Tax memo: Ontario’s “2% surtax” — The bottom line

Memo No. 2012-22

As widely reported, the McGuinty government has agreed to implement a “2% surtax” on individuals with incomes over $500,000. A press release issued by the Premier’s Office on April 23, 2012, provides further details:

Ontario will apply a tax rate of 13.16% (up from 11.16%) on taxable incomes over $500,000.
This change will be effective July 1, 2012 (an Ontario Ministry of Finance news release dated April 25, 2012, states that for 2012, the new tax rate will be 12.16% on taxable incomes over $500,000).

The new tax will be eliminated when Ontario’s budget is balanced (scheduled for 2017-2018).

Our understanding is that Ontario’s existing 56% surtax will apply to the 12.16% rate in 2012 and the 13.16% rate in 2013. As a result, the tax increase will actually exceed 2%. Read our Tax memo to learn more.