Businesses in Ontario will be able to file a single tax return with one set of rules and one point of contact starting with the 2008 calendar year. The change is expected to slash red tape, with businesses saving up to $100 million in annual compliance costs says Jim Flaherty, Minister of Finance.

"This agreement means businesses can spend more time focusing on expanding their facilities and markets in this highly competitive global marketplace," said Minister Flaherty.

The move is applauded by the Canadian Manufacturers & Exporters (CME) who has advocated for action in this area.

"Every time we can eliminate red tape, improve efficiencies, and lower costs for business is an occasion to celebrate," said Ian Howcroft, Vice President for CME-Ontario.

The deal was cemented today when Minister Flaherty and the Honourable Greg Sorbara, Minister of Finance of Ontario, signed a Memorandum of Agreement, under which the federal government would collect and administer Ontario's corporate income tax. Under the agreement, businesses would make combined payments starting in 2008 and file a single return beginning in 2009 for taxation years ending after December 31, 2008.

This agreement will reduce compliance costs for businesses and enable the Canada Revenue Agency (CRA) to streamline service and reduce administrative costs. Benefits to Ontario businesses will include:

• A single tax form.
• A single tax collector. The CRA will collect both federal and Ontario corporate income tax and administer the province's capital tax.
• One set of income tax rules.

The federal government already collects corporate income tax for seven provinces and three territories. Provisions in the agreement signed today, such as Canada's enhanced enforcement efforts in the areas of provincial income allocation and interprovincial tax avoidance, will benefit these provinces and territories.

"Consolidating corporate tax collection and auditing services is welcome news for the business community, and a move long called for by the Ontario Chamber of Commerce," said Len Crispino, President and CEO of the Ontario Chamber of Commerce. "Today's announcement will result in increased savings and efficiencies for both business and government, improving the competitive position of our province."

Copies of the Memorandum of Agreement are available on the Department of Finance website at www.fin.gc.ca/toce/2006/TxMOA_e.html.

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