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On February 15, 2016, Finance Minister Charles Sousa delivered the 2016 Ontario Budget. Please find below some highlights from that release that we thought would be beneficial for you to review. If you would like more detailed information, please visit the Government of Ontario’s web site: http://www.fin.gov.on.ca/en/budget/ontariobudgets/2016.
PERSONAL TAX RATES AND BRACKETS
| Federal | Ontario | |||
| – | 15.00% | – | 5.05% | |
| 45,282 | 20.50% | 41,536 | 9.15% | |
| 90,563 | 26.00% | 83,075 | 11.16% | |
| 140,388 | 29.00% | 150,000 | 12.16% | |
| 200,000 | 33.00% | 220,000 | 13.16% | |
Surtax of 20.00% on Ontario tax over 4,484
Surtax of 36.00% on Ontario tax over 5,739
MAXIMUM COMBINED PERSONAL RATES AND TAX FREE DIVIDENDS
| Eligible Dividends | Other than eligible dividends | Capital gains | Other income | |
| FEDERAL / ONTARIO RATES | 39.34% | 45.30% | 26.76% | 53.53% |
| TAX FREE DIVIDENDS* | 51,474 | 32,847 |
*This table assumes that only the dividend is earned, and includes federal and provincial taxes and surtaxes – reflecting basic personal amounts, dividend tax credits, and provincial tax rate reductions.
Ontario Health Premium of $600 on eligible dividends, and $446 on other than eligible dividend applies.
CORPORATE TAXES – COMBINED FEDERAL AND PROVINCIAL TAX RATES
| SBD limit | UP to SBD limit | M&P rate | General rate | CCPC investment income rate | Personal services business rate | |
| FEDERAL / ONTARIO | 500,000 | 13.50% | 12.00% – 17.50% | 30.00% | 53.67% | 48.00% |
For a CCPC with a tax year of January 1 to December 31. Rates may vary for non-calendar tax years.
Per proposed section 123.5 of the Income Tax Act, there will be an additional 5% tax on personal services business income.
