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Business Costs


Costs impact the profitability of any business. Fortunately, Toronto is a low cost jurisdiction that offers easy access to both high quality inputs and an outstanding talent pool.

As shown in the table below, the KPMG Competitive Alternatives report (2012) ranked Canada as a cost leader among 9 industrialized countries surveyed with the 2nd lowest overall business costs.

To see how Toronto and Canada compare to other regions on specific cost factors outlined in the KPMG report, click here.

Overall Cost of Doing Business- KPMG Competitive Alternatives, 2012
/Competitive-Advantages/Business-Costs/Overall-Cost-of-Doing-Business--KPMG-Competitive-A.aspx

This table shows that KPMG ranks Canada third overall in business cost competitiveness relative to the 10 other mature and high growth markets including the US.

Overall Cost of Doing Business: City-Level Benchmark
/Competitive-Advantages/Business-Costs/Overall-Cost-of-Doing-Business--City-Level-Benchma.aspx

Labour Costs

Toronto is a low-cost jurisdiction that offers access to high quality inputs and an outstanding talent pool. The 2010 Competitive Alternatives study by KPMG ranked Toronto 3rd in North America and 6th worldwide in business cost competitiveness when compared to 41 other large metropolitan regions.

The following tables illustrate Toronto's placement against its chief competitors.

Overall Cost of Labour: Country-Level Benchmark
/Competitive-Advantages/Business-Costs/Overall-Cost-of-Labour--Country-Level-Benchmark.aspx

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Wages

Change in Average and Median Wage (2001-2011)

Toronto CMA 2001 2004 2005 2006 2007 2008 2009 2010 2011 5 Year Change 10 Year Change
Source: City of Toronto Occupation Profiles, 2011. Labour Force Survey, 2011.
 
Median Wage/Hour * $16.45 $17.00 $18.00 $18.27 $18.95 $19.67 $20.00 $20.10 $20.60 12.8% 25.2%
vs. all occupations in the CMA 100% 100% 100% 100% 100% 100% 100% 100% 100%    
vs. this occupation in Canada 107% 104% 106% 106% 105% 105% 104% 101% 103%    
 
Average Wage/Hour * $18.61 $19.69 $20.48 $21.09 $21.67 $22.63 $23.10 $23.67 $24.13 14.4% 29.7%
vs. all occupations in the CMA 100% 100% 100% 100% 100% 100% 100% 100% 100%    
vs. this occupation in Canada 108% 106% 107% 107% 106% 106% 105% 105% 105%    
  • Current general minimum wage in Ontario is $10.25 per hour
  • In 2011, the average wage per hour for a worker in the Toronto region was $24.13
  • From 2001-2011. wages in the Toronto region were consistently 5-8% higher than the rest of Canada
  • From 2001-2011, the average hourly wage in the Toronto region increase by 29.7%
  • According to the 2006 Census, the average annual income in the Toronto region was $40,704

Average Wage Earnings for High-Level Occupation Groupings

Occupation Average Wage/ Hour Average Usual Hours Annualized Earnings
Source: City of Toronto Occupation Profile
Management Occupations $37.40 41.5 $80,709.20
Natural and Applied Sciences and Related Occupations $32.86 38.6 $65,905.33
Occupations in Social Science, Education, Government Service and Religion $32.24 35.2 $59,012.10
Health Occupations $26.00 35.6 $48,131.20
Trades, Transport and Equipment Operators and Related Occupations $21.25 40.7 $44,973.50
Business, Finance and Administrative Occupations $22.82 35.9 $42,600.38
Occupations in Art, Culture, Recreation and Sport $24.30 33.4 $42,204.24
Sales and Service Occupations $15.81 31.3 $25,715.91
  • The table above shows the average hourly and annual wages, as well as the average number of hours worked, for high-level occupations.
  • More data is available for specific occupations (all of the specific occupations that fall under the "sales and Service" occupations, and can be requested from Invest Toronto, or the entire file can be downloaded here.
  • Detailed wage information can also be viewed by industries, and can be downloaded here.

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Gas Rates for Businesses

Commercial and Industrial Rates

Charges for gas used from April 1, 2012 on will be calculated using the new approved rates as shown below. The annualized impact is based on a typical commercial and industrial heating and water heating customer who uses 22,606 cubic metres per year.

