Bill 26 2014

An Act to amend the Taxation Act, 2007

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

   1.  (1)  The definition of "middle tax rate" in subsection 3 (1) of the Taxation Act, 2007 is repealed and the following substituted:

"middle tax rate" means 11.16 per cent; ("taux d'imposition moyen")

   (2)  Subsection 3 (1) of the Act is amended by adding the following definitions:

"second-highest tax rate" means 12.16 per cent; ("deuxième taux d'imposition le plus élevé")

"second-lowest tax rate" means 9.15 per cent; ("deuxième taux d'imposition le moins élevé")

   (3)  The definition of "upper middle tax rate" in subsection 3 (1) of the Act is repealed.

   2.  Subsection 6 (1) of the Act is repealed and the following substituted:

Basic personal income tax

   (1)  The basic personal income tax for a taxation year of an individual ending after December 31, 2013 is the sum of the following amounts:

    1.  The amount calculated by multiplying the lowest tax rate for the year by the portion of the individual's tax base for the year that does not exceed $40,120.

    2.  The amount calculated by multiplying the second-lowest tax rate for the year by the amount by which the individual's tax base for the year exceeds $40,120 and does not exceed $80,242.

    3.  The amount calculated by multiplying the middle tax rate for the year by the amount by which the individual's tax base for the year exceeds $80,242 and does not exceed $150,000.

    4.  The amount calculated by multiplying the second-highest tax rate for the year by the amount by which the individual's tax base for the year exceeds $150,000 and does not exceed $220,000.

    5.  The amount calculated by multiplying the highest tax rate for the year by the amount by which the individual's tax base for the year exceeds $220,000.

   3.  Paragraph 1 of subsection 23 (1) of the Act is repealed and the following substituted:

    1.  Paragraphs 1 and 2 of subsection 6 (1) with respect to taxation years ending after December 31, 2014.

  1.1  Paragraph 3 of subsection 6 (1), except for the amount of $150,000, with respect to taxation years ending after December 31, 2014.

Commencement

   4.  This Act is deemed to have come into force on January 1, 2014.

Short title

   5.  The short title of this Act is the Taxation Amendment Act, 2014.

EXPLANATORY NOTE

This Explanatory Note was written as a reader's aid to Bill 26 and does not form part of the law.  Bill 26 has been enacted as Chapter 8 of the Statutes of Ontario, 2014.

Currently, subsection 3 (1) of the Taxation Act, 2007 defines four tax rates that are used in calculating an individual's basic personal income tax.  Effective for taxation years ending after December 31, 2013, amendments to that subsection define two additional tax rates - the "second-lowest tax rate" and the "second- highest tax rate" - repeal the definition of "upper middle tax rate" and change the middle tax rate, resulting in five tax rates: the lowest tax rate, the second-lowest tax rate, the middle tax rate, the second-highest tax rate and the highest tax rate.

Subsection 6 (1) of the Act governs the calculation of an individual's basic personal income tax for a year.  Effective for taxation years ending after December 31, 2013, that subsection is re-enacted to specify the tax brackets for which each of the five tax rates applies.

Currently, under paragraph 1 of subsection 23 (1) of the Act, all of the dollar amounts in the tax brackets set out in subsection 6 (1) of the Act are adjusted each year with reference to the change in the Consumer Price Index for Ontario.  That paragraph is re-enacted, and paragraph 1.1 is added, to provide for the adjustment of specified dollar amounts in three of the tax brackets.