2021-2022 Ontario Budget Tax Measures - Summary of Highlights

Crowe BGK

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:

Family income (based on the income used in determining the tax filer’s Child Care Expenses Deduction); and
Eligible childcare expenses (defined as the tax filer’s total entitlement under the Child Care Expenses Deduction).

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:

The individual is resident in Ontario on December 31, 2021;
The individual has a Canada training credit limit for 2021 that is greater than zero; and
The expenses incurred are included in one of the following categories which are “eligible training expenses” for purposes of the Ontario Jobs Training Tax Credit:
1. Occupational Skills Courses;
2. Occupational, Trade or Professional Exams;
3. Postsecondary Education Courses.

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:

The corporation is a Canadian-controlled private corporation throughout the taxation year;
The corporation has a permanent establishment in Ontario at the time the qualifying investment is made;
The corporation has made a qualifying investment in a designated region of the province.

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:

City of Kawartha Lakes
County of Bruce
County of Elgin together with the City of St. Thomas
County of Essex together with the City of Windsor and Township of Pelee
County of Frontenac together with the City of Kingston
County of Grey
County of Haliburton
County of Hastings together with the City of Belleville and City of Quinte West
County of Huron
County of Lambton
County of Lanark together with the Town of Smiths Falls
County of Lennox and Addington
County of Middlesex together with the City of London
County of Northumberland
County of Oxford
County of Perth together with the City of Stratford and the Town of St. Marys
County of Peterborough together with the City of Peterborough
County of Prince Edward
County of Renfrew together with the
City of Pembroke
District of Algoma
District of Cochrane
District of Kenora
District of Manitoulin
District of Muskoka
District of Nipissing
District of Parry Sound
District of Rainy River
District of Sudbury together with the City of Greater Sudbury
District of Thunder Bay
District of Timiskaming
Municipality of Chatham-Kent
United Counties of Leeds and Grenville together with the City of Brockville, the Town of Gananoque and the Town of Prescott
United Counties of Prescott and Russell
United Counties of Stormont, Dundas and Glengarry together with the City of Cornwall

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.

Prepared by:

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

Connect with him: [email protected]

Brittany Klumak, CPA auditor, LL.M. Tax is a Tax Specialist at Crowe BGK

Connect with her: [email protected]