Bill 105, Supporting Small Businesses Act, 2013

Bill 105 2013

An Act to amend the Employer Health Tax Act

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

   1.  (1)  Clause (e) of the definition of "eligible employer" in subsection 1 (1) of the Employer Health Tax Act is amended by striking out "section 2" at the end and substituting "section 2.1".

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

"registered charity" has the same meaning as in subsection 248 (1) of the Income Tax Act (Canada); ("organisme de bienfaisance enregistré")

   (3)  The definition of "small employer" in subsection 1 (1) of the Act is repealed.

   2.  Subsections 2 (5) to (11) of the Act are repealed and the following substituted:

Definition

   (5)  In this section,

"security" has the meaning assigned by subsection 7 (7) of the Income Tax Act (Canada).

   3.  The Act is amended by adding the following sections:

Taxable total Ontario remuneration

   2.1  (1)  For the purposes of subsection 2 (2), the taxable total Ontario remuneration paid by an employer during a year is,

  (a)  in the case of an employer who is an eligible employer at any time in the year, the amount by which the total Ontario remuneration paid by the employer during the year exceeds the employer's exemption amount for the year; or

  (b)  in the case of an employer who is not an eligible employer at any time in the year, the amount of the total Ontario remuneration paid by the employer during the year.

Exemption amount after 2013, remuneration less than or equal to exemption threshold

   (2)  If the total Ontario remuneration paid by an employer during a year beginning after December 31, 2013 is less than or equal to the exemption threshold for the employer and the employer is an eligible employer at any time in the year and is not associated with any other employers at any time in the year, the exemption amount of the employer for the year is the amount calculated using the formula,

A × B/C

in which,

  "A"  is $450,000 for a year in the five-year period consisting of 2014 to 2018 or, for a year in a subsequent five-year period, is the adjusted amount determined for that period under section 2.1.1 for the year,

  "B"  is the number of days in the year in which the employer,

         (a)  has one or more permanent establishments in Ontario, and

         (b)  is an eligible employer, and

  "C"  is the number of days in the year.

Same, associated employers

   (3)  If the aggregate of the total Ontario remuneration paid during a year beginning after December 31, 2013 by an employer who is an eligible employer at any time in the year (the "first employer") and by each employer who is an eligible employer at any time in the year and that is associated with the first employer at any time in the year is less than or equal to the exemption threshold for the group of employers, the exemption amount for the year of the first employer and of each associated employer shall be determined in accordance with subsection (4).

Same

   (4)  If all of the employers who are associated with each other at any time in a year beginning after December 31, 2013 and who are eligible employers at any time in the year enter into an agreement in which they allocate to one or more of them for the year an exemption amount that does not exceed the highest exemption amount that would be determined under subsection (2) for any of them if they were not associated in the year, the exemption amount for the year for each of them is the lesser of,

  (a)  the amount allocated to that employer; and

  (b)  the amount that would be that employer's exemption amount for the year under subsection (2) if that employer were not associated.

Exemption amount after 2013, remuneration more than exemption threshold

   (5)  If the total Ontario remuneration paid by an employer during a year beginning after December 31, 2013 is more than the exemption threshold for the employer and the employer is not associated with any other employers at any time in the year, the exemption amount of the employer for the year is nil.

Same, associated employers

   (6)  If the aggregate of the total Ontario remuneration paid during a year beginning after December 31, 2013 by an employer who is an eligible employer at any time in the year (the "first employer") and by each employer who is an eligible employer at any time in the year and that is associated with the first employer at any time in the year is more than the exemption threshold for the group of employers, the exemption amount for the year of the first employer and of each associated employer is nil.

Exemption threshold

   (7)  For the purposes of subsections (2) and (5), the exemption threshold for an employer for a year is the amount calculated using the formula,

$5,000,000 × D/E

in which,

  "D"  is the number of days in the year in which the employer,

         (a)  has one or more permanent establishments in Ontario, and

         (b)  is an eligible employer, and

  "E"  is the number of days in the year.

Exemption threshold, associated employers

   (8)  For the purposes of subsections (3) and (6), the exemption threshold for a year for a group of employers who are associated with each other at any time in the year is the amount that is equal to the highest exemption threshold that would be determined under subsection (7) for any of them if they were not associated in the year.

