Taxation Info-Guide

The Taxation Info-Guide is designed to help you navigate through the federal and provincial government programs, services and regulations related to taxation that may apply to individuals starting or operating a business in Ontario.

TABLE OF CONTENTS

1. Tax Information for Starting a Business
2. Tax Information for New Employers
3. Income Tax Information
4. General Taxation Information
5. Municipal Taxation Information
6. Other Resources

1. Tax Information for Starting a Business

Obtaining a Retail Sales Tax (RST) Licence/Vendor's Permit

The RST, also known as the Provincial Sales Tax (PST), is a tax based on the retail price of most goods. Businesses that sell taxable goods, provide a taxable service, or charge more than $4.00 admission to a place of amusement are responsible for collecting the tax and remitting it on a regular basis.

Merchandise and equipment used in a business, other than certain categories of production machinery and materials used in manufacturing, are taxable. Certain purchases, such as food products and children's clothing, are exempt from the tax. There is no fee for this permit. Further information on vendor permits and tax-exempt purchases may be obtained from the Ontario Ministry of Revenue, Retail Sales Tax Office.

What does the RST apply to?

The RST rate in Ontario is 8% on most purchases of goods and on labour charges to install, repair and maintain taxable goods and equipment. Tax is also payable at the same rate on all prepared food products purchased from an eating establishment, where the total charge is more than $4.00.

For further information:
please call 1-800-263-7965
visit the web site: Tax Revenue Division
see the documents:
Vendor Permits and the Retail Sales Tax
Purchase Exemption Certificates for Retail Sales Tax

Retention/Destruction of Books & Records

Explains the retention period required for Ontario tax purposes, before books and records can be destroyed.

For further information:
visit the web site: Retention/Destruction of Books and Records

Voluntary Disclosure

Explains what voluntary compliance is and the basic principles under which Ontario's tax system operates.

For further information:
visit the web site: Voluntary Disclosure

Business Number (BN)

Goods and Services Tax (GST) and Harmonized Sales Tax (HST)

Since July 1st, 2006, most goods and services sold or provided in Canada are taxable at the rate of 6% (GST) or 14% (HST). The HST applies in the provinces of New Brunswick, Nova Scotia, Newfoundland and Labrador.

Effective January 1, 2008, the rate of GST is 5% and the rate of the HST is 13%.

For more information on the GST/HST rate reduction, please call 1-866-959-7797. This toll-free hotline service is available from 8:15 a.m. to 8:00 p.m. (local time), Monday to Friday.

Certain items, such as sales of basic groceries and prescription drugs, are also taxable, but at a rate of 0%. These are referred to as zero-rated goods and services. A limited number of goods and services are exempt from the GST/HST.

Who must obtain a BN for the GST/HST?

Most individuals or businesses engaged in a commercial activity with annual sales and revenues of GST/HST-taxable goods or services totalling more than $30,000 must register and charge the GST/HST.

If your total annual sales are less than or equal to $30,000, you are considered to be a small supplier and are not required to have a BN for the purpose of GST. If you do not obtain a BN, you do not charge GST/HST.

For further information:
visit the web site: Goods and Services Tax/Harmonized Sales Tax (GST/HST)
see the document GST/HST   

You may contact CRA directly to inquire about the regulations mentioned above, by calling 1-800-959-5525.

For further information:
see the document Telephone numbers for the Canada Revenue Agency

2. Tax Information for New Employers

All employers must contact CRA to register for a Business Number (BN) and open a payroll deduction account. For more information, please see the section on the BN mentioned above.

Payroll Deductions - Tables on Diskette (TOD)

TOD is an electronic version of the payroll deductions tables. TOD calculates the income tax, CPP and EI contributions that the CRA requires an employer to withhold from an employee's income. TOD reduces paper handling and storage for clients. Each TOD diskette, in either Windows or Macintosh versions, includes information for all pay periods and all provinces and territories.

