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HISTORY OF TAX RATES 


Ministry of Revenue 
June 12, 1992 








Digitized by the Internet Archive 
in 2018 with funding from 
Ontario Council of University Libraries 




https://archive.org/details/historyoftaxrateOOonta 



HISTORY OF TAX RATES 
CONTENTS 


COMMERCIAL CONCENTRATION TAX ACT . 1 

CORPORATIONS TAX ACT. 2 

EMPLOYER HEALTH TAX ACT. 8 

FUEL TAX ACT. 10 

GASOLINE TAX ACT. 11 

INCOME TAX ACT. 13 

LAND TRANSFER TAX . 15 

MINING TAX ACT . 16 

PROVINCIAL LAND TAX ACT . 17 

RACE TRACKS TAX ACT. 18 

RETAIL SALES TAX ACT. 19 

SUCCESSION DUTY ACT SUPPLEMENTARY PROVISIONS ACT. 24 

TOBACCO TAX ACT. 25 


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COMMERCIAL CONCENTRATION TAX ACT 


o The Commercial Concentration Tax was implemented in January, 1990. 

o The purpose of the tax is to raise additional revenues from commercial property 

owners who receive direct economic benefits from Provincial expenditures on 
infrastructure (roads and other essential services) within the Greater Toronto 
Area (GTA). The GTA includes all municipalities within Metropolitan Toronto 
and the Regions of Durham, York, Halton and Peel. 

o A tax of $10.75 per square metre ($1.00 per square foot) is levied on the area of 
commercial structures that exceeds 18,600 square metres (200,000 square feet), 
and on the total area of every commercial parking lot and garage where parking is 
available to the public for a fee (including lots and garages owned by 
municipalities or local boards). All commercial property less than 18,600 square 
metres (200,000) square feet) is exempt from this tax. 


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CORPORATIONS TAX ACT 


The Corporations Tax Act imposes a tax on corporations doing business and having a 
permanent establishment in Ontario. 

1. Income Tax 

o Standard rate is 15.5% of taxable income allocated to Ontario (by 
means of an allocation formula). 

o General Rate: 


Prior to 1967 

1967 to 1978 

1978 to 1979 

1979 to 1983 

1983 to 1985 

1985 to 

Date 

11% 

12% 

13% 

14% 

15% 

15.5% 


o Preferential effective rate of 14.5% applies to profits from 

manufacturing and processing, farming, fishing, mining and logging 
(by means of a 1% tax credit). The 1992 Budget proposed to 
increase the tax credit from 1% to 2% effective for taxation years 
ending after December 31, 1992 thereby reducing the preferential 
rate to 13.5%. 

o Small businesses which do not qualify for the income tax exemption 
pay tax at a preferential small business rate of 10% by means of a 
5.5% credit deducted from the 15.5% general rate. The 1992 
Budget proposes to reduce the preferential rate to 9.5% by 
increasing the tax credit from 5.5% to 6.0% effective for taxation 
years ending after April 30, 1992. 

o The 1991 Budget proposes a gradual reduction of the 5.5% credit 

benefit for corporations having taxable income in excess of $200,000. 

o The 1992 Budget proposed to impose a 10% temporary surtax on 
income tax payable by banks. 

2. Capital Tax 

o Rate is 3/10th of one percent (0.3%) on the taxable capital allocated 
to Ontario. 

o The 1988 Budget introduced significant changes in the capital tax 
rate structure for small business. For taxation years after April 20, 
1988 the flat rate capital tax structure is as follows: 

Companies whose total assets and gross revenue are both 
under $1 million are exempt. 

$100 for companies whose total assets and gross revenue are 
both over $1 million and taxable capital is less than $1 
million. 

$200 for companies whose total assets and gross revenue are 
between $1 million and $1.5 million and taxable capital is 
over $1 million. 


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CORPORATIONS TAX ACT 


$500 for companies who do not qualify for a lower flat rate 
and have taxable capital of less than $2 million. 

General rate of 3/10ths of 1% to be phased in for 
corporations whose taxable capital is over $2 million but less 
than $2.3 million. 

o Prior to the 1988 Budget changes, the rate structure for small 
corporations was: 

$50 for taxable capital (before allocation to Ontario) not 
exceeding $100,000; 

$100 for taxable capital over $100,000 but not exceeding 
$1,000,000; and 

a notch provision resulting in reduced capital tax for taxable 
capital from $1,000,000 - $1,200,000. 