Special rule re registered charities

   (9)  Despite subsection (5) or (6), the exemption amount for a year beginning after December 31, 2013 of an eligible employer who is a registered charity shall be determined in accordance with subsection (2), regardless of the amount of the total Ontario remuneration paid during the year by the registered charity.

Same

   (10)  If an employer who is not a registered charity is associated at any time in the year with an employer who is a registered charity, the aggregate of the total Ontario remuneration for the purposes of determining the exemption amount for a year beginning after December 31, 2013 of the employer who is not a registered charity shall be calculated without including the total Ontario remuneration paid during the year by the employer who is a registered charity.

Same

   (11)  The Minister may make regulations providing for special rules that apply to employers who are registered charities and to employers who are associated with registered charities, including rules that exempt those employers from a provision of this section.

Exemption amount after 2000 and before 2014

   (12)  For a year that begins after December 31, 2000 and before January 1, 2014, the exemption amount of an employer who is an eligible employer at any time in the year and who is not associated at any time in the year with one or more employers who are eligible employers at any time in the year is the amount calculated using the formula,

$400,000 × F/G

in which,

  "F"  is the number of days in the year in which the employer,

         (a)  has one or more permanent establishments in Ontario, and

         (b)  is an eligible employer, and

  "G"  is the number of days in the year.

Same, associated employers

   (13)  If all of the employers who are associated with each other at any time in a year beginning after December 31, 2000 and before January 1, 2014 and who are eligible employers at any time in the year enter into an agreement in which they allocate to one or more of them for the year an exemption amount that does not exceed the highest exemption amount that would be determined under subsection (12) for any of them if they were not associated in the year, the exemption amount for the year for each of them is the lesser of,

  (a)  the amount allocated to that employer; and

  (b)  the amount that would be that employer's exemption amount for the year under subsection (12) if that employer were not associated.

Delivery of agreement

   (14)  A copy of the agreement referred to in subsection (4) or (13) shall be delivered to the Minister by at least one of the employers on or before the date on which the return for the year is required to be delivered under section 5.

If no agreement

   (15)  If an eligible employer who is associated at any time in a year with one or more eligible employers does not enter into an agreement for the year that complies with subsection (4) or (13), the exemption amount for the year for each of the employers who is associated is nil.

Adjustment of exemption amount

   2.1.1  (1)  For each five-year period beginning with the period consisting of the calendar years 2019 to 2023, the amount of "A" that is referred to in subsection 2.1 (2) shall be adjusted to the amount calculated using the formula,

X + [X × (Y/Z – 1)]

in which,

  "X"  is $450,000 for a year in the five-year period consisting of the calendar years 2019 to 2023 and, for a year in each succeeding five-year period, is the amount that would have been the amount of "A" used for the preceding five-year period if it was not rounded to the nearest ten-thousand under subsection (3),

  "Y"  is the Consumer Price Index for the 12-month period that ended on September 30 of the year immediately preceding the first year in the five-year period, and

  "Z"  is the Consumer Price Index for the 12-month period ending on September 30 that is five years preceding the 12-month period in the description of "Y".

Rounding

   (2)  For the purposes of subsection (1), the amount of "(Y/Z – 1)" shall be rounded to the nearest one-thousandth or, if the result obtained is equidistant between two consecutive one-thousandths, to the higher one-thousandth.

Same

   (3)  The amount of "A" that is referred to in subsection 2.1 (2), as adjusted under this section, shall be rounded to the nearest ten-thousand or, if the result obtained is equidistant between two consecutive ten-thousands, to the higher ten-thousand.

Consumer price index

   (4)  In this Act, the Consumer Price Index for any 12-month period is the result arrived at by,

  (a)  determining the sum of the Consumer Price Index for Ontario as published by Statistics Canada under the authority of the Statistics Act (Canada), adjusted in the prescribed manner, for each month in that period;

  (b)  dividing the sum obtained under clause (a) by 12; and

   (c)  rounding the result obtained under clause (b) to the nearest one-thousandth or, if the result obtained is equidistant between two consecutive one-thousandths, to the higher one-thousandth.

   4.  Clause (a) of the definition of "E" in subsection 3 (4) of the Act is amended by striking out "section 2" and substituting "section 2.1".

