The Ontario Finance Minister, Peter Bethlenfalvy, tabled the province’s 2021-2022 Budget on March 24, 2021. Ontario is projecting a budget deficit of $38.5 billion in 2020-2021, which is expected to fall to $33.1 billion in 2021-2022.
The following is a summary of the Ontario provincial government’s proposed tax measures based on its 2021 Budget.
Measures affecting Individuals
Enhancing the CARE Tax Credit for 2021
The government is proposing a temporary increase in the Childcare Access and Relief from Expenses (CARE) tax credit for 2021, which would ultimately increase support offered in 2021 to several recipients from approximately $1,250 to $1,500, on average. The CARE tax credit focuses on lower- and moderate-income families, and is aimed at offering a more flexible form of child care support. This incentive is offered in addition to the Child Care Expenses Deduction.
The CARE tax credit provided is up to 75% of the family’s eligible child care expenses, and is calculated based on several factors, such as the tax filer’s:
This increase would ultimately provide a one-time increase of 20% of the calculated CARE tax credit entitlement for 2021.
Introduction of the Temporary Ontario Jobs Training Tax Credit
The Budget proposes a new Personal Income Tax credit for 2021, aimed at providing support to certain individuals who incurred expenses related to higher education or training for an occupation. The Income Tax credit is a temporary measure and will be refundable. It would be calculated as 50% of eligible expenses for 2021, up to a maximum of $2,000.
Eligible expenses would be the same as those that may be claimed for the Canada training credit, which include tuition and other fees paid to an eligible educational institution in Canada for courses taken in 2021, as well as fees paid to certain bodies in respect of an occupational, trade or professional examination taken in 2021.
Certain conditions must be met in order for an individual to be entitled to their Canadian training credit for 2021. Specifically, in order to be eligible, the individual must meet the following criteria:
An individual can find their Canada training credit limit for 2021 on their latest notice of assessment or reassessment for 2020, provided by the Canada Revenue Agency. It should be noted that eligible claimants would be at least 26 years of age and not older than 65 years of age at the end of 2021.
COVID-19 Relief for Individuals
The province of Ontario is providing a third round of payments to parents who received Support for Learner’s payments. Specifically, parents will be entitled to receive $400 per child in Grade 12 or younger, or $500 per child or youth with special needs under the age of 21, a significant increase as compared to that previously offered to parents. Parents who have not applied for previous payments will still be able to submit an application for this third round of payments.
Measures affecting Businesses
Enhancing the Regional Opportunities Investment Tax Credit
The Regional Opportunities Investment Tax Credit is a refundable tax credit offered to Canadian-Controlled private corporations that make qualifying investments in eligible geographic areas of Ontario. According to the Budget, the Regional Opportunities Investment Tax Credit will increase temporarily from 10% to 20%, thereby doubling the rate offered.
In order to be eligible, the following criteria must be met:
Qualifying investments means eligible expenditures of capital property included in Class 1 and Class 6 for the purposes of calculating capital cost allowance, such as expenditures for constructing, renovating or acquiring eligible commercial and industrial buildings and other assets.
The following is a list of areas of the province where investments would be considered to be eligible for purposes of the Regional Opportunities Investment Tax Credit:
It should be noted that the enhanced credit will only 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, 2023.
COVID-19 Relief for Businesses
The province of Ontario is helping small businesses that have been most affected by the COVID-19 restrictions by offering a second round of payments of the Ontario Small Business Support Grant. These payments will be made to eligible small businesses. The second round of the support payment will be provided in the form of a grant for a minimum assistance amount of $10,000 and up to a maximum of $20,000.
For more information, please refer to the Minister of Finance website.
Aaron Patrick Belcher, CPA, CGA is a Tax Manager at Crowe BGK
Connect with him: [email protected]
Anas Chakikar, B.B.A, MBA is a Tax Specialist at Crowe BGK
Brittany Klumak, CPA auditor, LL.M. Tax is a Tax Specialist at Crowe BGK
Connect with her: [email protected]