2024 Ontario budget tax highlights

On March 26, the Ontario government released its 2024 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 2024 are outlined below:

Corporate tax measures

No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2024 are outlined below:

Ontario Computer Animation and Special Effects tax credit

The Ontario Computer Animation and Special Effects (OCASE) tax credit is an 18 per cent refundable corporate income tax credit available to companies engaged in computer animation and special effects activities on eligible film and television productions in Ontario.

To be eligible for the OCASE tax credit, a film or television production must also be certified for either the Ontario Film and Television tax credit or the Ontario Production Services tax credit, “tethering” the OCASE tax credit to these other film and television tax credits.

The budget proposes to remove this tethering requirement and replace it with the following new eligibility rules to ensure the credit continues to only support professional productions. The new rules would be effective for productions for which the qualifying corporation commences computer animation and/or special effects work on or after March 26, 2024.

The proposed changes include:

• A qualifying corporation would be required to incur a minimum of $25,000 in Ontario labour expenditures for each film or television production for which the OCASE tax credit is claimed. The minimum labour expenditure threshold would be required to be incurred in the taxation year of the claim or cumulatively between the taxation year of the claim and the previous taxation year. Once a qualifying corporation incurs the minimum labour expenditure threshold within up to two taxation years for a specific production, expenditures related to that production in those taxation years and any subsequent taxation years would be eligible; and
• Certain types of productions would be excluded from eligibility, including but not limited to instructional videos, music videos and gaming videos.

Other tax measures

Provincial sales tax measures

The government has extended the current gas tax and fuel tax rate cuts until Dec. 31, 2024, keeping the rates at nine cents per litre.

Alcohol taxation and fees

The government is proposing to eliminate the wine basic tax applicable to sales of Ontario wine and wine coolers in onsite winery retail stores. The new rate would come into effect April 1, 2024. The government will also conduct a targeted review of taxes and fees on beer, wine and other alcoholic beverages.

Carbon pricing program

The government will introduce legislation that would require a public referendum before implementing any new provincial carbon pricing program.

Housing supply and affordability

The budget announces the government’s intention to introduce legislative frameworks to allow qualifying municipalities to implement a Vacant Home Tax and offer a reduced property tax rate on new multi‐residential rental properties.

Property assessment and taxation review

The government is undertaking a review of the property assessment and taxation system, focusing on fairness, affordability, business competitiveness and modernized administration tools. Consultations have commenced to seek input on the scope and priority areas of the review. Beginning in early spring, consultations will continue with broader engagement of stakeholders throughout the province.

Reviewing Ontario’s tax system

As part of its plan to build a strong Ontario, the government announced a review of the province’s tax system in the 2023 budget. Since then, the government has consulted with a focused group of tax experts, economists and business leaders.

Based on input from the consultations, the tax system review will focus on opportunities to update the tax system to support greater productivity ⁠–⁠ notably, relating to innovation and research ⁠–⁠ to promote fairness, enable greater simplicity and transparency, and  modernize administration.

Technical amendments

Proposed legislative amendments include:

• Amendments to the Estate Administration Tax Act, 1998, to include the term “small estate certificate” and “amended small estate certificate” under the definition of the term “estate certificate”
• An amendment to the Financial Administration Act to provide express authority for intra‑day credit for loans entered into by the province of Ontario

Next steps

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