On December 13, 2007, Ontario’s Minister of Finance announce the new tax proposals in the 2007 Ontario Economic Outlook. The proposals would provide more than $1.4 billion in tax relief over three years of which over 78% of tax relief would go to business. Those measures include:
- Increasing the small business deduction threshold to $500,000 from $400,000, retroactive to January 1, 2007;
- The small business deduction would be phased out once income reaches $1,500,000, rather than $1,128,519. The increase in the threshold would be pro-rated for taxation years straddling the effective date.
- Eliminating Capital Tax on January 1, 2008 for corporations primarily engaged in manufacturing and resource activities;
- Providing a 21% Capital Tax rate cut for all businesses, retroactive to January 1, 2007, on the way to full elimination in 2010;
- Increasing the Ontario Film and Television Tax Credit to 35 per cent from 30 per cent, and the Ontario Production Services Tax Credit to 25 per cent from 18 per cent, both effective January 1, 2008;
- Extending the phase-out of the Labour Sponsored Investment Fund tax credit to the end of the 2011 taxation year, and increasing the maximum qualifying investment to $7,500 from $5,000.
- The Land Transfer Tax Refund Program for First-time Homebuyers be expanded to include purchases of resale homes. This measure would be effective for agreements of purchase and sale entered into after December 13, 2007.
The Ontario government is focusing much of this tax relief on helping small businesses acknowledging their role in building & sustaining the economy.