The general rate of 3/10th of 1% applied only on taxable 
capital in excess of $1,200,000. 

o The general rate last increased in 1977 from l/5th of one percent 
(0.2%) to 3/10th of one percent (0.3%). 

o A higher rate of 4/5ths of 1% on special tax bases applies to banks, 
and loan and trust companies. Prior to the 1988 Budget, the rate for 
loan and trust companies was 3/5ths of 1%. Before 1978, loan and 
trust companies calculated capital tax as ordinary corporations. 

o Rate for banks increased in 1979 from 3/5ths of 1% (0.6%) to 4/5ths 
of 1 % (0.8%). 

o Rate increase to a full 1% for both banks and loan and trust 
corporations was proposed in the 1991 Budget 

o The 1992 Budget proposes to increase the capital tax rate for banks 
from 1% to 1.12% 

o Temporary reduction in capital tax payable by farm equipment 
dealers applied to the first two taxation years commencing after 
December 31, 1986 and before January 1, 1989. $200 was payable 
on the first $3,000,000 of taxable paid-up capital. 

3. Premiums Tax 

o A tax of 2% or 3% on insurance premiums written for persons 

residing in Ontario and for property situated in Ontario (rather than 
a capital tax). 

o An additional tax of 0.5% applies to premiums on property 
insurance. 

o Premium tax rate was reduced to 2% from 3% on accident, sickness 
and all life insurance premiums in the 1978 Budget. 

o The Corporations Tax Act was amended by Bill 68 to exempt 


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CORPORATIONS TAX ACT 


insurance premiums on personal use automobiles from the 3% 
premium tax, effective June 22, 1990. 

o The 1991 Budget introduced provisions to withdraw the premium tax 
exemption on personal use automobile insurance, effective April 30, 
1991. 


1992 Budget Proposals 

The following section summarizes changes proposed to the Corporations Tax Act 
announced in the April 30, 1992 Budget. 

(1) Banking 

Temporary Surtax 

o A surtax of 10% on income tax payable by banks will apply for taxation 

years ending after April 30, 1992. The surtax will end on October 31, 1993. 
Calculation of the surtax will be prorated for taxation years that straddle 
the introduction and termination dates of April 30, 1992 and October 31, 
1993 respectively. 

Capital Tax Increase 

o The rate of capital tax payable by banks will be increased to 1.12% from 
1.0% for taxation years ending after April 30, 1992. The rate increase will 
be prorated for taxation years straddling this date. 


Capita] Tax Adjustment - Bank Mortgage Subsidiaries 

o For taxation years ending after April 30, 1992, a bank mortgage subsidiary, 
with a permanent establishment in Ontario, will be allowed to deduct any 
paid-up capital stock or contributed surplus provided by its parent bank in 
computing its capital tax base. This deduction will avoid double taxation 
otherwise arising by taxation of both the bank and the subsidiary. 

o The effect of the revised form of calculation will be prorated for taxation 
years that straddle April 30, 1992. 


(2) Manufacturing 

o The income tax rate applied to income from manufacturing and processing, 
mining, logging, farming and fishing will be reduced from 14.5% to 13.5% 
effective January 1, 1993. The effect of the rate reduction will be prorated 
for taxation years straddling this date. 

o The rate of capital cost allowance allowed on manufacturing and processing 
assets (Class 39) will be increased from 25% to 30% effective for property 
acquisitions after February 25, 1992. This rate increase parallels a similar 
measure announced in the federal Budget of February 25, 1992. 


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CORPORATIONS TAX ACT 


(3) Small Business 

o There will be a reduction in the income tax rate from 10% to 9.5% 

effective April 30, 1992 on the first $200,000 of business income of small 
corporations. 

o The income tax surtax announced in the 1991 Budget will be retained. The 
surtax gradually reduces the benefit of the small business tax credit for 
corporations whose taxable income is over $200,000 and eliminates it 
completely if the taxable income is over $500,000. However, the surtax will 
be increased to 4.0% of taxable income in excess of $200,000 (formerly 
3.7%) as a consequence of the income tax rate reduction. 

o Ontario will adopt measures announced in the 1992 federal Budget to 

facilitate the financing of financially troubled small businesses. Corporate 
lenders to these small businesses will be allowed to deduct interest on loans 
in computing taxable income thereby motivating reduced interest rates. 

This deduction will apply to borrowings after February 25, 1992 and before 
1993. 

(4) Other Federal Harmonization Measures 

o Ontario intends to parallel the federal announcement to relax certain rules 
permitting expenditures to qualify for research and development incentives. 
Notably, capital assets partly used for research and development and 
certain overhead expenses will become eligible for the R&D Super 
Allowance. 

o Ontario will parallel the capital cost allowance rate increases applicable to 
certain asset acquisitions by the transportation sector announced by the 
federal Finance Minister in December 1991. Among other increases, the 
rate will go to 40% from 30% for large trucks and tractors, to 10% from 
7% for railway cars and to 10% from 4% for track and other specified rail 
assets. 

1991 Budget Proposals 

The following section summarizes proposed changes to the Corporations Tax Act as 
announced in the Ontario Budget of April 29, 1991. Bill 11, which will implement these 
changes, received 1st Reading on April 15, 1992. 


