Business Costs
Costs impact the profitability of any business. Fortunately, Toronto is a low cost jurisdiction that offers easy access to both high quality inputs and an outstanding talent pool.
As shown in the table below, the KPMG Competitive Alternatives report (2010) ranked Canada as a cost leader among 9 industrialized countries surveyed with the 2nd lowest overall business costs.
To see how Toronto and Canada compare to other regions on specific cost factors outlined in the KPMG report, click here.
Overall Cost of Doing Business- KPMG Competitive Alternatives, 2010
/Competitive-Advantages/Business-Costs/Overall-Cost-of-Doing-Business--KPMG-Competitive-A.aspx
The table below shows that Toronto has the second lowest business costs when compared to other major global business centres in each of the countries examined in the KPMG report. KPMG ranks Toronto sixth in business cost competitiveness relative to 41 other large metropolitan regions worldwide with a population of at least 2 million. In addition, Toronto has lower overall business costs than all 22 large US cities studied in the report including Chicago, Los Angeles and New York.
Overall Cost of Doing Business: City-Level Benchmark
/Competitive-Advantages/Business-Costs/Overall-Cost-of-Doing-Business--City-Level-Benchma.aspx
Labour Costs
Toronto is a low-cost jurisdiction that offers access to high quality inputs and an outstanding talent pool. The 2010 Competitive Alternatives study by KPMG ranked Toronto 3rd in North America and 6th worldwide in business cost competitiveness when compared to 41 other large metropolitan regions.
The following tables illustrate Toronto's placement against its chief competitors.
Overall Cost of Labour: Country-Level Benchmark
/Competitive-Advantages/Business-Costs/Overall-Cost-of-Labour--Country-Level-Benchmark.aspx
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Wages
Change in Average and Median Wage (1999-2009)
| Toronto CMA |
1999 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
5 Year Change |
10 Year Change |
| Source: City of Toronto Occupation Profiles, 2009. Labour Force Survey, 2009. |
| |
| Median Wage/Hour * |
$15.38 |
$16.50 |
$16.83 |
$17.00 |
$18.00 |
$18.34 |
$19.00 |
$19.71 |
$20.00 |
17.6% |
30.0% |
| vs. all occupations in the CMA |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
|
|
| vs. this occupation in Canada |
106% |
105% |
105% |
104% |
106% |
106% |
106% |
105% |
104% |
|
|
| |
| Average Wage/Hour * |
$17.46 |
$18.90 |
$19.14 |
$19.71 |
$20.50 |
$21.10 |
$21.70 |
$22.66 |
$23.14 |
17.4% |
32.5% |
| vs. all occupations in the CMA |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
|
|
| vs. this occupation in Canada |
108% |
107% |
106% |
107% |
107% |
107% |
106% |
106% |
105% |
|
|
- Current general minimum wage in Ontario is $10.25 per hour.
- In 2009, the average wage per hour for a worker in the Toronto region was $23.14.
- From 1999-2009, wages in the Toronto region were consistently 5-8% higher than the rest of Canada.
- During the same period, the average Toronto region wage increased by 32.5%.
- According to the 2006 Census, the average annual income in the Toronto region was $40,704.
Average Wage Earnings for High-Level Occupation Groupings
| Occupation |
Average Wage/ Hour |
Average Usual Hours |
Annualized Earnings |
| Source: City of Toronto Occupation Profile |
| Management Occupations |
$36.42 |
41.7 |
$78,973.13 |
| Natural and Applied Sciences and Related Occupations |
$31.13 |
38.4 |
$62,160.38 |
| Occupations in Social Science, Education, Government Service and Religion |
$29.19 |
35.2 |
$53,429.38 |
| Health Occupations |
$27.95 |
35.2 |
$51,159.68 |
| Trades, Transport and Equipment Operators and Related Occupations |
$21.10 |
40.1 |
$43,997.72 |
| Business, Finance and Administrative Occupations |
$22.26 |
36.3 |
$42,017.98 |
| Occupations in Art, Culture, Recreation and Sport |
$23.28 |
33.6 |
$40,674.82 |
| Sales and Service Occupations |
$15.21 |
32 |
$25,309.44 |
- The table above shows the average hourly and annual wages, as well as the average number of hours worked, for high-level occupations.
- More data is available for specific occupations (all of the specific occupations that fall under the "sales and Service" occupations, and can be requested from Invest Toronto, or the entire file can be downloaded here.
- Detailed wage information can also be viewed by industries, and can be downloaded here.