The Canada Revenue Agency (CRA) offers the Payroll Deductions Online Calculator or Tables on Diskette (TOD) to calculate payroll deductions for all pay periods, provinces (except for Quebec), and territories based on the information you provide.

For further information:
visit the web sites:
Tables on Diskette (TOD)
Payroll Deductions Online Calculator  
see the document Payroll Deductions

New Employer Visits

This is a service provided to new employers to educate business about source deductions and their legal obligations and responsibilities.

For further information:
see the document Employer Visits Program

You may contact CRA directly to inquire about the above-mentioned programs and regulations by calling 1-800-959-5525.

For further information:
see the document Telephone numbers for the Canada Revenue Agency

Workplace Safety and Insurance Board (WSIB)

The WSIB provides compensation benefits to workers injured on the job or who contract an occupational disease. Most businesses in Ontario that employ workers (including family members and sub-contractors) must register with the WSIB within 10 days of hiring their first full- or part-time worker. Contact the nearest WSIB office to obtain a registration kit, which includes information on assessments, coverage, accident reporting requirements and appeals procedures.

For further information:
please call 416-344-1000 or 1-800-387-5540
visit the web site: Workplace Safety and Insurance Board
see the document Workplace Safety and Insurance Board - WSIB

Employer Health Tax (EHT)

The Employer Health Tax (EHT) is paid by employers who have a permanent establishment in Ontario and who:

• have employees who report for work at the Ontario permanent establishment, or have employees who do not report for work at a permanent establishment of the employer but are paid from an Ontario permanent establishment of the employer; and
• have a total Ontario remuneration for the year (paid to employees or former employees) that exceeds the exemption amount allowed, if any.

For the first $400,000 of the payroll, eligible employers are exempt from paying the Employer Health Tax.

For further information:
please call 1-800-263-7965
visit the web site: Employer Health Tax - Guide for Employers
see the document Employer Health Tax - EHT

3. Income Tax Information

Reporting Self-employed Income - T1-General Income Tax Return

Non-incorporated self-employed individuals use the T1-General income tax return and the Guide to self-employed business income to determine their income tax obligations under the laws of Canada and of all provinces and territories, except Quebec. The Business and Professional Income tax guide supplements the T1-General guide.

For further information:
visit the web site: T1 General Returns
see the document Income Tax Returns - T1 General Income Tax and Benefit Return

T2 Corporation Income Tax Return and the T2 Short Return

All corporations-including non-profit organizations, tax-exempt corporations, and inactive corporations-have to file a T2 return for every taxation year, even if there is no tax payable. The only exception to this rule is a corporation that was a registered charity throughout the year. The T2 Corporation Income Tax Return has eight pages. Any corporation can use it. The T2 Short return is two pages plus a Schedule 1, a Schedule 8, and a Schedule 50. It is a simpler version of the T2 Corporation Income Tax Return, but, in order to use this declaration, the corporation must meet the requirements.

For further information:
visit the web site: T2 Corporation Income Tax Return (2006 and later taxation years)
see the document Income Tax Returns - the T2 Corporate Income Tax Return and the T2 Short Return

You may contact CRA directly to inquire about the above-mentioned regulations by calling 1-800-959-5525.

For further information:
see the document Telephone numbers for the Canada Revenue Agency

Ontario Ministry of Revenue - Client Accounts and Services Branch (CASB) 

Any corporation doing business in Ontario must file a separate income tax return with the provincial Ministry of Revenue. However, certain corporations may be eligible for exemptions.

Note: The governments of Canada and Ontario signed a Memorandum of Agreement on October 6, 2006, that will lead to the Canada Revenue Agency (CRA) administering certain Ontario corporate taxes. Corporate taxpayers will start making blended instalment payments to the CRA in February 2008.

For now, the Ontario Ministry of Revenue continues to conduct audits, handle inquiries and receive instalment payments and returns for the Ontario corporate tax program and remains your first point of contact for all matters related to your Ontario corporate tax account. 