Monthly Charges Monthly Rates April 1, 2012 Annualized (Increase/(Decrease)
Customer Charge $70 No change
Gas Supply Charge 9.4623 ¢/m3 ($550)
Delivery to You Amount of gas used per month in cubic metres (m3) See breakdown below* ($13)
Transportation to Enbridge 5.87 ¢/m3 ($67)

Delivery to You Breakdown
Amount of gas used per month in cubic metres Cost in cents per cubic metre ¢/m3
First 500 7.8187 ¢/m3
Next 1,050 6.1909 ¢/m3
Next 4,500 5.0514 ¢/m3
Next 7,000 4.319 ¢/m3
Next 15,250 3.9935 ¢/m3
Over 28,300 3.9121 ¢/m3

Cost Adjustment Breakdown
Source: Enbridge Gas
Cost Adjustment (1.3980 ¢/m3) ($155)
Components of Cost Adjustment
  Gas Supply (1.3345 ¢/m3)  
  Transportation 0.0490 ¢/m3  
  Delivery (0.1125) ¢/m3  
Total Annual Change   ($785)

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Electricity Rates for Businesses

Toronto Hydro
  • The cost of General Services varies upon usage. For smaller users in the 2,000kWh range the cost per month is approximately $268. The largest corporate users, drawing 5,000,000 kWh, can expect to pay approximately $500,000 per month for electricity in Toronto.


Customer Type Monthly Consumption Total Bill, As of May 1, 2010
Source: Toronto Hydro
*General Service 2,000 kWh $268.80
less than 50 kW 5,000 kWh $645.41
10,000 kWh $1,273.09
20,000 kWh $2,528.45
*General Service 890†kVA $43,836.38
1,000 - 4,999 kW 400,000 kWh  
1,330 kVA $65,427.95
600,000 kWh
   
1,780 kVA $87,019.53
800,000 kWh
   
2,220 kVA $108,611.10
1,000,000 kWh
   
3,330 kVA $162,590.03
1,500,000 kWh
   
4,450 kVA $216,568.97
2,000,000
*General Service 3,150 kVA $162,488.35
1,500,000 kWh
5,000 or above 4,200 kVA $215,695.31
2,000,000 kWh
   
5,250 kVA $268,902.28
2,500,000 kWh
   
6,300 kVA $322,109.24
3,000,000 kWh
   
8,400 kVA $428,523.17
4,000,000 kWh
   
10,500 kVA $534,937.10
5,000,000 kWh

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Water Rates for Businesses

General Water Rate
Applied to all water consumption, including the first 6,000 m≥ of industrial consumption
Source: Toronto Water
Rate if paid after Due Date $2.1701 / m3
Rate if paid on, or before, Due Date $2.0616 / m3

Industrial Water Rate
Applied to water consumption over 6,000 m≥ for those businesses classified under the Industrial Tax Class
Source: Toronto Water
Rate if paid, after Due Date $1.5501 / m3
Rate if paid, on or before Due Date $1.4726 / m3

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Taxes

2012 Corporate Income Tax (CIT) Rates

Corporations operating in Ontario are generally taxed at a rate of 26.5%. However, Ontario's manufacturing and resource industries are subject to a lower provincial tax rate of 10.0%. When combined with the federal Manufacturing & Processing (M&P) rate of 15.0%, a corporation earning manufacturing income in Ontario is taxed at a rate of only 25.0%. By way of comparison, this combined rate is generally less than the combined statutory U.S. federal and state tax rates.

  Canada Ontario Combined
General Rate (Jan 1, 2012) 15% 11.5% 26.5%
Manufacturing & Processing (Jul 1, 2010) 15% 10% 25%
Small business rate 11% 4.5% 15.5%

Employee Taxes & Contributions

Ontario corporations collect mandatory Employment Insurance (EI) premiums and Canada Pension Plan (CPP) contributions from both employers and employees, to provide support for loss of employment (including maternity leave) and retirement.

Employment Insurance (EI)

Employers and employees pay EI premiums on every dollar of insurable earnings up to a yearly maximum.

