[38] Bill 2 Royal Assent (PDF)
Bill 2 2003
An Act respecting
fiscal responsibility
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CONTENTS Sections Corporations Tax Act 1-6 GO Transit Act, 2001 7-8 Income Tax Act 9-13 Municipal Act, 2001 14 Ontario Home Property Tax Relief for 15 Ontario Loan Act, 2003 16 Retail Sales Tax Act 17 Tobacco Tax Act 18 Commencement and Short Title 19-20 Schedule A |
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Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:
Corporations Tax Act
1. Clauses 11 (8.1) (e), (f) and (g) of the Corporations Tax Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 38, are repealed and the following substituted:
(e) 5/14 multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 to the total number of days in the taxation year.
2. Clauses 38 (2) (e), (f) and (g) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 41, are repealed and the following substituted:
(e) 14 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 to the total number of days in the taxation year.
3. (1) Clauses 41 (1.1) (g) and (h) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 42, are repealed and the following substituted:
(g) 8.5 per cent, in respect of a taxation year that ends after December 31, 2003.
(2) Clause 41 (1.1) (i) of the Act, as enacted by the Statutes of Ontario, 2002, chapter 22, section 42, is repealed.
(3) Subsection 41 (1.4) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 42, is repealed and the following substituted:
Same, 2000 and later
(1.4) Despite clauses (1.1) (d) to (g), if the taxation year begins on or before the particular September 30 or December 31 indicated in clause (d), (e), (f) or (g), the change in the percentage from the percentage set out in the preceding clause to the percentage set out in the applicable clause must be prorated according to the number of days in the taxation year that are after the particular September 30 or December 31, as the case may be.
(4) The definition of the variable "A" in subsection 41 (2) of the Act, as enacted by the Statutes of Ontario, 2000, chapter 10, section 4, is amended by striking out "clauses (3.2) (a) to (f)" and substituting "clauses (3.2) (a) to (e)."
(5) Subsection 41 (3.2) of the Act, as enacted by the Statutes of Ontario, 2000, chapter 10, section 4 and amended by 2001, chapter 23, section 32, is repealed and the following substituted:
Application of certain federal provisions
(3.2) In applying subsections 125 (2) and (3) of the Income Tax Act (Canada) to determine a corporation's business limit under paragraph 125 (1) (c) of that Act for the purposes of this section and sections 43 and 51 of this Act for a taxation year, any reference to the amounts in subsection 125 (2) of that Act shall be read as a reference to the total of,
(a) $200,000 multiplied by the ratio of the number of days in the taxation year that are before January 1, 2001 to the total number of days in the taxation year;
(b) $240,000 multiplied by the ratio of the number of days in the taxation year that are after December 31, 2000 and before October 1, 2001 to the total number of days in the taxation year;
(c) $280,000 multiplied by the ratio of the number of days in the taxation year that are after September 30, 2001 and before January 1, 2003 to the total number of days in the taxation year;
(d) $320,000 multiplied by the ratio of the number of days in the taxation year that are after December 31, 2002 and before January 1, 2004 to the total number of days in the taxation year; and
(e) $400,000 multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 to the total number of days in the taxation year.
4. (1) The definition of the variable "B" in clause 41.1 (1) (b) of the Act, as enacted by the Statutes of Ontario, 2000, chapter 10, section 5, is amended by striking out "clauses 41 (3.2) (a) to (f)" and substituting "clauses 41 (3.2) (a) to (e)".
(2) The definition of the variable "D" in clause 41.1 (1) (b) of the Act, as enacted by the Statutes of Ontario, 2000, chapter 10, section 5, is amended by striking out "clauses 41 (3.2) (a) to (f)" and substituting "clauses 41 (3.2) (a) to (e)".
(3) Clauses 41.1 (3) (f), (g) and (h) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 43, are repealed and the following substituted:
(f) 4.667 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2002 to the total number of days in the taxation year.
(4) Clause 41.1 (3) (i) of the Act, as enacted by the Statutes of Ontario, 2002, chapter 22, section 43, is repealed.