Surtax on Canadian Controlled Private Corporations 

o Effective January 1, 1992, a 3.7% surtax will be levied on taxable income in excess 
of $200,000 for Canadian-controlled private corporations claiming the Ontario 
small business tax credit. The maximum surtax imposed on any corporation will 
be limited to the amount of the small business tax credit claimed in the taxation 
year. 

o The purpose of the surtax is to ensure that only "small" businesses be entitled to 
the small business tax credit of 5.5% on the first $200,000 of income. 

o Where a corporation is a member of an associated group, the surtax will be 

calculated on the amount of taxable income in excess of $200,000 for the group as 
a whole. The calculated surtax will then be allocated to group members based on 
the apportionment used by the group for the purposes of claiming the small 


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CORPORATIONS TAX ACT 


business tax credit in the taxation year. 

o For taxation years straddling December 31, 1991, the surtax will be calculated 
relative to the number of days in the taxation year after December 31, 1991. 


Capital Tax Rate: Banks and Loan and Trust Corporations 

o Effective for taxation years ending after April 29, 1991 the capital tax rate for 
banks and loan and trust corporations will be increased from 0.8% to 1.0%. 

o For taxation years straddling April 29, 1991, the 1% tax rate will be prorated 

based on the proportion that the number of days in the taxation year after April 
29, 1991 is to the total number of days in the taxation year. 


Elimination of Premium Tax Exemption for Insurance Corporations 

o The premium tax exemption on gross premiums payable for personal use 

automobile insurance contracts is eliminated for taxation years ending after April 
29, 1991. 

o For taxation years straddling April 29, 1991, premium tax will apply pro rata on 
the annual gross premiums payable for personal use automobile insurance 
contracts based on the proportion that the number of days in the taxation year 
after April 29, 1991 is to the total number of days in the taxation year. 


History 

1899 - First special tax on certain corporations. 

1931 - First capital and income tax on ordinary corporations. 

1941 - 1947 and 1951 - 1957 

Ontario entered agreements whereby the federal government had 
sole taxing jurisdiction over corporations. Agreement terminated in 
1957. 

1972 - Introduction of capital gains tax to coincide with federal 

introduction. 

1977 - Non-share corporations became liable for tax. 

Tax simplification is implemented. 

1979 - Statutory lien replaced by registered lien on real property. 

1981 - Incorporated non-resident entertainers no longer taxed for 

performances in Ontario. 

1982 - Small business corporations became tax exempt for two taxation 

years. 

1983 - Tax exemption for small business corporations extended for one 

more year. 


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CORPORATIONS TAX ACT 


1984 - 

1985 - 

1986 - 

1988 - 


1989 - 

1990 - 

1991 - 


Three year income tax exemption applicable to newly incorporated 
small businesses. 

Ontario adopted the federal 1/2 year rule with respect to claiming 
capital cost allowance on newly acquired assets. 

Special small corporations exempted from filing an Ontario tax 
return. 

Approximately 192,000 small businesses whose total assets and gross 
revenue are less than $1 million are exempted from capital tax. 

Three year income tax exemption applicable to newly incorporated 
businesses was terminated. 

Corporations exempt from capital tax, having no liability for income 
tax and who have filed a federal income tax return, are exempted 
from filing an Ontario tax return. 

Federal Tax Reform measures substantially lowering capital cost 
allowance rates in line with actual depreciation were adopted. 

Ontario Current Cost Allowance for new manufacturing and 
processing equipment introduced for purchases commencing in 1989. 

Research and Development Super Allowance introduced allowing 
significant deductions on current and capital R & D expenditures 
incurred in Ontario. 

A general anti-avoidance rule was added to parallel federal tax 
reform measures. It can be used to deny a tax benefit in certain 
circumstances where a transaction is undertaken primarily to obtain 
the tax benefit unless specifically allowed under the Act. 

Automatic depletion allowance for mining profits to be phased out 
over a five-year period and replaced by extension of resource 
allowance phased in over the same period. 

Ontario Current Cost Adjustment extended to include deduction for 
new pollution control equipment. 

Ontario Current Cost Adjustment enriched by doubling the rate for 
purchases made after 1990. 

Surtax introduced to eliminate small business tax credit for 
corporations with taxable income exceeding $500,000, effective 
January 1, 1992. 

Sunset on Ontario Current Cost Adjustment for manufacturing and 
processing equipment purchased after 1991. 

Insurance premiums tax extended to automobile insurance contracts. 


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EMPLOYER HEALTH TAX ACT 


The Employer Health Tax applies to: 

o All Ontario employers, effective January 1, 1990, with the following exceptions: 
embassies; consulates; status Indians transacting business on a reserve; 
corporations operating on a reserve with respect to remuneration paid to status 
Indians; and 

o all self-employed individuals who have Ontario net income exceeding $40,000, 
effective January 1, 1993, as identified under the Income Tax Act (Canada). 