Commencement

   5.  This Act comes into force on the day it receives Royal Assent.

Short title

   6.  The short title of this Act is the Supporting Small Businesses Act, 2013.

EXPLANATORY NOTE

This Explanatory Note was written as a reader's aid to Bill 105 and does not form part of the law.  Bill 105 has been enacted as Chapter 15 of the Statutes of Ontario, 2013.

The Bill amends the Employer Health Tax Act as follows.  Technical amendments are also made.

Increase of exemption amount

Currently, the amount of tax payable by an employer under the Act is the tax rate multiplied by the employer's taxable total Ontario remuneration.  An eligible employer's taxable total Ontario remuneration is the amount by which the employer's total Ontario remuneration paid during the year exceeds the employer's exemption amount for the year.  Employers who are associated with one another under the Act must allocate the exemption amount between themselves.  Currently, the exemption amount is $400,000.

New subsection 2.1 (2) of the Act increases the exemption amount to $450,000 for the 2014 to 2018 calendar years.  Starting in 2019, the exemption amount is adjusted for inflation every five years using the formula set out in new section 2.1.1. 

Elimination of exemption amount

Currently, the exemption amount is the same for all eligible employers.  New subsections 2.1 (5) and (6) provide that an employer's exemption amount is nil in either of the following circumstances:

    1.   The employer's total Ontario remuneration paid exceeds the exemption threshold for the employer, if the employer is not associated with any other employer at any time in the year.

    2.   The aggregate of the total Ontario remuneration paid by employers who are associated with one another exceeds the exemption threshold for the group.

Under new subsection 2.1 (7) of the Act, the exemption threshold is $5,000,000 and is prorated based on the number of days the employer had a permanent establishment in Ontario in the year.  New subsection 2.1 (8) provides that the exemption threshold for a group of associated employers is the highest exemption threshold that would be determined for any of the employers if they were not associated with one another.

Registered charities

Special rules are provided for registered charities.  New subsection 2.1 (9) of the Act provides that the exemption amount for an employer who is a registered charity is determined without reference to its total Ontario remuneration paid.  New subsection 2.1 (10) provides that, in determining the aggregate of the total Ontario remuneration for a group of employers who are associated with a registered charity, the remuneration paid by the charity is not included.  New subsection 2.1 (11) authorizes the Minister to make regulations providing for special rules that apply to employers who are registered charities and employers who are associated with registered charities.

Bill 105 2013

An Act to amend the Employer Health Tax Act

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

   1.  (1)  Clause (e) of the definition of "eligible employer" in subsection 1 (1) of the Employer Health Tax Act is amended by striking out "section 2" at the end and substituting "section 2.1".

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

"registered charity" has the same meaning as in subsection 248 (1) of the Income Tax Act (Canada); ("organisme de bienfaisance enregistré")

   (3)  The definition of "small employer" in subsection 1 (1) of the Act is repealed.

   2.  Subsections 2 (5) to (11) of the Act are repealed and the following substituted:

Definition

   (5)  In this section,

"security" has the meaning assigned by subsection 7 (7) of the Income Tax Act (Canada).

   3.  The Act is amended by adding the following sections:

Taxable total Ontario remuneration

   2.1  (1)  For the purposes of subsection 2 (2), the taxable total Ontario remuneration paid by an employer during a year is,

  (a)  in the case of an employer who is an eligible employer at any time in the year, the amount by which the total Ontario remuneration paid by the employer during the year exceeds the employer's exemption amount for the year; or

  (b)  in the case of an employer who is not an eligible employer at any time in the year, the amount of the total Ontario remuneration paid by the employer during the year.

Exemption amount after 2013, remuneration less than or equal to exemption threshold

   (2)  If the total Ontario remuneration paid by an employer during a year beginning after December 31, 2013 is less than or equal to the exemption threshold for the employer and the employer is an eligible employer at any time in the year and is not associated with any other employers at any time in the year, the exemption amount of the employer for the year is the amount calculated using the formula,

A × B/C

in which,

  "A"  is $450,000 for a year in the five-year period consisting of 2014 to 2018 or, for a year in a subsequent five-year period, is the adjusted amount determined for that period under section 2.1.1 for the year,

  "B"  is the number of days in the year in which the employer,

         (a)  has one or more permanent establishments in Ontario, and

         (b)  is an eligible employer, and

  "C"  is the number of days in the year.