5. (1) Clauses 43 (1.1) (d), (e) and (f) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 44, are repealed and the following substituted:
(d) 2 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 to the total number of days in the taxation year.
(2) Clauses 43 (1.2) (c), (d) and (e) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 44, are repealed and the following substituted:
(c) 2 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 to the total number of days in the taxation year.
(3) Clauses 43 (1.3) (c), (d) and (e) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 44, are repealed and the following substituted:
(c) 2 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 to the total number of days in the taxation year.
(4) Paragraphs 7 and 8 of clause 43 (4) (b) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 44, are repealed and the following substituted:
7. B/C × J/Z × A/0.085
(5) Paragraph 9 of clause 43 (4) (b) of the Act, as enacted by the Statutes of Ontario, 2002, chapter 22, section 44, is repealed.
(6) The definition of "J" in subsection 43 (5) of the Act, as enacted by the Statutes of Ontario 2000, chapter 10, section 6, is repealed and the following substituted:
"J" is the number of days in the taxation year that are after December 31, 2003, and
(7) The definition of "K" in subsection 43 (5) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 44, is repealed.
(8) The definition of "L" in subsection 43 (5) of the Act, as enacted by the Statutes of Ontario, 2002, chapter 22, section 44, is repealed.
6. (1) Clauses 51 (4.1) (e) and (f) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 48, are repealed and the following substituted:
(e) 8.5 per cent multiplied by the ratio of the number of days in the taxation year after December 31, 2003 to the total number of days in the taxation year.
(2) Clause 51 (4.1) (g) of the Act, as enacted by the Statutes of Ontario, 2002, chapter 22, section 48, is repealed.
GO Transit Act, 2001
7. Subsection 9 (2) of the GO Transit Act, 2001 is repealed and the following substituted:
Payment by municipalities
(2) A municipality may enter into an agreement under clause (1) (c), (d) or (l) and if it does so, it may agree to pay to GO Transit all or any portion of the operating or capital expenditures required to meet the terms of the agreement.
8. (1) Section 35 of the Act is amended by adding the following subsection:
Same
(1.1) Despite subsection 9 (1) of the Development Charges Act, 1997, a development charge by-law described in subsection (1) that would, if not for this subsection, expire on December 31, 2003 shall remain in force until the earlier of,
(a) the day it is repealed; and
(b) December 31, 2004.
(2) Subsection 35 (3) of the Act is repealed and the following substituted:
Deemed capital costs
(3) If a municipality agrees to pay a capital cost that is required for the purposes of this Act, the amount that the municipality agrees to pay shall be deemed to be a capital cost for the purposes of subsection 5 (3) of the Development Charges Act, 1997 and may be collected by the municipality under a development charge by-law described in subsection (1) or under another development charge by-law passed for the purpose.
Income Tax Act
9. (1) Paragraph 10 of subsection 3 (1) of the Income Tax Act, as re-enacted by the Statutes of Ontario, 2001, chapter 23, section 127 and amended by 2002, chapter 22, section 104, is amended by striking out the portion before subparagraph i and substituting the following:
10. The additional tax for the 2002 taxation year is the aggregate of,
. . . . .
(2) Paragraph 11 of subsection 3 (1) of the Act, as enacted by the Statutes of Ontario, 2001, chapter 23, section 127 and amended by 2002, chapter 22, section 104, is repealed and the following substituted:
11. The additional tax for the 2003 taxation year is the aggregate of,
i. 20 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds $3,747, and
ii. 36 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds $4,727.
12. The additional tax for the 2004 taxation year is the aggregate of,
i. 20 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds $3,856, and
ii. 36 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds $4,864.
13. The additional tax for each taxation year after 2004 is the aggregate of,
i. 20 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds the amount calculated by adjusting $3,856 in accordance with subsection 4.0.2 (2), and
ii. 36 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds the amount calculated by adjusting $4,864 in accordance with subsection 4.0.2 (2).