The following tax rules apply to: 

Ontario Employers 

o The amount of tax levied is a percentage of the total Ontario remuneration 
paid to employees in a calendar year. 

o Rates range from .98% to 1.95%. The highest rate applies to employers 

with Ontario annual payrolls exceeding $400,000; the lowest rate applies to 
annual payrolls less than or equal to $200,000. Seven graduated rates, 
ranging from 1.101% to 1.829%, apply to annual remuneration over 
$200,000, but not exceeding $400,000. 

Self-employed 

o The amount of tax levied is a percentage of the Ontario self-employment 
net income. The first $40,000 is exempt. 

o The rates range from .98% to 1.95%. The highest rate applies to self- 

employed individuals with net income exceeding $400,000; the lowest rate 
applies to net income less than, or equal to, $200,000. A formula is used to 
determine the tax payable for net income over $200,000, but not exceeding 
$400,000. 

History 
May 17, 1989 

o The Treasurer announced the proposal to replace OHIP 

premiums with a tax on employer payrolls in the May 17, 

1989 Budget. 

June 15, 1989 

o The Treasurer announced quarterly filing, beginning in April 

1990, for small employers with annual payrolls up to and 
including $400,000. 

December 19, 1990 


o 


Bill 47 received third reading and Royal Assent. 






























EMPLOYER HEALTH TAX ACT 


April 30, 1992 

o The Treasurer announced in the 1992 Budget that, effective 

January 1, 1993, the EHT would be extended to self- 
employed individuals with net income over $40,000. 


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FUEL TAX ACT 


History 


1957 - 

First special diesel fuel tax legislation enacted at 20 cents per gallon. 

1958 - 

Rate reduced to 18.5 cents. 

1964 - 

Increased from 18.5 cents to 20.5 cents. 

1966 - 

Increased from 20.5 cents to 22 cents. 

1968 - 

Increased from 22 cents to 24 cents. 

1972 - 

Increased from 24 cents to 25 cents. 

1977 - 

Compulsory registration of all vendors of middle distillate fuels and 
users of taxable fuels. 

1979 - 

Conversion to metric with rate change from 25 cents per gallon to 
closest equivalent of 5.5 cents per litre. 

Increase from 5.5 cents to 5.9 cents per litre for regular use and rate 
of 2.2 cents per litre introduced for railway locomotives. 

1981 - 

Conversion to ad valorem basis. Clear fuel was taxed at 27% of the 
average retail price per litre and for railway equipment at 8.37% of 
the average retail price. 

1982 - 

Introduction of coloured fuel program (September). Exempt fuel is 
dyed red. 

1986 - 

Ad valorem was withdrawn and replaced with a fixed unit 
commodity tax rate of 9.9 cents (general rate) per litre for clear fuel 
and 3.1 cents per litre for railway equipment. 

1989 - 

Effective May 18, 1989, the tax rate on clear fuel was increased to 
10.9 cents per litre (general rate) and to 3.4 cents per litre for 
railway equipment. 

1991 - 

Effective April 30, 1991, the tax rate on clear fuel was increased to 
12.6 cents per litre and to 3.95 cents per litre for railway equipment. 

1992 - 

Effective January 1, 1992, the tax rate on clear fuel was increased to 
14.3 cents per litre (general rate) and to 4.5 cents per litre for usage 
in railway equipment. 


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GASOLINE TAX ACT 


History 


1925 - 

First Ontario tax on gasoline and other motor fuels of 3 cents per 

1955 - 

gallon. 

Administered by the Department of Highways as a Road Tax (until 
1937). 

Taken over by the Treasury Department. 

Rate was 11 cents per gallon at that time. 

1966 - 

Increased from 15 cents to 16 cents. 

1968 - 

Increased from 16 cents to 18 cents. 

1972 - 

Increased from 18 cents to 19 cents. 

1979 - 

Conversion to metric with rate changed from 19 cents per gallon to 
closest equivalent of 4.2 cents per litre. Increased from 4.2 cents to 
4.6 cents per litre. 

1981 - 

Conversion to ad valorem basis. Gasoline was taxed at 20% of the 
average retail price per litre on each grade of gasoline. Aviation 
fuel was taxed at 5.13% of the average retail price per litre of diesel 
fuel. 

1986 - 

Ad valorem was withdrawn and replaced with a fixed unit 
commodity tax rate of 8.3 cents per litre for gasoline (all grades) and 
1.88 cents per litre for aviation fuel. 

1988 - 

All grades of unleaded gasoline increased from 8.3 cents to 9.3 
cents per litre. 

All grades of leaded gasoline increased from 8.3 cents to 12.3 cents 
per litre (includes the special levy of 3 cents per litre). 

Aviation fuel: no change at 1.88 cents per litre. 

1989 - 

All grades of unleaded gasoline: increased from 9.3 cents to 10.3 
cents per litre. 

All grades of leaded gasoline: increased from 12.3 cents to 13.3 
cents per litre. 