Same, associated employers

   (3)  If the aggregate of the total Ontario remuneration paid during a year beginning after December 31, 2013 by an employer who is an eligible employer at any time in the year (the "first employer") and by each employer who is an eligible employer at any time in the year and that is associated with the first employer at any time in the year is less than or equal to the exemption threshold for the group of employers, the exemption amount for the year of the first employer and of each associated employer shall be determined in accordance with subsection (4).

Same

   (4)  If all of the employers who are associated with each other at any time in a year beginning after December 31, 2013 and who are eligible employers at any time in the year enter into an agreement in which they allocate to one or more of them for the year an exemption amount that does not exceed the highest exemption amount that would be determined under subsection (2) for any of them if they were not associated in the year, the exemption amount for the year for each of them is the lesser of,

  (a)  the amount allocated to that employer; and

  (b)  the amount that would be that employer's exemption amount for the year under subsection (2) if that employer were not associated.

Exemption amount after 2013, remuneration more than exemption threshold

   (5)  If the total Ontario remuneration paid by an employer during a year beginning after December 31, 2013 is more than the exemption threshold for the employer and the employer is not associated with any other employers at any time in the year, the exemption amount of the employer for the year is nil.

Same, associated employers

   (6)  If the aggregate of the total Ontario remuneration paid during a year beginning after December 31, 2013 by an employer who is an eligible employer at any time in the year (the "first employer") and by each employer who is an eligible employer at any time in the year and that is associated with the first employer at any time in the year is more than the exemption threshold for the group of employers, the exemption amount for the year of the first employer and of each associated employer is nil.

Exemption threshold

   (7)  For the purposes of subsections (2) and (5), the exemption threshold for an employer for a year is the amount calculated using the formula,

$5,000,000 × D/E

in which,

  "D"  is the number of days in the year in which the employer,

         (a)  has one or more permanent establishments in Ontario, and

         (b)  is an eligible employer, and

  "E"  is the number of days in the year.

Exemption threshold, associated employers

   (8)  For the purposes of subsections (3) and (6), the exemption threshold for a year for a group of employers who are associated with each other at any time in the year is the amount that is equal to the highest exemption threshold that would be determined under subsection (7) for any of them if they were not associated in the year.

Special rule re registered charities

   (9)  Despite subsection (5) or (6), the exemption amount for a year beginning after December 31, 2013 of an eligible employer who is a registered charity shall be determined in accordance with subsection (2), regardless of the amount of the total Ontario remuneration paid during the year by the registered charity.

Same

   (10)  If an employer who is not a registered charity is associated at any time in the year with an employer who is a registered charity, the aggregate of the total Ontario remuneration for the purposes of determining the exemption amount for a year beginning after December 31, 2013 of the employer who is not a registered charity shall be calculated without including the total Ontario remuneration paid during the year by the employer who is a registered charity.

Same

   (11)  The Minister may make regulations providing for special rules that apply to employers who are registered charities and to employers who are associated with registered charities, including rules that exempt those employers from a provision of this section.

Exemption amount after 2000 and before 2014

   (12)  For a year that begins after December 31, 2000 and before January 1, 2014, the exemption amount of an employer who is an eligible employer at any time in the year and who is not associated at any time in the year with one or more employers who are eligible employers at any time in the year is the amount calculated using the formula,

$400,000 × F/G

in which,

  "F"  is the number of days in the year in which the employer,

         (a)  has one or more permanent establishments in Ontario, and

         (b)  is an eligible employer, and

  "G"  is the number of days in the year.

Same, associated employers

   (13)  If all of the employers who are associated with each other at any time in a year beginning after December 31, 2000 and before January 1, 2014 and who are eligible employers at any time in the year enter into an agreement in which they allocate to one or more of them for the year an exemption amount that does not exceed the highest exemption amount that would be determined under subsection (12) for any of them if they were not associated in the year, the exemption amount for the year for each of them is the lesser of,

  (a)  the amount allocated to that employer; and

  (b)  the amount that would be that employer's exemption amount for the year under subsection (12) if that employer were not associated.

Delivery of agreement

   (14)  A copy of the agreement referred to in subsection (4) or (13) shall be delivered to the Minister by at least one of the employers on or before the date on which the return for the year is required to be delivered under section 5.

