax on the majority of inputs purchased such as feed, seed, fertilizer, farm equipment and machinery, which are currently point of sale tax-exempt.

This will put Ontario farmers on a more level playing field with farmers in others provinces that have harmonized sales taxes.

The HST will follow the same rules and structure as the Goods and Services Tax (GST). Farmers who are currently remitting their GST paperwork will continue to do so and continue to receive input tax credits on any applicable purchased farm inputs.

BENEFITS FOR RURAL COMMUNITIES

Ontario's rural communities are the backbone of this province. The Ontario government wants to ensure that our rural communities remain strong and vital for generations to come.

That's why Ontario's Tax Plan for Jobs and Growth has put into place several measures that will support our rural municipalities.

Families and individuals living in Ontario's rural communities will benefit from the new tax measures that are providing tax relief totaling $11.8 billion across the province over three years.

This includes permanently cutting personal income taxes for 93 per cent of Ontario income taxpayers. Additional measures will also help low and middle-income Ontarians through the new and enhanced Sales Tax Credit by providing up to $260 a year for each eligible adult and each child.

The Ontario government is also helping rural Ontarians adjust to the HST by providing eligible families with Ontario Sales Tax Transition Benefit payments.

BENEFITS FOR AGRI-FOOD BUSINESSES

Ontario's agri-businesses are vital to the success of our province's agri-food industry and our economy; they create jobs, support investments, and encourage trade and innovation.

The Ontario government is committed to helping agri-businesses grow and prosper.

Starting July 1, 2010, Ontario's agri-businesses will deal with one sales tax instead of two, one set of rules instead of two, and one level of government instead of two.

The measures announced in the 2009 and 2010 Ontario Budgets will provide more than $4.6 million in tax relief for businesses over three years. Under these tax measures, the government will:

  • Cut Corporate Income Tax (CIT) rates for large and small businesses;
  • Eliminate the CIT small business deduction surtax; and
  • Exempt more small and medium-sized businesses from the Corporate Minimum Tax and cut this tax from 4 per cent to 2.7 per cent.

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