  • Employer EI premium is 1.4 times the EI premium withheld for each employee.
  • There is no age limit for deducting EI premiums.
  • EI premium deduction ceases when an employer reaches an employee's maximum insurable earnings ($45,900 for 2012) or the maximum employee premium for the year ($839.97 for 2012).

Canadian Pension Plan (CPP) Contributions

Both employers and employees make CPP contributions on an employee's pensionable earnings.

CPP rate for 2012:

  • Employee contribution rate is 4.95% of pensionable earnings.
  • Maximum pensionable earnings total $50,100.00.
  • Basic yearly exemption is $3,500.
  • Maximum annual employee contribution is $2306.70.

Please click here for more taxation information.

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Cost of Debt Financing

  Overnight rate Prime rate Three-month bankers' acceptances Long-term corporate bond rate Weekly effective business interest rate*
Source: Bank of Canada
July 31, 2007 4.50 6.25 5.35 7.24 4.75
October 18, 2007 4.50 6.25 5.65 7.43 4.85
January 24, 2008 4.00 5.75 5.25 7.39 4.06
April 24, 2008 3.00 4.75 4.15 6.99 3.23
July 17, 2008 3.00 4.75 4.20 7.09 3.29
October 23, 2008 2.25 4.00 5.00 7.20 2.68
January 22, 2009 1.00 3.00 3.80 5.90 1.06
April 23, 2009 0.25 2.25 3.00 5.25 0.46
July 23, 2009 0.25 2.25 2.65 5.85 0.44
October 22, 2009 0.25 2.25 2.25 5.80 0.43
January 21, 2010 0.25 2.25 2.05 5.47 0.44
April 22, 2010 0.25 2.25 0.69 4.24 3.27

*The effective interest rate for businesses is a weighted-average borrowing rate for new lending to non-financial businesses, estimated as a function of bank and market interest rates. The weightings are derived from business credit data.

  • The table above shows the interest rates for various types of debt, (bonds, business loans, short-term debt issues), and the historic relationship of these instruments to the overnight rate and Canda's prime interest rate.
  • In July 2010, the Bank of Canada raised the overnight rate by 25 basis points to 0.75%, marking the second increase in as many months.
  • In its August Financial Markets Monthly report, the Royal Bank of Canada forecasted that the overnight rate will reach 1.25% by the end of 2010.

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Industrial Real-Estate

Colliers Industrial Statistics (Q1 2011)
Market / Submarket Total Availability (Q1 2011)
GTA Central Direct Availability (SF) Avg Net Rent $ / SF 2011 Q1 Sales Price (PSF)
East York     $104.90
Etobicoke 4,066,725 $3.51 $71.05
North York 1,407,871 $4.23 $99.59
Scarborough 2,526,858 $4.28 $39.01
Toronto 164,500 $2.95 $94.22
York 15,670 $3.95 $91.94
Total 8,181,624 $3.86 $79.20
Source: Colliers Industrial Statistics (Q1 2011)
  • The average price of industrial space in Toronto is $52.38 per ft2.
  • As of June 2010, 878,515 ft2 of office space is under construction in the Greater Toronto Area.
  • The average rental price of AAA real estate in Toronto is $61.49 per ft2. This office space is concentrated in the Financial Core District and downtown areas of Toronto.

Please click here for more real estate information.

