May 2004

Corporate Tax Measures

Capital Tax
The previous administration proposed to eliminate capital tax by 2008. The budget will continue the phase-out, but at a slower pace:

	Deductions ($ Millions)	Rate %
Current	5	0.3
01-Jan-05	7.5	0.3
01-Jan-06	10	0.3
01-Jan-07	12.5	0.3
01-Jan-08	15	0.3
01-Jan-09	15	0.225
01-Jan-10	15	0.15
01-Jan-11	15	0.075
01-Jan-12	Eliminated

Federal Tax Measures Adopted
The capital cost allowance rates on newly acquired computer and data network infrastructure equipment will increase to 45% and 30%, respectively, effective March 22, 2004.

The carry-forward period for business losses will be extended from 7 to 10 years.

Employer Health Tax
Beginning in 2005, returns for a particular month will not be due until the 15th day of the following month and will be based on the actual payroll for the month.

Destination Marketing Fees
In support of the hotel industry’s initiative in funding tourism marketing and assisting in the recovery of Ontario’s tourism industry, it is proposed that the destination marketing fee be exempt from RST for a one-year period.

The temporary exemption from the five per cent RST accommodations tax on this fee would be effective for destination marketing fees billed after May 18, 2004 and before May 19, 2005. It is not clear that this exemption would extend to a fee charged on anything other than rooms.

Readers are urged to consult their professional advisors prior to acting on the basis of material in this newsletter. If you have any questions regarding the content of this newsletter, please contact Crawford, Smith & Swallow. Copies of the newsletter in PDF format are available on our website.