2020 Ontario Budget tax changes

On Nov. 5, 2020, the Ontario (ON) government announced proposed changes to the provincial tax laws.

Income taxes

Personal tax

No personal income tax rate changes were announced in this year’s budget. The current personal income tax rates for 2020 are outlined as follows:

Personal tax credits

Senior’s Home Safety Tax Credit (SHSTC)

Ontario is set to introduce the new SHSTC refundable tax credit for 2021. Eligible claimants, which would include senior homeowners, renters or people who live with relatives who are seniors, will be able to claim a refundable tax credit equal to 25 per cent of up to $10,000 in eligible expenses for a senior’s principal residence in Ontario, resulting in a maximum tax credit of $2,500. The $10,000 limit may be shared by people who share a home, including spouses and common-law partners. The credit amount will not depend on the claimant’s income.

Expenses would be eligible if they are paid or become payable in 2021 to the extent that they relate to renovations that improve safety and accessibility or help a senior be more functional or mobile at home. Eligible expenses would include:

• Renovations to permit a first-floor occupancy or secondary suite for a senior;
• Grab bars and related reinforcements around the toilet, tub and shower;
• Wheelchair ramps, stair/wheelchair lifts and elevators;
• Non-slip flooring;
• Additional light fixtures throughout the home and exterior entrances;
• Automatic garage door openers; and
• Modular or removable versions of a permanent fixture, such as modular ramps and non-fixed bath lifts.

To qualify for the credit, the final installment for the improvement must become payable in 2021.

Corporate tax

No changes to the corporate income tax rate or to the $500,000 small business limit were announced in this year’s budget.

The corporate income tax rates effective as of Sept. 30, 2020 are outlined as follows:

Other tax measures

Employer Health Tax (EHT)

To continue to help private-sector employers weather the pandemic and build a stronger foundation for future growth and hiring, the government is proposing to make the EHT payroll exemption increase from $490,000 to $1million announced in March 2020 permanent.

The government is proposing to double the threshold payroll amount beyond which employers are required to pay EHT installments to $1.2 million starting in 2021. Private-sector employers who claim the full exemption would be required to remit EHT installments when they owe more than $3,900 in EHT for the year.

The government also proposed to move the next scheduled adjustment for inflation from 2024 to Jan. 1, 2029.

Business Education Tax (BET)

Beginning in 2021, Ontario will reduce all high BET rates, including the maximum 1.25 per cent rate, to a common high rate of 0.88 per cent for both commercial and industrial properties.

Small business property tax relief

In 2021, a new optional property subclass will be created for small business properties to allow municipalities targeted tax relief by reducing their property taxes. Ontario will also consider matching these municipal property tax reductions in order to provide provincial support to small businesses.

Beer and wine tax

The beer tax rates will be frozen until March 1, 2022 and the increase in wine tax rates that was scheduled for June 1, 2020 has been cancelled.

Ontario Research and Development Tax Credit (ORDTC)

Ontario proposes to extend the reporting period to claim the credit so that corporations with tax year-ends from September 13, 2018 to December 31, 2018 would have an additional six months to file an ORDTC claim, and those with tax year-ends from Jan. 1, 2019 to June 29, 2019 would have until Dec. 31, 2020 to file a claim.

Maintaining cultural media tax credit eligibility

To help companies maintain their tax credit eligibility and to help provide some stability and certainty in uncertain times, the Province is proposing to temporarily extend some timelines and amend some requirements for the cultural media tax credits.

The following table sourced from the 2020 Ontario Budget summarizes the proposed amendments for:

1. Ontario Film and Television Tax Credit (OFTTC)
2. Ontario Production Services Tax Credit (OPSTC)
3. Ontario Book Publishing Tax Credit (OBPTC)