2020 Ontario Budget Highlights

Ontario’s Action Plan: Protect, Support, Recover

Silvia Jacinto
Article
| 11/5/2020
2020 Ontario Budget

On Thursday, November 5, 2020, Premier Doug Ford and Minister of Finance Rod Phillips released Ontario’s Action Plan: Protect, Support, Recover - the second phase of a comprehensive action plan to respond to the serious health and economic impacts of COVID-19. Ontario's Action Plan now sets out a total of $45 billion in support over three years to provide more resources to strengthen frontline health care, support people and employers, and lay the groundwork for Ontario’s recovery.

Support for BIPOC Youth

BIPOC Youth

 

 

Ontario is investing an additional $60 million over three years starting in 2020–21 in the Black Youth Action Plan, doubling its base funding to extend the current program and create a new economic empowerment stream that will support Black youth in achieving social and economic success.

Support for Children Learning from Home

Support for Children Learning from Home
As a result of increased enrollment in online schooling, the province announced an additional $380 million of payments to parents, following the $378 million of support in March.  Parents will receive $200 per child up to the age of 12 and $250 per child and youth with special needs up to the age of 21, through the Support for Learners initiative. 

These payments will assist with added costs of COVID-19, such as access to technology for online learning. For example, this means a family with three young children (one of whom has special needs) would receive $1,300 in 2020 to support costs related to educational supplies and technology.

Tax Credit for Seniors’ Home Renovations

Ontario is proposing a 2021 Seniors’ Home Safety Tax Credit — a refundable 25 per cent tax credit on eligible home improvement costs of up to $10,000 (maximum credit of $2,500) — to help seniors stay in their homes longer by making their homes safer and more accessible.

Expenses would be eligible if they are paid or become payable in 2021 to the extent that they relate to renovations that improve safety and accessibility or help a senior be more functional or mobile at home. Seniors would be eligible regardless of their incomes and whether or not they owe income tax for 2021.  However, they must make improvements to their principal residences within 24 months after 2021. Family members who live with and support them would also be eligible, including spouses and common-law partners. 

Eligible expenses would include:

  • Renovations to permit a first-floor occupancy or secondary suite for a senior;
  • Grab bars and related reinforcements around the toilet, tub and shower;
  • Wheelchair ramps, stair/wheelchair lifts and elevators;
  • Non-slip flooring;
  • Additional light fixtures throughout the home and exterior entrances;
  • Automatic garage door openers; and
  • Modular or removable versions of a permanent fixture, such as modular ramps and non-fixed bath lifts.

Investing in Our Communities

investing in our community

 
As a commitment to community tourism, cultural, and sport organizations, the province is spending $100 million over two years for the Community Building Fund to support organizations experiencing significant financial pressures due to the COVID-19 pandemic.

Boost for Arts Funding

 

Art Community


 Ontario commits to a one-time emergency funding of $25 million for Ontario’s arts institutions to help cover operating losses incurred as a result of COVID-19.

Increased Broadband Access

Broadband access

 
 
 
Ontario pledges an additional $680 million over the next four years toward high-speed broadband infrastructure to underserved and rural communities. The new funding is in addition to the $315 million in support of the Up to Speed: Ontario’s Broadband and Cellular Action Plan.

Cutting Electricity Costs

Electricity costs

 
In an effort to draw investors and bring more jobs to Ontario, the province announced a comprehensive plan to address high electricity costs, saving medium size and larger industrial and commercial employers about 14 and 16 per cent respectively, on average, on their electricity bills (at an additional expense of $1.3 billion over three years).
 

Reducing Property Taxes for Job Creators

Ontario Budget Commercial Property Tax
 
The province announced it would be levelling the playing field by lowering high Business Education Tax (BET) rates on over 94 per cent of all business properties to a rate of 0.88 per cent thus creating $450 million in immediate annual savings for Ontario businesses. This represents a reduction of 30 per cent for many businesses currently subject to the highest BET rate in the province. See Chart 1.A in Ontario’s Action Plan: Protect, Support, Recover.

Allow For and Match Municipalities Small Business Property Tax Cut

match municipalities
 
 
In response to requests from local governments, the province will be providing municipalities with the ability to cut property tax for small businesses and has committed to giving consideration to matching those reductions. Pending municipal adoption, this would provide small businesses as much as $385 million in total property tax relief by 2022–23. 

Permanent Employer Health Tax (EHT) Exemption Increase

 
EHT
 
The Ontario government has proposed to make the Employer Health Tax (EHT) exemption increase from $490,000 to $1 million, which was proposed as a 2020 COVID-19 relief, permanent. With this additional relief approximately 90 per cent of employers will pay no EHT, resulting in a total savings of $360 million in 2021–22.

Discover Ontario in 2021

Discover Ontario
 
 
The province will provide residents with support of up to 20 per cent of eligible Ontario tourism expenses to encourage them to safely discover Ontario in 2021, which they are coining as “the year of the Ontario staycation”. Further support for the tourism and hospitality sector includes an investment of $180.5 million over three years through a skilled trades strategy. 
 

Maintaining Cultural Media Tax Credit Eligibility

Film and Television
 
Due to delays resulting from COVID-19, companies may be unable to meet tax credit deadlines and may lose their eligibility for tax credit support.  To help companies maintain their tax credit eligibility and provide some stability, the Province is proposing to temporarily extend timelines and amend some requirements for the cultural media tax credits, the highlights of which are provided in the attached chart.
 

Supporting Research & Development

SR&ED
 
The province has proposed to extend the reporting period to claim an Ontario Research and Development Tax Credit (ORDTC) to parallel the extension of the reporting deadlines for federal scientific research and experimental development (SR&ED) claims. 
  • Corporations with tax year-ends from September 13, 2018 to December 31, 2018 would have an additional six months to file an ORDTC claim.
  • Corporations with tax year-ends from January 1, 2019 to June 29, 2019 would have until December 31, 2020 to file the claim.
 

Cancelled Wine Tax Increase, Frozen Beer Tax Rates

wine and beerDue to the unique circumstances and economic hardships being faced by the alcohol and beverage sector, Ontario is proposing to retroactively cancel the increase in wine basic tax rates legislated to occur on June 1, 2020, as well as freeze beer tax rates until March 1, 2022. The government issued an order under the Financial Administration Act during the state of emergency that prevents the increase from being applied between June 1, 2020 and December 31, 2020.

 

This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.

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Silvia Jacinto
Silvia Jacinto
Partner, Tax