If no agreement

   (15)  If an eligible employer who is associated at any time in a year with one or more eligible employers does not enter into an agreement for the year that complies with subsection (4) or (13), the exemption amount for the year for each of the employers who is associated is nil.

Adjustment of exemption amount

   2.1.1  (1)  For each five-year period beginning with the period consisting of the calendar years 2019 to 2023, the amount of "A" that is referred to in subsection 2.1 (2) shall be adjusted to the amount calculated using the formula,

X + [X × (Y/Z – 1)]

in which,

  "X"  is $450,000 for a year in the five-year period consisting of the calendar years 2019 to 2023 and, for a year in each succeeding five-year period, is the amount that would have been the amount of "A" used for the preceding five-year period if it was not rounded to the nearest ten-thousand under subsection (3),

  "Y"  is the Consumer Price Index for the 12-month period that ended on September 30 of the year immediately preceding the first year in the five-year period, and

  "Z"  is the Consumer Price Index for the 12-month period ending on September 30 that is five years preceding the 12-month period in the description of "Y".

Rounding

   (2)  For the purposes of subsection (1), the amount of "(Y/Z – 1)" shall be rounded to the nearest one-thousandth or, if the result obtained is equidistant between two consecutive one-thousandths, to the higher one-thousandth.

Same

   (3)  The amount of "A" that is referred to in subsection 2.1 (2), as adjusted under this section, shall be rounded to the nearest ten-thousand or, if the result obtained is equidistant between two consecutive ten-thousands, to the higher ten-thousand.

Consumer price index

   (4)  In this Act, the Consumer Price Index for any 12-month period is the result arrived at by,

  (a)  determining the sum of the Consumer Price Index for Ontario as published by Statistics Canada under the authority of the Statistics Act (Canada), adjusted in the prescribed manner, for each month in that period;

  (b)  dividing the sum obtained under clause (a) by 12; and

   (c)  rounding the result obtained under clause (b) to the nearest one-thousandth or, if the result obtained is equidistant between two consecutive one-thousandths, to the higher one-thousandth.

   4.  Clause (a) of the definition of "E" in subsection 3 (4) of the Act is amended by striking out "section 2" and substituting "section 2.1".

Commencement

   5.  This Act comes into force on the day it receives Royal Assent.

Short title

   6.  The short title of this Act is the Supporting Small Businesses Act, 2013.

EXPLANATORY NOTE

The Bill amends the Employer Health Tax Act as follows.  Technical amendments are also made.

Increase of exemption amount

Currently, the amount of tax payable by an employer under the Act is the tax rate multiplied by the employer's taxable total Ontario remuneration.  An eligible employer's taxable total Ontario remuneration is the amount by which the employer's total Ontario remuneration paid during the year exceeds the employer's exemption amount for the year.  Employers who are associated with one another under the Act must allocate the exemption amount between themselves.  Currently, the exemption amount is $400,000.

New subsection 2.1 (2) of the Act increases the exemption amount to $450,000 for the 2014 to 2018 calendar years.  Starting in 2019, the exemption amount is adjusted for inflation every five years using the formula set out in new section 2.1.1. 

Elimination of exemption amount

Currently, the exemption amount is the same for all eligible employers.  New subsections 2.1 (5) and (6) provide that an employer's exemption amount is nil in either of the following circumstances:

    1.   The employer's total Ontario remuneration paid exceeds the exemption threshold for the employer, if the employer is not associated with any other employer at any time in the year.

    2.   The aggregate of the total Ontario remuneration paid by employers who are associated with one another exceeds the exemption threshold for the group.

Under new subsection 2.1 (7) of the Act, the exemption threshold is $5,000,000 and is prorated based on the number of days the employer had a permanent establishment in Ontario in the year.  New subsection 2.1 (8) provides that the exemption threshold for a group of associated employers is the highest exemption threshold that would be determined for any of the employers if they were not associated with one another.

Registered charities

Special rules are provided for registered charities.  New subsection 2.1 (9) of the Act provides that the exemption amount for an employer who is a registered charity is determined without reference to its total Ontario remuneration paid.  New subsection 2.1 (10) provides that, in determining the aggregate of the total Ontario remuneration for a group of employers who are associated with a registered charity, the remuneration paid by the charity is not included.  New subsection 2.1 (11) authorizes the Minister to make regulations providing for special rules that apply to employers who are registered charities and employers who are associated with registered charities.