2019 Ontario Economic Outlook and Fiscal Review

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The 2019 Ontario Economic Outlook and Fiscal Review: A Plan to Build Ontario Together, was presented by Finance Minister Rod Philips on November 6, 2019. Though higher than the actual 2018-2019 deficit of $7.4 billion, the projected $9 billion deficit for 2019-2020 is $1.3 billion lower than what was initially estimated in the 2019 Budget that was presented earlier this year. Only three new tax changes were announced as a part of the fiscal update.

First, the government proposes to cut the small business tax rate from 3.5% (on the first $500,000 of active business income) to 3.2%, effective January 1, 2020. The rates will be prorated for corporate taxation years that straddle January 1, 2020. In accordance with a reduction to the rate a corporation pays on its small business income, the provincial dividend tax credit for non-eligible dividends will be reduced from 3.2863% to 2.9863%, effective January 1, 2020.

Second, the government proposes to reduce the rate of the aviation fuel tax in Northern Ontario from 6.7 ¢/L to 2.7 ¢/L, effective January 1, 2020. The reduction applies to aviation fuel that is purchased within the North. For this purpose, “the North” refers to the districts of Algoma, Cochrane, Kenora, Manitoulin, Nipissing, Parry Sound, Rainy River, Sudbury, Thunder Bay and Timiskaming. Fuel wholesalers that prepay the aviation fuel tax at the rate of 6.7 ¢/L but sell it to a retailer or consumer in the North at the rate of 2.7 ¢/L can apply to the Ministry of Finance for an adjustment for the tax rate difference.

And third, the government wishes to simplify the administration of the Gasoline Tax Act by aligning the computation for interest on refunds with the same timeline as under the Fuel Tax Act. Interest will be payable from the date of the refund until the date that the refund is paid.

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