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Ontario Enacts New "Top" Ontario Personal Tax Rate 

Canadian Tax Adviser

 

June 26, 2012

 

Ontario's 2012 budget bill (Bill 55) and related legislation in Bill 114 received Royal Assent in the Ontario legislature on June 20, 2012. This means that the top statutory Ontario income tax rate on taxable income of more than $500,000 increases to 12.16% for 2012 (from 11.16%) and to 13.16% in 2013. Bill 114 contains the enabling legislation for this personal tax hike. The bill also clarifies how the new top rate will apply to inter vivos trusts and donations.

As a result, the top Ontario marginal tax rates for 2012 and 2013 on different types of income are as follows:

 

 

The new individual "top" Ontario tax rate will be applied to income of inter vivos trusts and split income (i.e., the "kiddie" tax will be applied at this new "top" rate). In the case of donations, the highest percentage that will apply to donations in excess of $200 will remain at 11.16%. Finally, as a bit of a surprise, this "temporary" new tax bracket threshold of $500,000 will be subject to indexation for years ending after 2012.

 

For more information, contact your KPMG adviser.

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