On May 15, 2025, Ontario finance minister Peter Bethlenfalvy released the 2025 Ontario Budget. The following are some of the most relevant tax measures included therein:
Business Tax Measure
The budget proposes enhancing the Ontario-made manufacturing investment tax credit. Effective from 15 May 2025 to 2030, the refundable credit for CCPCs will increase from 10% to 15% on up to $20 million of eligible expenditures per year, raising the maximum credit from $2 million to $3 million. Non-CCPCs can also claim of 15% non-refundable credit for investments in Ontario. Unused credits can be carried forward for up to 10 years. Recapture rules apply if the property is sold, converted, or removed from Ontario within five years. As with the refundable credit, the $20 million limit must be shared by an associated group of corporations and will be prorated for short taxation years.
For purposes of this credit, eligible expenditures include expenditures incurred to acquire certain capital property included in Class 1 or Class 53 (or Class 43(a) for property acquired after 2025) for capital cost allowance purposes, which will be used in M&P activities in Ontario (such as buildings and machinery and equipment). To be eligible for the credit, the property must also become available for use during the effective period.
This measure aims to boost local manufacturing and stimulate economic growth by providing substantial financial incentives for companies to invest in Ontario's manufacturing sector.
Personal Tax Measure
The fertility treatment tax credit, introduced in the 2024 Ontario Economic Outlook and Fiscal Review, offers a 25% refundable tax credit for eligible fertility treatment expenses starting in 2025. The credit covers up to $20,000 in annual expenses, with a maximum annual credit of $5,000. Eligible expenses can be claimed alongside federal and provincial medical expense tax credits.
Eligible expenses must be paid by the individual or the individual’s spouse or common-law partner in respect of goods and services provided in Canada for the purpose of conceiving a child, or for certain medical expenses paid to or on behalf of a surrogate mother. Eligible expenses include certain amounts paid to a medical practitioner or a public or private hospital, fertility clinic or donor bank in Canada, costs relating to reproductive technology processes, including costs for egg and embryo freezing (including storage), fertility medications, and travel for treatment, subject to certain conditions.
This initiative is designed to alleviate the financial burden on individuals undergoing fertility treatments, making such procedures more accessible and affordable for residents of Ontario.
Employer Health Tax
Amendments to the Employer Health Tax Act will allow notices of assessments to be sent by regular mail and electronically. These changes are intended to streamline administrative processes, improve efficiency, and ensure that employers receive timely notifications regarding their tax assessments. Additionally, modernizing the communication methods reflects an ongoing effort to integrate technological advancements into provincial tax administration.