Ministry of Finance

McGuinty government introduces bill that will transform corporate income tax system

       Simplified system will mean significant savings for businesses
    

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    QUEEN'S PARK, Dec. 13 — The McGuinty government has introduced
legislation that, if approved, will streamline Ontario's corporate tax
administration and increase businesses' competitive advantage, said Finance
Minister Greg Sorbara.
    "This bill outlines one of the most significant steps the federal and
provincial governments can make to help the Ontario corporate income tax
system work more efficiently and effectively," said Sorbara. "This legislation
will give businesses one set of tax forms, one audit and one set of rules."
    The Strengthening Business through a Simpler Tax System Act, 2006 builds
on the Memorandum of Agreement signed in October 2006 for the federal
government, on Ontario's behalf, to administer corporate taxes in the province
beginning in 2009. The bill proposes to combine the current Income Tax Act and
the Corporations Tax Act into a single, more streamlined statute.
    Provisions in Bill 174 will save Ontario businesses up to $100 million
annually in administrative costs, by spending less time and money on filing
paperwork and more time on their business. There is also a further savings of
$90 million a year in lower Ontario corporate income taxes, which is the
result of Ontario's harmonization with the federal corporate income tax base.
    "The agreement to move toward a single corporate tax collection
strengthens Ontario's economy by making it easier for businesses to do
business," said Sorbara. "It helps to build a more competitive economy by
reducing costs and simplifying the rules for business, and also to build a
more productive working relationship with the federal government."

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                 For more information visit www.fin.gov.on.ca


    Backgrounder
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      The Strengthening Business through a Simpler Tax System Act, 2006

    Businesses throughout Ontario will benefit from Bill 174, which amends
Ontario corporate tax legislation to harmonize with the federal corporate
income tax base and collection system.
    The legislation builds on a Memorandum of Agreement, signed in October,
which would see businesses file a single combined federal and Ontario
corporate income tax return for taxation years ending after 2008. Combined
corporate tax installments to the Canada Revenue Agency (CRA) would start in
2008.
    This agreement will reduce compliance costs for businesses and enable the
CRA to streamline service and reduce administrative costs. Benefits to Ontario
businesses will include:

 — A single tax form.
 — A single tax collector. The CRA will collect both federal and Ontario
        corporate income tax and administer the province's capital tax.
 — One set of income tax rules.

    The federal government already collects corporate income tax for seven
provinces and three territories.
    The Memorandum of Agreement allows for the delivery of early compliance
gains to business, including more co-ordinated audits and other administrative
savings. These savings could begin even before the Canada Revenue Agency
begins administering Ontario's corporate income tax in 2009.
    The bill responds to businesses' need to simplify tax administration.

    At the time the Memorandum of Agreement was signed, a number of groups
showed support for the initiative, including:

 — Len Crispino, Ontario Chamber of Commerce president and CEO:
           "Consolidating corporate tax collection and auditing services is
           welcome news for the business community, and a move long called
           for by the Ontario Chamber of Commerce. This announcement will
           result in increased savings and efficiencies for both business and
           government, improving the competitive position of our province."

 — Judith Andrew, Vice-President Ontario of the Canadian Federation
           of Independent Business: "The CRA collecting corporate tax in
           Ontario is an important step that will reduce paper burden, reduce
           compliance issues and make a more efficient process, ultimately
           reducing costs to government and business. Having to file two sets
           of paperwork, to two different governments and enduring two
           different compliance issues is too burdensome."

    Disponible en français

                              www.fin.gov.on.ca