All grades of aviation fuel: increased from 1.88 cents to 2.1 cents 
per litre. 

A new tax of 2.3 cents per litre on propane used in licensed vehicles. 

1990 - 

All grades of unleaded gasoline: increased from 10.3 cents to 11.3 
cents per litre. 

All grades of leaded gasoline: increased from 13.3 cents to 14.3 
cents per litre. 


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GASOLINE TAX ACT 


1991 - 


1992 - 


Aviation fuel: no change at 2.1 cents per litre. 

Propane: increased from 2.3 cents to 4.3 cents per litre. 

All grades of unleaded gasoline: increased from 11.3 cents to 13.0 
cents per litre. 

All grades of leaded gasoline: increased from 14.3 cents per cents 
per litre to 16.0 cents per litre. 

Aviation fuel: increased from 2.1 cents per litre to 2.4 cents per 

litre. 

Propane: no change at 4.3 cents per litre. 

All grades of unleaded gasoline: increased from 13.0 cents to 14.7 
cents per litre. 

All grades of leaded gasoline: increased from 16.0 cents to 17.7 
cents per litre. 

Aviation fuel: increased from 2.4 cents to 2.7 cents per litre. 
Propane: remain at 4.3 cents per litre. 


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INCOME TAX ACT 


History 

o Ontario tax rates in recent years: 


Yearfsl 

Percent of Basic 

Federal Tax Rate 

1993 

55% 

1992 

54.5% 

1991 

53% 

1990 

53% 

1989 

52% 

1988 

51% 

1986=1987 

50% 

1982-1985 

48% 

1981 

46% 

1977-1980 

44% 

1972-1976 

30.5% 


Surtaxes 

o The 1985 Ontario Budget imposed a surtax at the rate of 3% on Ontario 

income tax payable over $5,000. As originally announced, this surtax was to 
apply for the 1986 taxation year only. However, the 1986 Ontario Budget 
extended the surtax to the 1987 taxation year. 

o The 1988 Ontario Budget: 

a. increased the surtax rate from 3% to 10%, and 

b. raised the threshold to Ontario income tax payable over $10,000. 

o The 1991 Ontario Budget increased the surtax rate to 12% of Ontario 

income tax in excess of $10,000 for the 1991 taxation year and to 14% for 
1992 and subsequent taxation years. 

o The 1992 Ontario Budget 

a. for 1992, imposed a surtax on Ontario personal income tax between 
$5,500 and $10,000 at a rate of 7 per cent. (The surtax rate remains 
at 14 per cent of Ontario income tax in excess of $10,000 for 1992.) 

b. For 1993 and subsequent years, the Ontario surtax will be calculated 
as 14 per cent of Ontario personal income tax between $5,500 and 
$8,000 and 20 per cent of Ontario personal income tax in excess of 
$ 8 , 000 . 


Recent Surtax Rates 

Year 

Rate 

Threshold 

1990 

10% 

of Ontario income tax in excess of $10,000 

1991 

12% 

of Ontario income tax in excess of $10,000 

1992 

7% 

of Ontario income tax between $5,500 and 



$10,000; plus 


14% 

of Ontario income tax in excess of $10,000 

1993 

14% 

of Ontario income tax between $5,500 and 



$8,000; plus 


20% 

of Ontario income tax in excess of $8,000 


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INCOME TAX ACT 


History of Ontario Tax Credits 

1972 - Program commenced as a Property Tax Credit for renters and 

homeowners. 

1973 - Sales Tax Credit and Pensioner Tax Credit added. 

1974 - Amount of Property Tax Credit allowed was increased, but the 1% 

offset was increased to 2 %. 

1975 - Political Contribution Tax Credit added. 

1980 - Pensioner Property and Sales Tax Credits repealed. Replaced by 

Property and Sales Tax Grants for seniors. 

1981 - Temporary Home Heating Tax Credit added. 

1983 - Temporary Home Heating Tax Credit expired. 


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LAND TRANSFER TAX 


History 

1974 - The high rate of tax for non-residents was introduced April 9, 1974 
to discourage land-banking of Ontario land by or for non-residents. 

1977 - Major changes limit the high rate of tax to agricultural and 
recreational land. 

1983 - Amendments made to block non-resident tax avoidance schemes. 

1986 - A tax of 1/2% is imposed on the excess of the taxable value of a 

single-family residence that is over $250,000. 

1989 - The Budget of May 17, 1989 announced effective May 18, 1989 a 
refund of land transfer tax paid on the purchase of a qualifying 
home by first-time homebuyers who are Ontario Home Ownership 
Savings Plan (OHOSP) planholders. 

Summary of Tax Rate Changes 


Effective Date 

Raters') 

1921 

0.2% on total consideration 

April 1, 1966 

0.2% on first $25,000 

0.4% on balance 

April 1, 1972 

0.3% on first $35,000 

0.6% on balance 

April 9, 1974 

20% rate on non-resident purchases 

April 11, 1979 

0.4% on first $45,000 

0.8% on balance 

January 1, 1986 

0.5% on first $55,000 

1% on balance 

0.5% surcharge on portion of 
consideration over $250,000, applied 
to single family residences. 