10. (1) Clauses (c) and (d) of the definition of "lowest tax rate" in subsection 4 (1) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 105, are repealed and the following substituted:
(c) 6.05 per cent for the 2002 and each subsequent taxation year;
(2) Clauses (c) and (d) of the definition of "middle tax rate" in subsection 4 (1) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 22, section 105, are repealed and the following substituted:
(c) 9.15 per cent for the 2002 and each subsequent taxation year;
11. Subsection 4.0.2 (2) of the Act, as re-enacted by the Statutes of Ontario, 2001, chapter 8, section 38, is repealed and the following substituted:
Indexing, surtax
(2) For each taxation year ending after December 31, 2004, each dollar amount in paragraph 13 of subsection 3 (1) is adjusted to the amount calculated using the formula in subsection (3).
12. (1) Clause 8 (3.1) (a) of the Act, as re-enacted by the Statutes of Ontario, 2003, chapter 4, section 11, is repealed and the following substituted:
(a) a property tax credit equal to the sum of,
(i) the lesser of the senior's occupancy cost for the taxation year and $500, and
(ii) an amount equal to 10 per cent of the senior's occupancy cost for the taxation year; and
(2) Subsection 8 (8.6) of the Act, as enacted by the Statutes of Ontario, 2003, chapter 4, section 11, is repealed.
(3) Subsection 8 (15.5) of the Act, as enacted by the Statutes of Ontario, 2001, chapter 8, section 40, is amended by adding "and before January 1, 2003" after "taxation year ending after December 31, 2001".
13. (1) Paragraph 2 of subsection 8.4.2 (3) of the Act, as re-enacted by the Statutes of Ontario, 2003, chapter 5, section 1, is repealed.
(2) Paragraphs 3, 4 and 5 of subsection 8.4.2 (3) of the Act, as enacted by the Statutes of Ontario, 2003, chapter 5, section 1, are repealed.
Municipal Act, 2001
14. (1) Subsections 319 (2.1), (2.2) and (3.1) of the Municipal Act, 2001, as enacted by the Statutes of Ontario, 2003, chapter 4, section 12, are repealed.
(2) Subsection 319 (5) of the Act, as amended by the Statutes of Ontario, 2003, chapter 4, section 12, is amended by striking out "but not tax increases attributable to taxes described in subsection (2.1)" at the end.
Ontario Home Property Tax Relief
for Seniors Act, 2003
15. (1) The Ontario Home Property Tax Relief for Seniors Act, 2003 is repealed.
(2) Despite subsection 2 (1) of the Ontario Home Property Tax Relief for Seniors Act, 2003, no person is entitled to be paid the amount of the tax credit calculated under that Act for the period commencing on July 1, 2003 and ending immediately before that Act is repealed.
Ontario Loan Act, 2003
16. The Ontario Loan Act, 2003, as set out in Schedule A, is enacted.
Retail Sales Tax Act
17. (1) The definition of "energy-efficient appliance" in subsection 9.1 (1) of the Retail Sales Tax Act, as enacted by the Statutes of Ontario, 2002, chapter 23, section 5, is amended by striking out "2002 or 2003" and substituting "2002, 2003 or 2004".
(2) Clause 9.1 (2) (a) of the Act, as enacted by the Statutes of Ontario, 2002, chapter 23, section 5, is repealed and the following substituted:
(a) the contract for the sale is entered into after November 25, 2002 and on or before March 31, 2004;
(3) Clause 9.1 (2) (c) of the Act, as enacted by the Statutes of Ontario, 2002, chapter 23, section 5, is repealed and the following substituted:
(c) delivery of the appliance occurs on or before May 15, 2004;
Tobacco Tax Act
18. (1) Subsection 2 (1) of the Tobacco Tax Act, as re-enacted by the Statutes of Ontario, 2002, chapter 8, Schedule M, section 1, is repealed and the following substituted:
Tax on consumers
(1) Subject to subsection (1.1), every consumer shall pay to Her Majesty in right of Ontario a tax at the rate of 74 per cent of the taxable price per cigarette on every cigarette and on every gram or part gram of any tobacco, other than cigars and cigarettes, purchased by the consumer.