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Gas Rates for Businesses
Commercial and Industrial Rates
Monthly gas rates as of July 1, 2010 are shown below. The annualized impact is based on a typical commercial and industrial heating and water heating customer using 22,606 metres3 per year.
| Monthly Charges |
Monthly Rates July 1, 2010 |
Annualized (Increase/(Decrease) |
| Customer Charge |
$60 |
No change |
| Gas Supply Charge |
17.3842 ¢/m3 |
($873) |
| Delivery to You Amount of gas used per month in cubic metres (m3) |
See breakdown below* |
($13) |
| Transportation to Enbridge |
4.8009 ¢/m3 |
$33 |
| Delivery to You Breakdown |
| Amount of gas used per month in cubic metres |
Cost in cents per cubic metre ¢/m3 |
| First 500 |
7.8186 ¢/m3 |
| Next 1,050 |
6.1188 ¢/m3 |
| Next 4,500 |
4.9289 ¢/m3 |
| Next 7,000 |
4.1640 ¢/m3 |
| Next 15,250 |
3.8242 ¢/m3 |
| Over 28,300 |
3.7391 ¢/m3 |
| Cost Adjustment Breakdown |
| Source: Enbridge Gas |
| Cost Adjustment |
(1.0418 ¢/m3) |
($235) |
| Components of Cost Adjustment |
| Gas Supply |
(1.0883 ¢/m3) |
|
| Transportation |
0.0024 ¢/m3 |
|
| Delivery |
0.0442 ¢/m3 |
|
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Electricity Rates for Businesses
Toronto Hydro
- The cost of General Services varies upon usage. For smaller users in the 2,000kWh range the cost per month is approximately $268. The largest corporate users, drawing 5,000,000 kWh, can expect to pay approximately $500,000 per month for electricity in Toronto.
| Customer Type |
Monthly Consumption |
Total Bill, As of May 1, 2010 |
| Source: Toronto Hydro |
| *General Service |
2,000 kWh |
$268.80 |
| less than 50 kW |
5,000 kWh |
$645.41 |
| 10,000 kWh |
$1,273.09 |
| 20,000 kWh |
$2,528.45 |
| *General Service |
890†kVA |
$43,836.38 |
| 1,000 - 4,999 kW |
400,000 kWh |
|
| 1,330 kVA |
$65,427.95 |
| 600,000 kWh |
| |
|
| 1,780 kVA |
$87,019.53 |
| 800,000 kWh |
| |
|
| 2,220 kVA |
$108,611.10 |
| 1,000,000 kWh |
| |
|
| 3,330 kVA |
$162,590.03 |
| 1,500,000 kWh |
| |
|
| 4,450 kVA |
$216,568.97 |
| 2,000,000 |
| *General Service |
3,150 kVA |
$162,488.35 |
| 1,500,000 kWh |
| 5,000 or above |
4,200 kVA |
$215,695.31 |
| 2,000,000 kWh |
| |
|
| 5,250 kVA |
$268,902.28 |
| 2,500,000 kWh |
| |
|
| 6,300 kVA |
$322,109.24 |
| 3,000,000 kWh |
| |
|
| 8,400 kVA |
$428,523.17 |
| 4,000,000 kWh |
| |
|
| 10,500 kVA |
$534,937.10 |
| 5,000,000 kWh |
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Water Rates for Businesses
General Water Rate
Applied to all water consumption, including the first 6,000 m≥ of industrial consumption |
| Source: Toronto Water |
| Rate if paid after Due Date |
$2.1701 / m3 |
| Rate if paid on, or before, Due Date |
$2.0616 / m3 |
Industrial Water Rate
Applied to water consumption over 6,000 m≥ for those businesses classified under the Industrial Tax Class |
| Source: Toronto Water |
| Rate if paid, after Due Date |
$1.5501 / m3 |
| Rate if paid, on or before Due Date |
$1.4726 / m3 |
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Taxes
2010 Corporate Income Tax (CIT) Rates
Corporations operating in Ontario are generally taxed at a rate of 30.0%. However, Ontario's manufacturing and resource industries are subject to a lower 10.0% provincial tax rate. When combined with the federal Manufacturing & Processing (M&P) rate of 18.0%, a corporation earning manufacturing income in Ontario is taxed at a rate of only 28.0%. By way of comparison, this combined rate is generally less than the combined statutory U.S. federal and state tax rates.
| |
Canada |
Ontario |
Combined |
| General Rate (Jul1, 2010) |
18% |
12% |
30% |
| Manufacturing & Processing (Jul 1, 2010 |
18% |
10% |
28% |
| Small business rate |
11% |
4.5% |
15.5% |
Employee Taxes & Contributions
Ontario corporations collect mandatory Employment Insurance (EI) premiums and Canada Pension Plan (CPP) contributions from both employers and employees, to provide support for loss of employment (including maternity leave) and retirement.
