2021 Ontario provincial budget tax highlights
On March 24, 2021, the Ontario government released its 2021 budget. The following are highlights of the key tax measures.
Personal tax measures
No personal income tax rate changes were announced in this year’s budget. The current personal combined income tax rates for 2021 are outlined below:
|
Personal (combined) federal and ON top marginal tax rates |
|
|
|
Rate |
|
Interest/regular income |
53.53% |
|
Capital gains |
26.76% |
|
Eligible dividends |
39.34% |
|
Other-than-eligible dividends |
47.74% |
Support for Learners payment
The province is automatically providing a third round of payments to parents who received Support for Learners payments, which are now being doubled. Every eligible parent will receive $400 for each child aged 0 to Grade 12, and $500 for children and youth 21 years old or younger with special needs. Parents who did not apply for the previous payments will be able to submit an application for this third payment round.
Seniors’ Home Safety Tax Credit
The budget includes a reminder that the Seniors’ Home Safety Tax Credit now applies to expenses paid or payable beginning in 2021. See our 2020 Ontario Budget Tax Flash for more details.
Childcare Access and Relief from Expenses (CARE) Tax Credit
Introduced in 2019, the CARE Tax Credit helps Ontario families with child care costs up to 75 per cent of their eligible child care expenses. This credit is provided in addition to the child care expenses deduction and focuses on lower and moderate-income families. For the 2021 entitlement, the government is proposing a temporary 20 per cent top-up of the CARE Tax Credit for all recipients. The top-up credit will be provided when families file their 2021 personal income tax returns.
Ontario Jobs Training Tax Credit
The government is proposing the Ontario Jobs Training Tax Credit, a temporary, refundable personal income tax credit that would deliver support for 2021. This credit would provide relief equal to 50 per cent of eligible expenses up to a maximum of $2,000. Eligible expenses would be the same as those that can be claimed for the Canada training credit.
Occupational skills courses – This includes fees for occupational skills courses paid to a university, college or certain other educational institutions, if the student is enrolled in the institution to obtain or improve their skills in an occupation.
Occupational, trade or professional exams – This includes fees for an occupational, trade or professional examination required to obtain a professional status, license or certification as a tradesperson paid to a university, college or other educational institution, a professional association, provincial ministry or other similar institution.
Postsecondary education courses – Fees for one or more courses at the postsecondary level can qualify, if the courses provide credit towards a degree, diploma or certificate.
Individuals would be able to claim the Ontario Jobs Training Tax Credit on their 2021 personal income tax returns if they meet both of the following conditions:
- They are a resident in Ontario on December 31, 2021
- They have a Canada training credit limit for 2021 greater than zero
Corporate tax measures
No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2021 are outlined below:
|
|
Small business corporations |
General corporations |
||
|
|
Rate |
Threshold |
Non-M&P |
M&P |
|
Federal |
9.0% |
$500,000 |
15.0% |
15.0% |
|
Ontario |
3.2% |
$500,000 |
11.5% |
10.0% |
|
Combined |
12.2% |
$500,000 |
26.5% |
25.0% |
Regional Opportunities Investment Tax Credit
Ontario introduced the Regional Opportunities Investment Tax Credit in the March 2020 Economic and Fiscal Update. This corporate income tax measure is a 10 per cent refundable tax credit for Canadian-controlled private corporations that make qualifying investments in eligible geographic areas of Ontario.
Qualifying investments include expenditures for constructing, renovating or acquiring eligible commercial and industrial buildings and other assets that are eligible expenditures for capital property included in Class 1 and Class 6 for the purposes of calculating capital cost allowance.
The budget proposes to temporarily double the tax credit rate from 10 per cent to 20 per cent for eligible expenditures that become available for use in the period from March 24, 2021 to December 31, 2022.
Other tax measures
Ontario Small Business Support Grant
The government announced an additional round of support will be provided through the Ontario Small Business Support Grant. Small businesses determined as eligible recipients of the Ontario Small Business Support Grant will automatically be entitled to a second payment in an amount equal to the first payment they received. They will not need to apply again to receive this additional funding.
Ontario Tourism and Hospitality Small Business Support Grant
The government introduced the Ontario Tourism and Hospitality Small Business Support Grant, which will provide an estimated $100 million in one‑time payments of $10,000 to $20,000 to eligible small businesses that demonstrate they have experienced a minimum 20 per cent revenue decline and have less than 100 employees. Small businesses that received the Ontario Small Business Support Grant will not be eligible for this new grant.
Next steps
Contact your Baker Tilly advisor to learn more about how we can help navigate the complexities of the Canadian tax system.
Information is current to March 26, 2021. The information contained in this release is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.