(2) Subsections 2 (1.1) and (1.1.1) of the Act, as enacted by the Statutes of Ontario, 2002, chapter 8, Schedule M, section 1, are repealed and the following substituted:
Adjustment to tax
(1.1) If the federal duty in respect of a cigarette increases or decreases after November 24, 2003, the tax payable by a consumer under subsection (1) shall be increased or decreased, as the case may be, by the full amount of the change in the federal duty, effective on the same day as the change in the federal duty.
Same
(1.1.1) For the purposes of subsection (1.1), the federal duty in respect of a cigarette as of November 24, 2003 is the duty of $0.079251 per cigarette that is imposed under paragraph 1 (b) of Schedule 1 of the Excise Act, 2001 (Canada).
(3) Subsections 2 (1.3) and (1.4) of the Act, as re-enacted by the Statutes of Ontario, 2002, chapter 8, Schedule M, section 1, are repealed and the following substituted:
Retail price of cigarettes
(1.3) The following shall be excluded in determining the retail price of a package of 25 cigarettes for the purposes of subsection (1.2):
1. The total amount of tax imposed on the package of cigarettes under this Act and under Part IX of the Excise Tax Act (Canada).
2. The amount of duty imposed on the package of cigarettes under the Excise Act, 2001 (Canada).
Transition
(1.4) Until the taxable price per cigarette is prescribed by the Minister, every consumer shall pay to Her Majesty in right of Ontario a tax at the rate of 9.85 cents on every cigarette and on every gram or part gram of tobacco, other than cigars and cigarettes, purchased by the consumer, rather than at the rate of 74 per cent of the taxable price per cigarette.
Commencement and Short Title
Commencement
19. (1) Subject to subsections (2), (3) and (4), this Act comes into force on the day it receives Royal Assent.
Same
(2) The following provisions come into force on January 1, 2004:
1. Sections 1 and 2.
2. Subsections 3 (1) to (4).
3. Sections 4 to 6.
4. Sections 9 to 11.
5. Subsection 13 (2).
Same
(3) Subsections 3 (5), 12 (3) and 13 (1) shall be deemed to have come into force on January 1, 2003.
Same
(4) Section 18 shall be deemed to have come into force on November 25, 2003.
Short title
20. The short title of this Act is the Fiscal Responsibility Act, 2003.
SCHEDULE A
ONTARIO LOAN ACT, 2003
Borrowing authorized
1. (1) The Lieutenant Governor in Council may borrow in any manner provided by the Financial Administration Act such sums, not exceeding a total aggregate amount of $7.1 billion, as are considered necessary to discharge any indebtedness or obligation of Ontario or to make any payment authorized or required by any Act to be made out of the Consolidated Revenue Fund.
Other Acts
(2) The authority to borrow conferred by this Act is in addition to that conferred by any other Act.
Expiry
2. (1) No order in council authorizing borrowing under this Act shall be made after December 31, 2005.
Same
(2) The Crown shall not borrow money after December 31, 2006 under an order in council that authorizes borrowing under this Act unless, on or before December 31, 2006,
(a) the Crown has entered into an agreement to borrow the money under the order in council; or
(b) the Crown has entered into an agreement respecting a borrowing program and the agreement enables the Crown to borrow up to a specified limit under the order in council.
Commencement
3. The Act set out in this Schedule comes into force on the day the Fiscal Responsibility Act, 2003 receives Royal Assent.
Short title
4. The short title of the Act set out in this Schedule is the Ontario Loan Act, 2003.
EXPLANATORY NOTE
This Explanatory Note was written as a reader's aid to Bill 2 and does not form part of the law. Bill 2 has been enacted as Chapter 7 of the Statutes of Ontario, 2003.