Employment Insurance (EI)
Employers and employees pay EI premiums on every dollar of insurable earnings up to a yearly maximum.
- Employer EI premium is 1.4 times the EI premium withheld for each employee.
- There is no age limit for deducting EI premiums.
- EI premium deduction ceases when an employer reaches an employee's maximum insurable earnings ($42,300 for 2009) or the maximum employee premium for the year ($731.79 for 2009).
Canadian Pension Plan (CPP) Contributions
Both employers and employees make CPP contributions on an employee's pensionable earnings.
CPP rate for 2010:
- Employee contribution rate is 4.95% of pensionable earnings.
- Maximum pensionable earnings total $47,200.00.
- Basic yearly exemption is $3,500.
- Maximum annual employee contribution is $2163.15.
Please click here for more taxation information.
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Cost of Debt Financing
| |
Overnight rate |
Prime rate |
Three-month bankers' acceptances |
Long-term corporate bond rate |
Weekly effective business interest rate* |
| Source: Bank of Canada |
| July 31, 2007 |
4.50 |
6.25 |
5.35 |
7.24 |
4.75 |
| October 18, 2007 |
4.50 |
6.25 |
5.65 |
7.43 |
4.85 |
| January 24, 2008 |
4.00 |
5.75 |
5.25 |
7.39 |
4.06 |
| April 24, 2008 |
3.00 |
4.75 |
4.15 |
6.99 |
3.23 |
| July 17, 2008 |
3.00 |
4.75 |
4.20 |
7.09 |
3.29 |
| October 23, 2008 |
2.25 |
4.00 |
5.00 |
7.20 |
2.68 |
| January 22, 2009 |
1.00 |
3.00 |
3.80 |
5.90 |
1.06 |
| April 23, 2009 |
0.25 |
2.25 |
3.00 |
5.25 |
0.46 |
| July 23, 2009 |
0.25 |
2.25 |
2.65 |
5.85 |
0.44 |
| October 22, 2009 |
0.25 |
2.25 |
2.25 |
5.80 |
0.43 |
| January 21, 2010 |
0.25 |
2.25 |
2.05 |
5.47 |
0.44 |
| April 22, 2010 |
0.25 |
2.25 |
0.69 |
4.24 |
3.27 |
*The effective interest rate for businesses is a weighted-average borrowing rate for new lending to non-financial businesses, estimated as a function of bank and market interest rates. The weightings are derived from business credit data.
- The table above shows the interest rates for various types of debt, (bonds, business loans, short-term debt issues), and the historic relationship of these instruments to the overnight rate and Canda's prime interest rate.
- In July 2010, the Bank of Canada raised the overnight rate by 25 basis points to 0.75%, marking the second increase in as many months.
- In its August Financial Markets Monthly report, the Royal Bank of Canada forecasted that the overnight rate will reach 1.25% by the end of 2010.
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Industrial Real-Estate
| Colliers Industrial Statistics (Q1 2011) |
| Market / Submarket |
Total Availability (Q1 2011) |
| GTA Central |
Direct Availability (SF) |
Avg Net Rent $ / SF |
2011 Q1 Sales Price (PSF) |
| East York |
|
|
$104.90 |
| Etobicoke |
4,066,725 |
$3.51 |
$71.05 |
| North York |
1,407,871 |
$4.23 |
$99.59 |
| Scarborough |
2,526,858 |
$4.28 |
$39.01 |
| Toronto |
164,500 |
$2.95 |
$94.22 |
| York |
15,670 |
$3.95 |
$91.94 |
| Total |
8,181,624 |
$3.86 |
$79.20 |
| Source: Colliers Industrial Statistics (Q1 2011) |
- The average price of industrial space in Toronto is $52.38 per ft2.
- As of June 2010, 878,515 ft2 of office space is under construction in the Greater Toronto Area.
- The average rental price of AAA real estate in Toronto is $61.49 per ft2. This office space is concentrated in the Financial Core District and downtown areas of Toronto.
Please click here for more real estate information.
