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ARTICLE · 14 JUNE 2016

New Regulations Intended To Encourage Consolidation

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The new regulations are intended to encourage the consolidation of the LDC sector by reducing, and in some cases eliminating significant tax barriers to consolidation.

CanadaTax
Stephen Fyfe
Stephen Fyfe
Daniel Lang
Daniel Lang
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The Ministry of Finance ("MOF") published two regulations on April 25, 2016, implementing the changes described in the April 2015 Ontario Budget. The new regulations are intended to encourage the consolidation of the LDC sector by reducing, and in some cases eliminating significant tax barriers to consolidation.

Overview of New Regulations

The regulations are intended to provide three tax incentives related to the consolidation objective:

  • The elimination of the capital gains tax that arises when a municipal electricity utility ("MEU") leaves the payments in lieu of taxes ("PILs") system.
  • A reduction of transfer tax to 22%.
  • The elimination of transfer tax on sales of electricity property made by a MEU which has less than 30,000 customers.

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