June 1, 1989 

0.5% on first $55,000 

1% on $55,001 to $250,000 

1.5% on amount over $250,000 

(2% on amount over $400,000 for single family 

residences). 


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MINING TAX ACT 


History 

o Since 1907, Ontario has levied a mining tax on profits earned on ore removed 

from the ground. The tax is based on profits on mining operations and does not 
include profits attributable to processing. 

o There have been 7 major amendments to Ontario’s Mining Tax Act. 6 involving 
the rate of tax. 

o The Budget of October 24, 1985 proposed major reforms to simplify and improve 
the mining tax system and the administrative provisions of the Act. These reforms 
have been implemented and include the following changes: 

- Taxation of the operator of the mine instead of tax on a mine-by-mine basis. 

- The multiple rate tax structure was replaced with a single tax rate of 20% 
applicable to profits in excess of $500,000. 

- More certainty was added to computation of the tax and administration of the 
Act by removing certain discretionary powers of the mine assessor. The new 
provisions result in an objective determination of taxable mining profits 
determined by rules within the Act and regulations instead of "appraisal" by the 
mine assessor. 

o Administrative matters related to the collection of mining tax were modernized by 
adopting procedures contained within the Corporations Tax Act . 

o Responsibility for administration of the Mining Tax Act was transferred from the 
Ministry of Northern Development and Mines to the Ministry of Revenue in May 
1986. 


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PROVINCIAL LAND TAX ACT 


History 


o The rate is 1.5% of the total assessment for land and /or buildings. (1940 base 
year for assessment except in the case of pipelines which are assessed on 1979 
values). 

o There is a minimum tax of $6.00. 

o A tax of 5% is imposed on the gross receipts of telephone and telegraph 

companies in areas without municipal organization. 

o There are a number of exempt classes of properties which closely parallel those 
under the Assessment Act . 

o Also exempted by regulation are bona fide farmers and the geographic townships 
of Campbell, Dawson, Mills and Robinson in the Territorial District of Manitoulin. 

o The tax dates from 1924 and was administered by the Ministry of Natural 
Resources until 1972. 


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RACE TRACKS TAX ACT 


o The tax is imposed on every person who places a bet in Ontario on a horse race, 
whether the race is held in Ontario or elsewhere. 

o The rate of tax is 9 % on triactor wagering and 1 % on all other wagering and is 
imposed on every person placing a bet under the pari-mutuel system in Ontario. 

o The tax is collected, by the person holding the race meeting, by deducting 9% or 
1 % from the total amount bet or wagered on each race. 

o This tax dates from 1922. 


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RETAIL SALES TAX ACT 


0 The general tax rate is 8% with the following exceptions: 


5% for transient accommodation; 

10% for admissions over $4.00; 

10% for alcoholic beverages sold, or required to be sold, under the 
authority of a licence issued by the Liquor Licence Board (LCBO) under 
the Liquor Licence Act : 

12% for alcoholic beverages sold, or required to be sold, by or under the 
authority of the LCBO under the Liquor Control Act. 


o In addition, the Retail Sales Tax Act provides for two "flat" taxes, which are also 
subject to the general tax rate of 8%: 

- $5.00 on the purchase of each new pneumatic tire; and 

- A tax for fuel conservation which ranges from a $100 tax credit on certain fuel- 
efficient passenger vehicles to an additional tax of $7,000 on others, and from a 
tax of $75 to $3,200 on certain sport utility vehicles. 


History 

1961 - The Ontario retail sales tax became effective on September 1, 1961 at a 

rate of 3%. 

1966 - Rate increased to 5%. 

1969 - The 10% tax on admissions under Hospitals Tax Act transferred to Retail 

Sales Tax Act . 

Differential rate of 10% introduced for alcoholic beverages and prepared 
meals. 


1973 - General rate increased to 7%. 


1975 - 7% rate temporarily reduced to 5% for the period April 8, 1975 to 

December 31, 1975. 

1978 - Sales tax on charges for transient accommodation was temporarily removed 

for the period March 8, 1978 to December 31, 1981. 

For a six-month period, the 7% rate was reduced to 4% and the 10% rate 
on alcoholic beverages and meals to 7%. 

1979 - Temporary exemption granted to the hospitality industry for purchases of 

kitchen equipment and furnishings for the period April 11, 1979 to 
December 31, 1981. 

1980 - January 31, 1980 to March 8, 1980, tax refunds were paid (to a maximum 

of $700) to purchasers of certain new 1979 vehicles. 


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RETAIL SALES TAX ACT 


1981 

1982 


1983 


1984 


1985 


1986 


Temporary exemption extended to some building materials, household 
appliances, and furniture for the period November 14, 1980 to June 30, 
1981. 

