Ontario Economic and Fiscal Update
Ontario Minister of Finance Rod Philips presented the March 2020 Economic and Fiscal Update. The update projects a deficit of $9.2 billion for 2019–2020 which is $1.1 billion lower than what was projected in the 2019 Budget. Due to the response to COVID‐19, the government projects a deficit of $20.5 billion for 2020–2021.
The Update announced several new tax measures which are briefly summarized below.
Temporarily Doubling the Employer Health Tax Exemption
Currently, private-sector employers with remuneration in Ontario of less than $5 million are exempt from the employer health tax (“EHT”) on up to $490,000 of their payroll. The government will increase this exemption to $1 million for 2020, and it will return to $490,000 beginning in 2021. This measure will provide EHT relief of up to $9,945 per eligible employer.
Interest and Penalty Relief
Beginning April 1, 2020, and ending on August 31, 2020, penalties and interest will not apply where a business fails to file a return for or remit selected types of provincially-administered taxes.
Regional Opportunities Investment Tax Credit
The government proposes to introduce a new regional opportunities investment tax credit. A CCPC that makes an qualifying capital investment in a specified region of Ontario will be eligible for a 10% refundable tax credit. Qualifying investments include capital property that is included in CCA Classes 1 or 6, which primarily include buildings. The credit is available for investments in excess of $50,000 and not exceeding $500,000. The credit is available for investments that becomes available for use on or after March 25, 2020. The credit must also be reviewed by the government every three years.
Postponing Property Tax Reassessments
The government intends to postpone the planned property tax reassessment for 2021. Therefore, assessments for the 2021 taxation year will continue to use the valuation date that was in effect for the 2020 taxation year.
Economic Support Measures
In addition to the tax measures above, the Update promises billions in new spending, including:
• $1.9 billion for the Workplace Safety and Insurance Board allowing employers to defer payments for up to six months;
• a one-time payment of $200 per child up to 12 years of age, and $250 for those with special needs, including children enrolled in private schools;
• $148 million for charitable and non-profit social services organizations