Corporations Tax Act
The Corporations Tax Act is amended. Amendments to subsection 38 (2) increase the general corporate income tax rate to 14 per cent, effective January 1, 2004. Scheduled tax rate reductions to 11 per cent on January 1, 2004, 9.5 per cent on January 1, 2005 and 8 per cent on January 1, 2006 are repealed.
A consequential amendment is made to subsection 11 (8.1) of the Act in respect of certain amounts paid to non-residents, to reflect the change in the corporate income tax rate.
Amendments to subsections 43 (1.1), (1.2) and (1.3) of the Act change the tax credit for income from manufacturing and processing, mining, logging, farming and fishing, effective January 1, 2004. As a result of these changes, the tax rate that applies to income from these sources will increase to 12 per cent on January 1, 2004.
Amendments to the small business deduction in section 41 of the Act maintain the small business tax rate at 5.5 per cent effective January 1, 2004. Section 41 is also amended to accelerate the increase in the amount of business income eligible for the small business deduction. The increase in the business income limit to $400,000 that is currently scheduled for January 1, 2005, is accelerated to January 1, 2004. The surtax rate in section 41.1 of the Act is maintained at 4.667 per cent in order to extend the income range over which the small business deduction is recaptured. Consequential amendments relating to the small business deduction are made to subsections 43 (4) and (5) and 51 (4.1) of the Act. A technical amendment is also made to subsection 41 (3.2) of the Act, to reflect the changes to the small business income limit under subsection 125 (2) of the Income Tax Act (Canada).
GO Transit Act, 2001
Subsection 9 (2) of the GO Transit Act, 2001 is amended to clarify municipalities' authority to enter into agreements with GO Transit and to agree to pay to GO Transit all or part of the operating and capital expenditures incurred under such agreements. The new subsection 35 (1.1) of the Act continues in force, for a limited time, municipal development charge by-laws in respect of GO Transit's capital costs that would otherwise expire on December 31, 2003. Subsection 35 (3) of the Act, as re-enacted, allows municipalities to use those by-laws to collect amounts that they agree to pay to GO Transit.
Income Tax Act
Amendments to subsection 3 (1) of the Income Tax Act provide that, for 2004, the first tier surtax will be payable when Ontario income tax exceeds $3,856 and the second tier surtax will be payable when Ontario income tax exceeds $4,864. Consequential amendments are made to section 4.0.2 of the Act to ensure that these amounts are indexed for 2005 and subsequent taxation years.
Section 4 of the Act is amended to maintain the lowest tax rate at 6.05 per cent and the middle tax rate at 9.15 per cent for 2004 and subsequent taxation years.
An amendment to section 8 of the Act repeals the equity in education tax credit as of January 1, 2003. The other amendments to section 8 are described below.
Ontario Home Property Tax Relief
for Seniors Act, 2003
and Related Amendments
The Ontario Home Property Tax Relief for Seniors Act, 2003 is repealed. Consequential amendments are made to subsections 8 (3.1) and (8.6) of the Income Tax Act and section 319 of the Municipal Act, 2001.
Ontario Loan Act, 2003
The Ontario Loan Act, 2003, set out in Schedule A, is enacted. It authorizes the Crown to borrow a maximum of $7.1 billion.
Retail Sales Tax Act
Currently, section 9.1 of the Retail Sales Tax Act authorizes a tax rebate for specified energy efficient appliances that are purchased before November 26, 2003 and delivered before January 1, 2004. Amendments to that section extend the rebate, so that it is available for appliances that are purchased on or before March 31, 2004 and delivered on or before May 15, 2004.
Tobacco Tax Act
The Tobacco Tax Act is amended to increase the rate of tax payable on every cigarette and every gram or part gram of tobacco to 74 per cent of the taxable price per cigarette. After November 24, 2003, the tax payable on these items will be adjusted to parallel any increases and decreases in the federal duty on cigarettes. The transitional rule is revised to set a new transitional tax rate of 9.85¢ for every cigarette and every gram or part gram of tobacco.