Corporation Tax

The 2012 Ontario budget proposes to freeze the general corporate income tax rate at 11.5% until the budget is balanced. Previously, the government intended to reduce the rate to 11% on July 1, 2012 and to 10% on July 1, 2013. The budget states that Ontario is scheduled to return to a balanced budget in 2017-18. At that time, the budget states the corporate tax rate reductions would resume.

The rate for income from manufacturing and processing will remain at 10% and the small business rate for Canadian controlled private companies on the first $500,000 of active business income will remain at 4.5%.

According to the 2011 RBC Small Business Survey conducted by RBC and Ipsos-Reid of 1,400 entrepreneurs, the top priorities for the entrepreneurs to grow their business include the following:

• Develop an effective business plan - 44%;
• Manage time well - 43%;
• Engage in networking - 38%;
• Seek help/advice - 28%;
• Conduct market research/planning - 25%;
• Aggressively solicit client/business - 25%; and
• Get financing advice before starting a business - 23%.

Canada Business Network is a Canadian government service website which provides practical useful information for enterpreneurs.  The "Succession Planning" section of the website provides an excellent overview of this complex process, the reasons why and when an enterpreneurs should start this planning process to ensure a smooth transition of their businesses.

Generally, you are required to file a return if any of the following situations apply:

• You have to pay tax for 2011.
• You disposed of capital property in 2011 (for example, if you sold real estate or shares) or you realized a taxable capital gain (for example, if a mutual fund or trust attributed amounts to you, or you are reporting a capital gains reserve you claimed on your 2010 return).
• You have not repaid all amounts withdrawn from your registered retirement savings plan (RRSP) under the Home Buyers’ Plan or the Lifelong Learning Plan.
• You and your spouse or common-law partner elect to split pension income for 2011.
• You received Working Income Tax Benefit advance payments in 2011.
• You have to repay any of your Old Age Security or Employment Insurance benefits.
• You have to contribute to the Canada Pension Plan (CPP). This can apply if, for 2011, the total of your net self-employment income and pensionable employment income is more than $3,500.
• You are paying Employment Insurance premiums on self-employment and other eligible earnings.