The Ontario Minister of Finance, Peter Bethlenfalvy, delivered the 2024 Budget on March 26, 2024. The 2024 Budget aims to deliver on its plan to build by investing in infrastructure to build more homes, attracting better jobs and keeping costs down for families and business. Ontario is projecting a budget deficit of $3 billion in 2023-2024, which is expected to increase to $9.8 billion in 2024-2025.
The following is a summary of the Ontario provincial government’s proposed tax measures based on its 2024 Budget.
Extending the Temporary Gas Tax and Fuel Tax Rate Cuts
The Ontario government temporarily cut the gasoline tax rate by 5.7 cents per litre and the fuel tax (diesel) rate by 5.3 cents per litre on July 1, 2022. The 2024 budget proposes to extend the gas tax and fuel tax cuts for an additional six months, so the tax rate on gasoline and fuel would continue to remain at 9 cents per liter until December 31, 2024, saving Ontario households $320 on average since July 2022.
Simplifying the Ontario Computer Animation and Special Effects Tax Credit
The Ontario Computer Animation and Special Effects Tax Credit (OCASE) is an 18% refundable corporate income tax credit available to companies that undertake computer animation and special effects activities on eligible film and television productions in Ontario. To qualify for the OCASE tax credit, a film or television production must also be certified for the Ontario Film and Television Production Tax Credit or the Ontario Production Services Tax Credit, "tethering" the OCASE tax credit to these other film and television tax credits.
The government proposes to remove this tethering requirement and replace it with the following new eligibility rules to ensure that the credit continues to support only professional productions. These new rules are consistent with the government's commitment to explore opportunities to simplify support for the computer animation and special effects tax credit:
- An eligible corporation would be required to incur a minimum of $25,000 in Ontario labour expenditures for each film or television production for which the OCASE tax credit is claimed. The minimum labour expenditure threshold would have to be incurred in the tax year of application, or cumulatively between the tax year of application and the previous tax year. Once an eligible corporation incurs the minimum labour expenditure threshold in up to two taxation years for a specific production, expenditures related to that production in those, and any subsequent taxation years would be eligible; and
- Certain types of productions would be excluded from eligibility, including educational videos, music videos and game videos.
The new rules would be effective for productions for which the qualifying corporation commences computer animation and/or special effects work on or after March 26, 2024.
Review of Various Tax systems
- Continuing from its announcement in the 2023 budget, the government has consulted with focused groups, tax experts, economists and business leaders to review Ontario's overall tax system. The overall review and analysis are currently ongoing.
- The government is reviewing the property assessment and taxation system to increase fairness, affordability and modernized administration tools.
- Similarly, the government will also conduct a targeted review of taxes on alcohol. Proposals include eliminating the wine basic tax for Ontario wine sales in winery retail stores starting April 1, 2024, and conducting a review of taxes and fees on alcoholic beverages to promote a more competitive marketplace.
- Moving forward, the government is taking further action to strengthen the Non-resident Speculation Tax with amendments to support compliance and improve fairness.