November 14, 1980 to June 30, 1981, refunds were paid (to a maximum of 
$700) to purchasers of eligible light trucks or vans. 

November 5, 1981, a tax refund up to $700 was announced for new 1981 
autos, light trucks, or vans purchased before November 28, 1981. 

Revoked exemptions on items ranging from classroom supplies to 
municipal purchases such as street sweepers. 

Labour charges for the installation, repair and maintenance of tangible 
personal property became taxable at 7%. 

Prepared foods also became taxable at 7%. 

7% tax rate on transient accommodation reduced to 5%. 

Production machinery exemption broadened to roughly parallel that 
provided in the federal Excise Tax Act (Canada). 

Introduction of an exemption for purchases of heavy trucks designed for 
the carriage of goods. 

Certain household furnishings and appliances exempted for a 90-day 
period. 

Tobacco products, previously exempted from retail sales tax, became 
taxable. 

Tax on beverage alcohol sold through liquor control board stores, Brewers’ 
Warehousing outlets, and winery stores increased from 10% to 12%. 

A new program to refund tax on vehicles converted within 30 days of 
purchase to run on alternative fuel such as propane. 

The exemption threshold on admissions was increased from $3.50 to $4.00. 

Maple leaf gold coins exempted from tax. 

A "temporary" program was introduced on May 16, 1984 to refund Ontario 
sales tax paid on transient accommodation by out-of-province visitors. This 
program was scheduled to expire on December 31, 1984 but was extended 
indefinitely. 

Maple leaf gold coin exemption removed. 

Prepared foods purchased for $1.00 or less became exempt. 

The exemption threshold for prepared foods was raised to $2.00. 

A refund program replaced exemptions for vehicles operating on 
alternative fuels and kits to convert vehicles to operate on alternative fuels. 


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RETAIL SALES TAX ACT 


Exemptions replaced refunds for university research equipment and farm 
grain storage bins. 

Modified exemptions for admission to places of amusement as follows: 

exempted admissions at any price where no performer receives 
remuneration of any kind; 

exempted theatrical and musical performances if 90% or more of all 
performers are permanent residents of Canada; 

restricted the sponsors who may benefit from the exemption on prices of 
admission over $4.00. 

Exemption removed for heavy trucks designed for the carriage of goods, 
effective December 31, 1986. 

1987 - Exemption threshold for prepared foods raised to $4.00, effective June 1, 

1987. 

1988 - General rate of tax increased from 7% to 8%. 

The federal tax on consumers of the types of telecommunications defined 
in the Retail Sales Tax Act became part of the fair value of those services 
for retail sales tax purposes. 

Advertising supplements and inserts exemption withdrawn. 

Ready-mix and asphalt became taxable, and producers of these materials 
are considered manufacturers. 


1989 - Introduction of new "flat" taxes on: 

new pneumatic tires; and 
fuel inefficient cars. 

Exemption for fertilizers and pest control products limited to purchases 
made by farmers. 

Refund program for vehicles used to transport physically disabled persons 
modified to limit the refund amount to a maximum of $1,600 for cars and 
$2,400 for vans. 

Expansion of the time periods allowed under the refund program for 
conversion of vehicles to an alternative fuel source. To qualify for the 
refund, contracts to convert a vehicle to an alternative fuel source can be 
signed up to 90 days from the date of purchase (previously 30 days) and 
the actual conversion must take place within 180 days (previously 90 days). 

1990 - Act amended to ensure that the GST is excluded from the calculation of 

the fair value on which RST is payable. 

The time period for tax refunds and tax assessment or reassessment was 
extended from three years to four years. 


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RETAIL SALES TAX ACT 


Removed the reference to Part XIII of Schedule III of the Excise Tax Art 
(Canada) that defines tax exempt production machinery. 

Effective April 1, 1991, the maximum limit on compensation amounts 
provided to vendors increased from $1,000 to $1,500 for each 12-month 
period commencing April 1st and ending March 31st. The rate paid to 
vendors increased from 4% to 5% for tax collected from January 1, 1991. 

Calculation of interest on a compound basis rather than a simple basis. 

Director’s liability provision added to make directors jointly and severally 
liable, together with the corporation, for any taxes owing. 

Minister authorized to make regulations providing for a tax rebate on 
tangible personal property taken out of Ontario. This provision was 
removed from the Retail Sales Tax Act . 

1991 - Bill 130 received First Reading on June 24, 1991 and Second Reading on 

December 19, 1991. It includes the following amendments: 

Authority for vendors to refund tax on services when a purchase price is 
refunded in whole or in part. 

A tax for fuel conservation replaced the tax on fuel inefficient cars, 
effective August 1, 1991. The tax ranges from a tax credit of $100 on 
certain fuel-efficient passenger vehicles to an additional tax of $7,000 on 
others, and from a tax of $75 to $3,200 on certain sport utility vehicles. 