For more information:
contact the Ontario Ministry of Revenue's Customer Service Centre at 1-800-262-0784.
visit these web sites:
Corporations Tax Act
Ontario Corporations Tax
Single Administration of Corporate Tax
CT23 Corporations Tax and Annual Return   
Guide to the CT23 Corporations Tax and Annual Return  

4. General Tax Information

The Ontario Health Premium

Since July 1, 2004 all employees working in Ontario are required to pay an additional tax called The Ontario Health Premium. This tax will is deducted from pay and pensions as part of personal income tax requirements. The premiums range from $60 to $900 a year for people with a taxable income of $21,000 a year or more. For detailed information on The Ontario Health Premium and employer responsibilities regarding payroll and deductions please contact the Canada Revenue Agency.

For further information:
please call 1-800-959-5525
visit the web site: Ontario Health Premium

Fairness and Taxpayer Rights

This service provides information on the general policy regarding the collection of taxes and amounts owing under the Income Tax Act , the Canada Pension Plan Act , the Employment Insurance Act , the Excise Tax Act , the Customs Act , and the Petroleum and Gas Revenue Tax Act .

For further information:
visit the web site: CRA - Fairness and Taxpayer Rights  
see the document RC4213 - Your Rights

Objections and Appeals

The Income Tax Act and the  Excise Tax Act allow a person to dispute an assessment of taxation by filing a formal objection. These disputes can include Income Tax assessment, GST assessment or other taxes imposed under the Excise Tax Act .

For further information:
see the document Objections and Appeals - Income Tax Act/Excise Tax Act

Rulings and Interpretation Program

The Rulings and Interpretations Program of the CRA provides clients with rulings and technical interpretations of the Excise Tax Act and related statutes, and offers technical publications which explain these rulings and technical interpretations.

For further information:
see the document Services of the Income Tax Rulings Directorate

You may contact CRA directly to inquire about the above-mentioned programs and regulations by calling 1-800-959-5525.

For further information:
see the document Telephone numbers for the Canada Revenue Agency

Voluntary Disclosures Program

Allows taxpayers to come forward and correct inaccurate or incomplete information or disclose material they did not report during previous dealings with the CRA, without penalty or prosecution.

For further information:
visit the web site: Voluntary Disclosures Program  
see the document Voluntary Disclosures Program

Online Requests for Business

The Online Requests for Business service allows Business clients to electronically ask for certain financial actions to be processed on an account. It lets business clients inform the Canada Revenue Agency via the Internet of an action or review they want them to do, request items they require or inform them of communication items they no longer wish to receive.

For further information:
visit the website: Online Requests for Business  
see the document Online Requests for Business

5. Municipal Taxation Information

For information regarding local taxation requirements, contact your local municipal tax office. Municipal government offices are listed in the government section of your telephone book. A selection of Ontario Municipal Government Web links is available at the following address: Home Pages of Ontario Municipalities

6. Other Resources

• General Information for GST/HST Registrants
  
  
• Business number RC2
  
  
• Employee or Self-employed?
  
  
• Business and Professional Income   
  
  
• Guide for Canadian Small Businesses
  
  
• Payroll Deductions and Remittances
  
  
• Basics of Retail Sales Tax
  
  
• Purchase Exemption Certificates
  
  
• Changes to Canada Revenue Agency Service and Payment Counters

To obtain copies of the CRA or the Ministry of Revenue publications, contact their toll-free numbers listed in the document.

Need more information?

Click: Canada-Ontario Business Service Centre
Call: 1-800-567-2345
Visit: our  Regional Access Program Locations page to locate an office near you

---

Some of the organizations listed above are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages.

---

• Ontario Innovation Tax Credit (OITC)
• Telephone numbers for the Canada Revenue Agency
• Grants, Subsidies and Contributions Info-Guide
• Taxes
• Business Guides

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.