Highlights of the Ontario 2020 Economic and Fiscal Update

MEMORANDUM

 

Date: March 26, 2020

 

From: Crowe BGK Tax Group

 

Subject: Highlights of the Ontario 2020 Economic and Fiscal Update

 

The Government of the Province of Ontario was scheduled to deliver its 2020 Budget on March 25, 2020. However, as a result of the impact of the global COVID-19 pandemic, rather than release a full Budget, on March 25, 2020 The Honourable Rod Phillips, Minister of Finance, delivered an Economic and Fiscal Update ­– Ontario’s Action Plan 2020: Responding to COVID-19. Ontario’s Action Plan includes $17 billion of spending measures to support the economy and health care system during the current COVID-19 outbreak. Below is a summary of the measures that were announced by the Government of Ontario.

Measures Supporting People and Jobs

Doubling Guaranteed Annual Income System Payments

The Government of Ontario is proposing to double the Guaranteed Annual Income System (“GAINS”) payment for low income and vulnerable seniors. For a six month period, beginning in April 2020, the maximum GAINS payment will be increased to $166 per month for an individual or $332 per month for a couple.

Assistance to Parents

The Government of Ontario will provide individuals with a one-time payment of $200 per child under the age of 13 and $250 per child with special needs. The purpose of the payment is to provide support for parents due to the closure of schools and day cares, however the Ontario Action Plan does not provide details of when or how this benefit will be paid.

Deferral of OSAP Repayments

The Ontario Student Assistance Program (“OSAP”) provides loans to students attending post-secondary institutions in Ontario. During the period from March 30, 2020 until September 30, 2020, individuals with OSAP loans will not be required to make any loan or interest payments.

Electricity Relief

The Government of Ontario has proposed to keep the price of electricity charged to residential, farm and small business customers fixed at the off-peak rate (which is the lowest rate charged) for a 45 day period.

Deferral of WSIB Payments

The Ontario Workplace Safety and Insurance Board (“WSIB”) is allowing all employers a six month deferral in payments until August 31, 2020. During this period no interest or penalties will be charged for late remittances.

Tax Measures

Employer Health Tax Exemption

Currently, private-sector employers with total Ontario remuneration of less than $5,000,000 are exempt from paying the Employer Health Tax (“EHT”) on the first $490,000 of remuneration paid to employees in Ontario. The Ontario Government has proposed to increase the EHT exemption from $490,000 to $1,000,000 retroactive to the beginning of 2020. The current EHT exemption will return to its current level of $490,000 on January 1, 2021. At the top EHT rate of 1.95%, the increase in the EHT exemption will provide a total reduction of up $9,945 per eligible employer.

Penalty and Interest Relief

The Government of Ontario is granting relief from penalties and interest for the tax programs that are administered by the provincial government. Beginning on April 1, 2020 until August 31, 2020, no penalties or interest will be assessed for late filing or late remittances under any of the programs that are administered by the provincial government such as EHT or the Insurance Premium Tax. This initiative mirrors the Federal Government’s decision to provide penalty and interest relief for income taxes. Ontario has harmonized its taxation system with the Federal Government and therefore all of the income tax relief measures apply to Ontario as well.

Regional Opportunities Investment Tax Credit

The Regional Opportunities Investment Tax Credit is a new 10% refundable tax credit available to Canadian-Controlled Private Corporations that make expenditures for constructing, renovating or acquiring eligible commercial and industrial buildings and other assets included in Classes 1 and 6 for the purposes of calculating capital cost allowance. The tax credit is available for expenditures between $50,000 up to $500,000 made in specified regions in Ontario. The list of regions is included in the Ontario Action Plan, however all of the regions are either in Northern Ontario, Eastern Ontario (other than the Ottawa region and rural regions in Southwestern Ontario.

Postponing Planned Property Tax Reassessment

The government is postponing the planned property tax reassessment that was scheduled to be completed by the Municipal Property Tax Assessment Corporation in 2020 that would have taken affect for the 2021 taxation year. As a result of this postponement, assessments for the 2021 taxation year will continue to be based on the same property valuation that was in effect for the 2020 taxation year.

Please contact your CroweBGK advisor if you have questions.