Ontario Fall Economic Statement 2022 | Tax Highlights

Ananth Balasingam
| 11/14/2022

On Monday, November 14, 2022, Ontario Premier Doug Ford and Finance Minister Peter Bethlenfalvy published the province’s fall economic statement, Ontario’s Plan to Build: A Progress Update (the “Update”). The Update highlighted the province’s economic and fiscal outlook and noted the economic uncertainty ahead.

Extension of the Small Business Deduction to More Businesses

A Canadian-controlled private corporation (“CCPC”) has access to the small business deduction (“SBD”) on its first $500,000 of profits from an active business carried on in Canada. The $500,000 SBD must be shared among an associated group of companies. The SBD is currently clawed back where taxable capital employed in Canada (“Taxable Capital”) of the CCPC and its associated group of companies exceeds $10 million. Further, the SBD is fully eliminated where Taxable Capital reaches $15 million.

The Ontario government proposes to extend the range over which the SBD is reduced, with a revised range of $10 million to $50 million. This measure would mirror the Federal Budget 2022 announcement in respect of the federal SBD.

The proposed measure would apply to taxation years that begin on or after April 7, 2022, to be consistent with the expected federal measure.

Immediate Expensing for Businesses

BriefcaseThe Ontario government is providing temporary immediate expensing for certain types of capital property acquired by Canadian-controlled businesses, which mirrors the 2021 Federal Budget announcement.

The immediate expensing is limited to $1.5 million per year and must be shared among an associated group of members. Types of property eligible for immediate expensing are generally property other than long-life assets, and would therefore exclude assets such as buildings and goodwill.

For CCPCs, the measure applies to property acquired after April 18, 2021 and that becomes available for use before January 1, 2024. Meanwhile, for other eligible Canadian-controlled businesses, the measure applies to property acquired after December 31, 2021, and that becomes available for use before January 1, 2025.

Additional Key Tax-Related Measures

Guaranteed Annual Income System Payments

The Ontario government is proposing to double the Guaranteed Annual Income System (“GAINS”) payment for low-income seniors for 12 months, starting in January 2023. The maximum payment would increase to $166 per month for single seniors and $332 per month for couples.

Ontario Disability Support Program

The Ontario government is proposing to raise the earnings exemption amount for persons with a disability on the Ontario Disability Support Program (“ODSP”) from $200 per month to $1,000 per month. As a result, a person with a disability on the ODSP would be able to earn up to $1,000 per month before it impacts their income support payments.

Gas and Fuel Tax

The Ontario government is extending the temporary gas tax rate cut of 5.7-cents per liter and the fuel tax rate cut of 5.3-cents per liter to December 31, 2023.

Non-Resident Speculation Tax

As previously announced, the Ontario government has increased the Non-Resident Speculation Tax rate from 20% to 25%, effective October 25, 2022. This tax generally applies to foreigners purchasing homes located in Ontario.

Ontario Cultural Media Tax Credits

The Ontario government is making changes to these credits to reflect current industry practices and to continue to attract investment and jobs.

To learn how Ontario’s initiatives will affect your personal and business affairs, schedule a consultation with a Crowe Soberman advisor.

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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Ananth Balasingam Crowe Soberman
Ananth Balasingam
Partner, Tax
Ananth Balasingam Professional Corporation