The tax credit does not apply to sport utility vehicles. 

As of January 1, 1991 artwork and similar materials to be used to produce 
exempt publications are exempt regardless of whether the purchaser is a 
manufacturer. 

Indian bands and band councils are now entitled to the same exemptions 
available to status Indians. 

All changes, unless otherwise noted, will become effective upon receipt of 
Royal Assent, which is expected in the spring session of the Legislature. 

1992 - As of October 1, 1992, tax on the transfer of used motor vehicles is to be 

based on the higher of its purchase price or the average wholesale price as 
determined by the Minister. The tax is payable to the vehicle licence issuer 
when the ownership is transferred. 

Clarified that lodging or lodging and prepared meals acquired as a privilege 
of membership are taxable as transient accommodation. 

Clarified that tax applies to the fair value of liquor, beer and wine even 
when sold by a vendor operating without a liquor licence or the authority of 
the Liquor Control Board. 

Provision made for fines to be levied as a result of the filing of false rebate 
claims. 

Removed the requirement that a purchaser enter into a written contract 
within 90 days of the purchase date in order to obtain a tax rebate for the 


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. 























RETAIL SALES TAX ACT 


conversion of a vehicle to operate on an alternative fuel . 

Time of payment of tire tax is specified for leases and rentals of tangible 
personal property leased for periods of 30 days or more. Tire tax is 
payable on the due date of the first lease or rental payment. 

Time of payment of tax for fuel conservation (TFFC) is specified for leases 
of new passenger cars and sport utility vehicles for periods of one year or 
more. TFFC is payable on the due date of the first lease or rental 
payment. 

For leases of less than a year, if the lessor is paying the TFFC in lieu of 
collecting the tax from the lessee, the lessor must pay the tax at the time 
the vehicle is sold to the lessor. 


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SUCCESSION DUTY ACT SUPPLEMENTARY PROVISIONS ACT 


History 

1892 - Ontario introduced first Succession Duty in Canada. 

1971 - Federal government withdrew from the Estate Tax field. 

- Ontario doubled its rates. 

1979 - Succession Duty Act repealed. 

1980 - Succession Duty Act Supplementary Provisions Act introduced to: 

o Ensure that all duty, properly payable in respect of deaths prior to repeal, 
is paid. The legislation protected revenue of approximately $100 million. 

o Encourage estates to pay by the end of 1980 duty that had been deferred 
until the occurrence of some future event. 90 out of 450 estates elected to 
prepay an estimated $7 million. 


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TOBACCO TAX ACT 


History 
1966 - 

1966 - 

1981 - 

1982 - 

1983 - 

1986 - 

1987 - 

1988 - 

1990 - 


1991 - 


First special Tobacco Tax Act was introduced to improve enforcement. 

Tax on tobacco prior to that date had been part of Retail Sales Tax Act . 

To April 1, 1982 various tax adjustments. 

(May 20th), conversion to ad valorem basis. Cigarettes were taxed at 36% of 
average retail price, cut tobacco at 30% of the average retail price and cigars at 
45% of the retail selling price. 

(May 14th), tax on cigarettes and cut tobacco was increased to 40% of the 
average retail price. 

(May 11th), tax on cigarettes and cut tobacco was increased to 45% of the 
average retail price. 

(January 1st), ad valorem was withdrawn and replaced with a fixed unit tax rate 
of 2.7 cents per cigarette, for cut tobacco 1.5 cents per gram. The tax on cigars 
remained at 45% of the retail selling price. 

(January 1st), the tax per cigarette was increased to 2.83 cents and cut tobacco 
to 1.6 cents per gram. 

(April 21st), the tax per cigarette was increased to 3.83 cents and cut tobacco 
to 2.2 cents per gram. 

(March 1st) all cigarettes manufactured for sale at retail in Ontario must be 
marked by an Ontario tax mark to be incorporated into the E.O.D. of a 
cigarette package and the end-flap seals of cartons. 

(April 25th) the tax per cigarette was increased to 4.83 cents and on cut 
tobacco to 4.83 cents per gram or part gram. 

(November 1) Retailers’ cigarette inventory must be marked product. 

Unmarked cigarettes found in the inventory of a retailer is subject to seizure 
and heavy penalties. 

(April 30th) the tax per cigarette and on cut tobacco was increased to 6.50 
cents per cigarette, gram or part gram. 

Effective June 1, 1991, a new program of reporting and remitting tobacco tax 
was introduced. New tobacco tax collectors will be collecting and remitting 
taxes based on sales instead of purchases. Existing collectors may choose the 
new system or remain on the purchase method of tax accountability provided 
completion of a remittance agreement indicating their acceptance of the 
conditions and their willingness to continue on the purchase method. 


25 






REF/HJ/2460/.05/.H57/1992 
Ontario. Ministry of Revenue 
History of tax rates 

hiqf 

c.1 REF