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2016-2017 Ontario budget highlights

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Feb 25, 2016

On February 25, 2016, Minister of Finance Charles Sousa presented the 2016-2017 Ontario budget in the Legislative Assembly. The budget contains initiatives to focus on talent and skills, increase infrastructure investments and to introduce a cap-and-trade program to foster a low-carbon economy.

The budget proposes to reduce the rate of the Ontario Research and Development Tax Credit from 4.5% to 3.5% and the rate of the Ontario Innovation Tax Credit from 10% to 8% for eligible research and development (R&D) expenditures incurred in taxation years that end on or after June 1, 2016. These rate reductions will be prorated for taxation years straddling June 1, 2016.
New targeted investment in R&D is proposed including:
1. $35 million over five years to establish the Advanced Manufacturing Consortium;
2. $20 million over three years to connect colleges with Ontario companies on applied research projects; and
3. $50 million over five years to invest in the Perimeter Institute.

 Other measures

  • Ontario’s tobacco tax will increase from 13.975 cents to 15.475 cents per cigarette and per gram of tobacco products other than cigars, effective 12 a.m. February 26, 2016. Beginning in 2017, the government proposes to increase tobacco rates based on inflation over each of the next five years.
  • Technical amendments will be proposed to various statutes, including: Financial Administration Act, Income Tax Act, Taxation Act, 2007, Employer Health Tax Act, Estate Administration Tax Act, Land Transfer Tax Act, Provincial Land Tax Act, 2006, Retail Sales Tax Act and Tobacco Tax Act.

For further details, we refer you to the Ministry of Finance website.

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