On March 25, 2020, the Ontario government delivered the province’s economic and fiscal update.  The update also indicates the province intends to deliver a multi-year Ontario budget no later than November 15, 2020.

Income taxes

Personal tax

No personal income tax rate changes were announced. The current personal income tax rates for 2020 are outlined below.

Family support

A one-time payment to Ontario families of $200 per child aged 12 and under was proposed in this update. The maximum payment per child is increased to $250 for children who have special needs, including kids enrolled in private schools.

Support for low-income seniors

This update proposed to double the Guaranteed Annual Income System (GAINS) payment for six months for low-income seniors. Starting in April 2020, the payment will be $166 per month for individuals and $332 per month for couples.

Postponing planned property tax reassessment

The government is postponing the planned property tax reassessment for 2021.

Property taxation is based on the assessed value of properties and in Ontario those assessments are updated every four years. The next property valuation update, known as a reassessment, had been scheduled to be completed by the Municipal Property Assessment Corporation (MPAC) in 2020 for the 2021 taxation year.

As a result of this, assessments for the 2021 taxation year will continue to be based on the same valuation date effective for the 2020 taxation year.

Ontario Student Assistance Program (OSAP)

This update proposed temporarily deferring loan payments and interest accrual for six months for OSAP borrowers. Repayments will be deferred from March 30, 2020 to September 30, 2020.  During this time, no loan or interest payments will be required and interest will not accrue.

Corporate tax

No corporate income tax rate changes were announced in this update. The current corporate income tax rates for 2020 are outlined below.

Regional Opportunities Investment Tax Credit

The government has introduced a new 10 per cent refundable corporate income tax credit for capital investments called the Regional Opportunities Investment Tax Credit.  This tax credit is designated only for government approved qualifying regions (see table below) and can result in a tax credit up to $45,000.

This new measure applies to an acquisition of an eligible property qualifying as eligible expenditure of a qualifying corporation.

A qualifying corporation for a taxation year is a non-exempt Canadian-controlled private corporation (CCPC) throughout the taxation year that carries on business in Ontario through a permanent establishment in Ontario.

An eligible expenditure is the acquisition of an eligible property by a qualifying corporation in the taxation year or preceding taxation year at a time when the corporation had a permanent establishment in Ontario.

An eligible property consists of depreciable property, including expenditures for constructing, renovating or acquiring eligible commercial and industrial buildings that meet the following criteria:

• Included in class 1 or class 6 (if property is a building – at least 90 per cent of the floor space is used for non-residential purposes at the end of the taxation year);
• Available for use on or after March 25, 2020 and in the taxation year; and
• Located wholly within the qualifying region at the time it becomes available for use.

This credit is available for eligible expenditures in excess of $50,000 and up to $500,000. This credit will be re-evaluated by the province in three years.

Qualifying regions are as follows:

Temporary doubling of the Employer Health Tax (EHT) exemption

The Government is introducing a temporary measure to increase the Employer Health Tax (EHT) exemption. Currently, Ontario employers with a total annual remuneration of less than $5 million are eligible for an EHT exemption on up to $490,000 of their payroll. The highest EHT rate is 1.95 per cent. 

This exemption will be raised from $490,000 to $1 million retroactively applied to January 1, 2020 for the 2020 calendar year. The exemption will revert to its original level of $490,000 on January 1, 2021.

Increasing the exemption to $1 million would provide additional EHT relief of up to $9,945 per eligible employer. With this additional relief, eligible employers could benefit by up to $19,500 in total EHT relief.

Providing interest and penalty relief for Ontario businesses

Beginning April 1, 2020, penalties and interest will not apply to Ontario’s businesses that miss any filing or remittance deadlines under select provincially administered taxes.

This will continue for a period of five months, up until August 31, 2020, under the following provincially administered tax programs:

• Employer health tax
• Tobacco tax
• Fuel tax
• Gas tax
• Beer, wine and spirits taxes
• Mining tax
• Insurance premium tax
• International fuel tax agreement
• Retail sales tax on insurance contracts and benefit plans
• Race tracks tax

The interest and penalty relief period is available to all Ontario businesses that are required to file returns and make remittances under these tax programs. During the relief period, penalties and interest will not apply to late returns or remittances made under these tax programs. This initiative complements the relief from interest and penalties from not remitting corporate income tax owing that was announced by the federal government on March 18, 2020.

Businesses will not be required to provide any documentation supporting their reasons for late‑filing or payments and they will not be required to advise the Ontario Ministry of Finance of their inability to meet their deadline(s).

Additional measures

Deferral of Workplace Safety & Insurance Board (WSIB) premiums

The financial relief package allows businesses to defer premium reporting and payments until August 31, 2020. Businesses who report and pay monthly, quarterly or annually based on their insurable earnings are eligible for this deferral.

Each customer reports and pays on the previous full month or quarter, for example March 31 reporting and payment obligation covers the period of February 1-29. The following payments are eligible for deferral:

• Monthly: March 31, April 30, May 31, June 30, July 31, August 31
• Quarterly: April 30, July 31
• Annual: April 30

The relief package also applies to Schedule 2 organizations – publicly funded organizations (municipalities, hospitals, school boards) and other businesses who are involved in federally regulated industries. All payment obligations (weekly and monthly) for Schedule 2 businesses will be deferred until August 31, 2020.

No interest will accrue on outstanding premium payments for Schedule 1 businesses and no penalties will be charged during this six-month deferral period. Schedule 2 account balances will not accrue interest as part of the financial relief package.

Ontario electricity rate relief

For a 45-day period, the government is working to suspend time-of-use electricity rates, holding electricity prices to the off-peak rate of 10.1 cents per kilowatt-hour. This reduced price will be available 24 hours per day, seven days a week to all time-of-use customers. The time-of-use prices as of November 2019 are 10.1₵/kwh for off-peak, 14.4₵/kwh for mid-peak and 20.8₵/kwh for on-peak.