Payments in lieu of federal and provincial corporate tax (Hydro PILs)
Learn about the payments hydroelectric companies make to Ontario.
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Ontario Power Generation Inc., each of the corporations' subsidiaries, and municipal electricity utilities, that are exempt from corporate tax are liable to make payments in lieu of federal and provincial corporate tax to the Ontario Ministry of Finance. These payments are known as Hydro PILs.
Hydro PILs are comprised of both federal and provincial components at federal and provincial corporate tax rates.
Hydro PILs tax clients make Hydro PILs payments and submit tax returns to the Ministry of Finance.
Time‑limited relief was introduced in 2016. To encourage private‑sector involvement in the Ontario electricity distribution sector, the time‑limited tax relief measures, including an exemption for capital gains arising under the Hydro PILs deemed diposition rules that had been scheduled to expire on December 31, 2018, were extended until December 31, 2022, as announced in the 2018 Ontario Economic Outlook and Fiscal Review.
Ontario's recent efforts to encourage consolidation through tax incentives have resulted in a modest number of proposed mergers. For this reason, the government will continue to review sector activity and will consider additional ways to promote efficiency and modernization of the electricity distribution sector in consultation with consumers and other stakeholders.
Registering for Hydro PILS
These corporations are exempt from corporate tax and need to register for hydro PILs with the Ministry of Finance:
- Ontario Power Generation Inc. and its subsidiaries, and
- municipal electricity utilities that generate, transmit, distribute or retail electricity.
Before registering an account with the ministry, corporations need to first register with ServiceOntario for an Ontario corporation number.
After registering your business, request a Hydro PILs tax account with the Ministry of Finance.
If you have any questions, please call the ministry at 1‑866‑ONT‑TAXS (1‑866‑668‑8297).
Filing a Hydro PILs tax return
For tax years ending on or after January 1, 2009, corporations need to file a T2 corporation income tax return. Returns can be filed by mail, in person, or electronically, using ONT‑TAXS online.
To file a Hydro PILS tax return electronically, login to ONT‑TAXS online and upload:
- the Hydro PILs T2 return in a .COR data file format
- a PDF copy of the corporation's T2 return, and
- the corporation's financial statements and/or supporting documents in a PDF, TXT, DOC, XLS or PPT file format.
Where to send your Hydro PILs return
All returns and payments should be sent to:
Ministry of Finance
33 King Street West
PO Box 620
Oshawa ON L1H 8E9
Do not send your Hydro PILs returns and payments to the Canada Revenue Agency.
Hydro PILs returns can be filed in person at certain ServiceOntario locations.
Hydro PILs payments
Hydro PILs instalment and/or balance of tax payments can be made:
- using ONT‑TAXS online
- in person at certain ServiceOntario locations
- by mail to: Ministry of Finance, 33 King St W, PO Box 620, Oshawa ON L1H 8E9.
Payments should be made payable to the Minister of Finance in Canadian funds. The corporation's business number should be printed on the back of the cheque or money order.
Hydro PILs credits
Proposed amendments to the Electricity Act, 1998 enhance the application of past payments in lieu of federal and provincial tax against a taxpayer's transfer tax liability.
Due dates, assessments and refunds
A completed tax return and any supporting documents need to be filed within six months after the end of each tax year.
Corporations that do not file a return on time may receive an assessment that has automatically estimated an amount of tax owing. Estimated amounts will be calculated based on the average of total tax assessed on/up to the past six (6) filed tax returns excluding nil and credit tax returns.
After the corporation's tax return is processed, the ministry will send an assessment by mail. Any refunds will be paid after the assessment is issued.