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Tax Advantages

More than any other major city in North America, Toronto provides the advantages of a robust and diverse economy, a business-friendly tax structure, and a commitment to corporate success.

The City of Toronto ranked 1st of 51 major international cities surveyed in KPMG's Competitive Alternatives 2014 Special Report: Focus on Tax, which compares the total tax cost of global cities with metro area populations of at least two million.

The Report captures the total tax costs facing businesses, including income tax, capital tax, sales tax, property tax, miscellaneous local business taxes, and statutory labour costs.

The tax rates used in this study are those in effect as of January 1, 2014.

Key Findings of KPMG's Special Report: Focus, 2014:

  • Toronto is the most tax competitive major international city in the world, ranking 1st overall of 51 cities studied on the total tax index across all operations and sectors.
    • Canada is the most tax competitive country in the world, ranking 1st of ten countries surveyed with a total tax index score of 53.6. When compared to the United States, which ranked 5th, Canada's total tax costs are 46.4% lower.
  • Toronto ranks 2nd in the digital services industry and 3rd in the R&D and corporate services sectors.
    • Canada ranks 1st across digital services and R&D industry sectors, and 2nd in the manufacturing and corporate services industry sectors.
  • Toronto ranks 5th in the manufacturing industry sector.

Both the federal and Ontario governments continue to take steps to reduce Corporate Income Taxes (CIT), directly benefiting companies in Toronto. Some highlights of recent changes include:

  • General and manufacturing CIT rates lowered
  • Small business CIT rate cut from 5.5% to 4.5%
  • Small business deduction surtax eliminated
  • Capital tax eliminated for manufacturing and resource activities
  • Capital Cost Allowance (CCA) rate for computers, machinery and equipment accelerated
  • Modern, value-added single sales tax implemented
  • Ontario's Marginal Effective Tax Rate (METR) on new investment reduced by half, from 32.8% to 16.8%
  • One-time transition support for small businesses provided
  • Business costs on inputs taxable under the current system reduced

[For Tables and Downloads, click here]

Graph explains how Ontario's marginal effective tax rate will fall between 2009 and 2018 to below the OECD average.
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