2022 Ontario provincial budget tax highlights

On April 28, the Ontario government released their 2022 budget. The following are highlights of the key tax measures.

The tax proposals provided in the 2022 Ontario budget are subject to change depending on the results of the pending June 2, 2022 election.

Personal tax measures

No personal income tax rate changes were announced in this year’s budget. The current personal combined income tax rates for 2022 are outlined below:

Low-income Individuals and Families Tax (LIFT) Credit

The budget proposes to enhance the LIFT Credit in 2022. The enhancement would be calculated as the lesser of:

• $875 (up from the current $850); and
• 5.05 per cent of employment income

This amount would then be reduced by five per cent (down from the current 10 per cent) of the greater of:

• Adjusted individual net income in excess of $32,500 (up from the current $30,000); and
• Adjusted family net income in excess of $65,000 (up from the current $60,000)

The resulting amount would then be applied against the taxpayer’s Ontario Personal Income Tax (PIT) otherwise payable, excluding the Ontario Health Premium.

Seniors Care at Home Tax Credit

The budget proposes a new refundable personal income tax credit to help seniors with eligible medical expenses. Starting with the 2022 tax year, eligible recipients of this new Ontario Seniors Care at Home Tax Credit can receive up to 25 per cent of their claimable medical expenses, up to $6,000, for a maximum credit of $1,500. This amount would be reduced by five per cent of family net income over $35,000 and be fully phased out by $65,000.

Tax filers would be eligible for the proposed credit if they:

• Turned 70 years of age or older in the year, or have a spouse or common‑law partner who turned 70 years of age or older in the year; and
• Are resident in Ontario at the end of the tax year

Eligible medical expenses would be the same as those claimed for the existing Ontario Medical Expense Tax Credit (METC). The proposed credit could be claimed in addition to the non‑refundable federal and Ontario medical expense tax credits for the same eligible expenses.

Corporate tax measures

No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2022 are outlined below:

Regional Opportunities Investment Tax Credit

The budget proposes to extend the temporary enhancement of the tax credit rate of 20 percent (from 10 per cent) for an additional year, to December 31, 2023. The enhanced credit of 20 per cent would be available for eligible expenditures in excess of $50,000 and up to $500,000 for property that becomes available for use in the corporation’s taxation year, and in the period beginning on March 24, 2021, and ending before January 1, 2024. Qualifying investments include expenditures of capital property included in Class 1 and Class 6 for the purposes of calculating capital cost allowance for constructing, renovating or acquiring eligible commercial and industrial buildings and other assets.

Tax credit measures

Film and Television Tax Credits and Production Services Tax Credit

The budget proposes to extend eligibility for these tax credits to professional film and television productions distributed exclusively online.

Additional eligibility requirements would apply, including, but not be limited to, requirements that the production:

• Meet a minimum budget threshold of $250,000;
• Have an agreement in writing with an eligible exhibitor service for consideration at fair market value to have the production shown on the internet in Ontario within two years of completion; and
• Not include certain content (e.g., opinion, advice or how‑to instructions)

Further information about the proposed changes and new requirements for productions distributed exclusively online, including details on the effective date of these amendments, will be provided in the fall.

Book Publishing Tax Credit

The budget proposes to permanently remove the requirement that literary work must be published in an edition of at least 500 copies of a bound book effective for the 2022 and subsequent taxation years.

Computer Animation and Special Effects Tax Credit

To help simplify the tax credit, the government will examine ways to untether the Ontario Computer Animation and Special Effects Tax Credit from the other film and television tax credits, while continuing to ensure support remains targeted to professional productions with significant cultural or economic impact.

Film and Television Tax Credit

The government proposes to review the credit’s 10 per cent regional bonus on all expenditures for productions primarily filmed or produced outside of the Greater Toronto Area (GTA). The regional bonus is included in the 35 per cent refundable tax credit on qualifying labour expenditures available to corporations producing certified domestic film and television productions in Ontario.

Work-from-Home Labour for Interactive Digital Media and Computer Animation and Special Effects

The government is confirming that, under the current legislation, eligible labour expenditures for employees working remotely can be claimed under the Ontario Computer Animation and Special Effects Tax Credit and the Ontario Interactive Digital Media Tax Credit, provided the work is undertaken in Ontario by an Ontario resident who reports to and is under the direction of an eligible tax credit applicant with a permanent establishment in Ontario.

Other tax measures

Gasoline Tax Act and Fuel Tax Act 

On April 4, 2022, the government proposed legislation that would amend the Gasoline Tax Act and Fuel Tax Act to temporarily cut the gasoline tax by 5.7 cents per litre and the fuel tax by 5.3 cents per litre for six months beginning July 1, 2022. The current gasoline tax rate is 14.7 cents per litre and the current fuel tax rate is 14.3 cents per litre. Both rates would be reduced to 9 cents per litre from July 1, 2022, until December 31, 2022.

Land Transfer Tax Act in relation to the Non-Resident Speculation Tax (NRST)

Effective March 30, 2022, the government implemented several amendments to include an increase to the NRST rate to 20 per cent, expansion of the NRST’s application provincewide and elimination of two rebates specific to international students and foreign nationals working in Ontario. Agreements of purchase and sale entered into on or after March 30, 2022, will be subject to these changes. 

Municipal electricity utilities (MEUs)

The tax relief measures, introduced in the 2015 Budget, were originally extended until December 31, 2022, in the 2018 Ontario Economic Outlook and Fiscal Review. Through regulatory amendments, Ontario is further extending this relief until December 31, 2024.

Next steps

Contact your Baker Tilly advisor to learn more about how we can help you navigate the complexities of the Canadian tax system.