Ontario Health Premium
The Budget proposes the introduction of a new health care premium commencing in the 2004 taxation year. Individuals whose taxable income is less than $20,000 will be exempt from this premium cost.
The applicable taxable income levels and maximum associated premium costs are as follows:
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Taxable Income
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2004
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2005
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$20,000 to $36,000
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$150
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$300
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| $36,000 to $48,000
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$225
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$450
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| $48,000 to $72,000
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$300
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$600
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| $72,000 to $200,000
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$375
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$750
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| more than $200,000
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$450
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$900
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Since the first premium level would be phased in at six per cent of taxable income over $20,000, the full premium for this level will be payable at taxable income of $25,000. For the second and subsequent premium levels, the full premium will be payable based on 25 per cent of the first $600 in that range. Consequently, the full premiums would be payable for each applicable premium level at taxable incomes of $36,600, $48,600, $72,600 and $200,600 respectively.
This new health care premium applies to individuals who are residents of Ontario on the last day of the taxation year. Trusts would be exempt from the premium. The taxable income reported in the final Ontario tax return will be utilized for individuals who die or emigrate from Canada during the year.
Source deduction withholdings with respect to this premium will commence July 1, 2004. Individuals who make income tax instalment payments should include the applicable premium cost in their total tax cost in determining the applicable amount of quarterly tax instalment payments. The actual premium cost will be determined in the individual's annual income tax return.
Enrichment of Property Tax Credit
The underlying basic property tax credit amount for lower income seniors will be increased from $500 to $625 commencing with the 2004 taxation year. Consequently, the maximum benefit available for the property and sales tax credits for seniors will be increased from $1,000 to $1,125.
Ontario Tax Reduction
The Ontario tax reduction for lower income taxpayers is being amended, for the 2004 and subsequent taxation years, so that this tax reduction is calculated before claiming foreign tax credits.
Ontario Home Ownership Savings Plan
No new plans will be registered and no new contributions to existing plans will be eligible for the program after May 18, 2004. Existing plans are available for home purchases until December 31, 2005. In addition, the withdrawal of funds from existing plans after 2005 will not be subject to recovery of tax credits or penalties.
Ontario Research Employee Stock Option Credit and Employer Health Tax
Individuals will not be able to claim this tax credit after December 31, 2004 on stock option benefits or capital gains arising from eligible options. In addition, all stock option benefits arising on or after May 18, 2004 will be subject to EHT.
Personal Tax Rates
The Budget proposed no changes to personal tax rates. However, in November 2003, it was announced that personal tax rates would remain at 2003 levels.
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