Greater Toronto Area Office Statistics: Q1 2011

Office Market/Submarket Class Buildings Surveyed Office Investory Available Space Q1 2011 Availability Rate Q1 2010 Availability Rate Avg Asking Net Rental Rates Avg Asking Gross Rental Rates Currently Under Construction
Colliers GTA Office Statistics Q1 2011
Central Area Total: AAA 11 12720286 1740365.00 14% 17% $28.00 $67.81  
A 186 41,457,534 3445916.00 8% 10% $19.24 $37.18  
B 496 49,123,015 3814011.00 8% 9% $12.79 $25.48  
C 379 14,486,018 1117156.00 8% 5% $12.52 $24.35  
All 1,072 117,786,853 10117448.00 9% 10% $17.61 $36.91 644,952
Financial Core AAA 11 12,720,286 1740365.00 14% 17% $28.00 $60.97  
A 26 11,557,149 1075827.00 9% 12% $27.23 $52.94  
B 48 6,744,841 638924.00 10% 13% $19.58 $40.51  
C 24 2,609,048 126770.00 5% 6% $17.09 $36.00  
All 109 33,631,324 3581884.00 11% 13% $26.00 $54.29  
Downtown AAA 11 12,720,286 1740365.00 14% 17% $28.00 $67.81  
A 108 23,997,692 1889562.00 8% 10% $24.28 $46.35  
B 236 24,886,585 2131091.00 9% 9% $18.47 $35.47  
C 163 8,126,552 610161.00 8% 4% $16.69 $30.06  
All 518 69,731,115 6371179.00 9% 10% $22.82 $47.72 644,952
Midtown A 19 4,867,965 423947.00 9% 11% $18.97 $39.52  
B 96 9,896,044 562741.00 6% 5% $15.43 $34.48  
C 99 3,536,636 305327.00 9% 9% $12.32 $28.29  
All 214 18,300,645 1292014.00 7% 8% $15.56 $34.22  
Central North A 25 6,381,834 637324.00 10% 11% $21.13 $40.95  
B 57 4,811,817 159312.00 3% 5% $15.17 $31.46  
C 44 900,359 30490.00 3% 6% $8.89 $17.98  
All 126 12,094,010 827127.00 7% 8% $18.90 $37.20  
Central East A 34 6,210,043 495083.00 8% 9% $13.57 $29.45  
B 107 9,528,569 960867.00 10% 14% $11.02 $23.89  
C 67 1,922,471 171179.00 9% 6% $11.82 $21.09  
All 208 17,661,083 1627129.00 9% 12% $11.86 $25.23  
Greater Toronto Area AAA 11 678,691 1740365.00 14% 17% $28.00 $67.81  
A 424 5,325,291 7191873.00 10% 12% $17.43 $33.05  
B 954 4,261,272 6610464.00 9% 9% $12.90 $24.64  
C 738 1,630,547 2356072.00 9% 6% $12.13 $22.06  
All 2,127 11,895,801 17898772.00 10% 10% $16.08 $31.99 894,952

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Provincial, Federal and Combined Corporate tax rate as of 2012.
Table shows the average hourly wage of employs, the average length of the work week and the annualized earnings by occupational grouping.
Table shows the change in average wage/hour in the Toronto region compared to the national average over a 10 year period.
The cost of gas to commercial and industrial users broken down by cost component.
Quarterly interest rates, 3-month bankers acceptance, long-term bond rate and week effective business interest rate since July 2007.
The data indicates the cost of electricity based on general usage.
Square footage and cost of commercial real-estate in Toronto as of Q1, 2011.
Graph compares the cost of doing business in Canada to other developed countries.
Graph benchmarks the cost of doing business in Toronto relative to other cities.
Graph benchmarks the cost of facilities in Toronto relative to other cities.
Graph benchmarks the cost of labour in Toronto relative to other cities.
Cost of labour in Canada compared to other developed countries.
Graph benchmarks the cost of Utilities in Toronto relative to other cities.
Summary statistics of the office real-estate market in the Toronto region.
Graphs compare business costs in Toronto relative to North American and International peers.
Graph benchmarks the cost of taxes in Toronto relative to other cities.
Cost of water for general users and industrial users based on rate of consumption.
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report
Competitive Alternatives 2012
Comprehensive guide for comparing business costs and locations internationally
Year: 2012
Categories: Business Costs
report
Global Office Rent
International comparison of prime office space rent and occupancy costs.
Year: 2009
Categories: Business Costs
report
Global Salary Guide
Comparative international salary information for financial, legal, administrative and creative professional sectors
Year: 2009
Categories: Business Costs, Finance
report
Tax Facts and Figures: Canada 2010
Tax Facts and Figures will help identity and understand the tax rates and tax changes that apply to companies.
Year: 2010
Categories: Business Costs, Incentives & Tax Advantages
report
The Path to Prosperity: Internationally Competitive Rates and a Level Playing Field
In the report the CD. Howe Institute assess the affects of tax reduction policies of both the federal and provincial government in recent years.
Year: 2009
Categories: Business Costs, Incentives & Tax Advantages
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