Greater Toronto Area Office Statistics: Q1 2011
| Office Market/Submarket |
Class |
Buildings Surveyed |
Office Investory |
Available Space |
Q1 2011 Availability Rate |
Q1 2010 Availability Rate |
Avg Asking Net Rental Rates |
Avg Asking Gross Rental Rates |
Currently Under Construction |
| Colliers GTA Office Statistics Q1 2011 |
| Central Area Total: |
AAA |
11 |
12720286 |
1740365.00 |
14% |
17% |
$28.00 |
$67.81 |
|
| A |
186 |
41,457,534 |
3445916.00 |
8% |
10% |
$19.24 |
$37.18 |
|
| B |
496 |
49,123,015 |
3814011.00 |
8% |
9% |
$12.79 |
$25.48 |
|
| C |
379 |
14,486,018 |
1117156.00 |
8% |
5% |
$12.52 |
$24.35 |
|
| All |
1,072 |
117,786,853 |
10117448.00 |
9% |
10% |
$17.61 |
$36.91 |
644,952 |
| Financial Core |
AAA |
11 |
12,720,286 |
1740365.00 |
14% |
17% |
$28.00 |
$60.97 |
|
| A |
26 |
11,557,149 |
1075827.00 |
9% |
12% |
$27.23 |
$52.94 |
|
| B |
48 |
6,744,841 |
638924.00 |
10% |
13% |
$19.58 |
$40.51 |
|
| C |
24 |
2,609,048 |
126770.00 |
5% |
6% |
$17.09 |
$36.00 |
|
| All |
109 |
33,631,324 |
3581884.00 |
11% |
13% |
$26.00 |
$54.29 |
|
| Downtown |
AAA |
11 |
12,720,286 |
1740365.00 |
14% |
17% |
$28.00 |
$67.81 |
|
| A |
108 |
23,997,692 |
1889562.00 |
8% |
10% |
$24.28 |
$46.35 |
|
| B |
236 |
24,886,585 |
2131091.00 |
9% |
9% |
$18.47 |
$35.47 |
|
| C |
163 |
8,126,552 |
610161.00 |
8% |
4% |
$16.69 |
$30.06 |
|
| All |
518 |
69,731,115 |
6371179.00 |
9% |
10% |
$22.82 |
$47.72 |
644,952 |
| Midtown |
A |
19 |
4,867,965 |
423947.00 |
9% |
11% |
$18.97 |
$39.52 |
|
| B |
96 |
9,896,044 |
562741.00 |
6% |
5% |
$15.43 |
$34.48 |
|
| C |
99 |
3,536,636 |
305327.00 |
9% |
9% |
$12.32 |
$28.29 |
|
| All |
214 |
18,300,645 |
1292014.00 |
7% |
8% |
$15.56 |
$34.22 |
|
| Central North |
A |
25 |
6,381,834 |
637324.00 |
10% |
11% |
$21.13 |
$40.95 |
|
| B |
57 |
4,811,817 |
159312.00 |
3% |
5% |
$15.17 |
$31.46 |
|
| C |
44 |
900,359 |
30490.00 |
3% |
6% |
$8.89 |
$17.98 |
|
| All |
126 |
12,094,010 |
827127.00 |
7% |
8% |
$18.90 |
$37.20 |
|
| Central East |
A |
34 |
6,210,043 |
495083.00 |
8% |
9% |
$13.57 |
$29.45 |
|
| B |
107 |
9,528,569 |
960867.00 |
10% |
14% |
$11.02 |
$23.89 |
|
| C |
67 |
1,922,471 |
171179.00 |
9% |
6% |
$11.82 |
$21.09 |
|
| All |
208 |
17,661,083 |
1627129.00 |
9% |
12% |
$11.86 |
$25.23 |
|
| Greater Toronto Area |
AAA |
11 |
678,691 |
1740365.00 |
14% |
17% |
$28.00 |
$67.81 |
|
| A |
424 |
5,325,291 |
7191873.00 |
10% |
12% |
$17.43 |
$33.05 |
|
| B |
954 |
4,261,272 |
6610464.00 |
9% |
9% |
$12.90 |
$24.64 |
|
| C |
738 |
1,630,547 |
2356072.00 |
9% |
6% |
$12.13 |
$22.06 |
|
| All |
2,127 |
11,895,801 |
17898772.00 |
10% |
10% |
$16.08 |
$31.99 |
894,952 |
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Competitive Alternatives 2010
Comprehensive guide for comparing business costs and locations internationally
Year: 2010
Categories:
Business Costs
Competitive Alternatives-Special Report: Focus on Tax
Assesses tax competitiveness of 95 cities in 10 countries.
Year: 2010
Categories:
Business Costs, Incentives & Tax Advantages
Global Office Rent
International comparison of prime office space rent and occupancy costs.
Year: 2009
Categories:
Business Costs
Global Salary Guide
Comparative international salary information for financial, legal, administrative and creative professional sectors
Year: 2009
Categories:
Business Costs, Finance
Tax Facts and Figures: Canada 2010
Tax Facts and Figures will help identity and understand the tax rates and tax changes that apply to companies.
Year: 2010
Categories:
Business Costs, Incentives & Tax Advantages
The Path to Prosperity: Internationally Competitive Rates and a Level Playing Field
In the report the CD. Howe Institute assess the affects of tax reduction policies of both the federal and provincial government in recent years.
Year: 2009
Categories:
Business Costs, Incentives & Tax Advantages
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