@Copyright November 2018
Ontario Mini Fall Economic Statement - November 15, 2018
The Ontario government announced a economic statement or a mini budget for all intents and purposes. Here are the more interesting items as follows;
Ontario’s Government has already taken a number of steps to create a business‐friendly environment. Actions taken to cancel the cap‐and‐trade carbon tax, reduce Workplace Safety and Insurance Board (WSIB) premiums, and keep the minimum wage at $14 per hour.
End of Mandatory Drive Clean Testing for Light-Duty Vehicles On September 28, 2018, the government announced the cancellation of the outdated Drive Clean passenger vehicle program, saving Ontario taxpayers approximately $40 million annually. This change will reduce regulations by shifting focus to the biggest polluters on Ontario’s roads. Effective April 1, 2019, drivers will no longer be required to get Drive Clean emissions tests for their passenger and light‐duty vehicles.
Freezing Driver’s Licence Fees As part of the strategy to make life more affordable, the government reversed a decision by the previous administration to escalate fees on September 1, 2018. This freeze means that individuals who are getting their driver’s licence for the first time — or simply getting their licence renewed — will save money. This freeze also applies to fees for road and knowledge tests for all driver’s licence classes. This leaves more money in the pockets of individuals and families in Ontario.
The government will enact policies to increase the supply of housing across Ontario. Part of this initiative will be the reintroduction of the rent control exemption that will apply to new rental units first occupied after today. This will help create market‐based incentives for supply growth that will encourage an increase in housing supply to meet the needs of the people of Ontario. As well, the government will cancel the Development Charges Rebate Program. This program is an expensive and ineffective method to incentivize new housing supply and cancelling it will result in savings of approximately $100 million over four years. The Province will follow through on its commitment to preserve rent control for existing tenants.
As an immediate first step in modernizing the sector, the Alcohol and Gaming Commission of Ontario will align the permissible hours of operation for retailers, including the Beer Store, the LCBO and authorized grocery stores, by enabling them to sell beverage alcohol from 9:00 a.m. to 11:00 p.m., seven days a week. This change will improve choice, access and convenience, and will allow consumers to make responsible choices that work best for them.
THE LOW-INCOME INDIVIDUALS AND FAMILIES TAX (LIFT) CREDIT
Starting with the 2019 tax year, the government is proposing to introduce a new non‐refundable Low‐income Individuals and Families Tax (LIFT) Credit.
The LIFT Credit would eliminate or reduce Ontario Personal Income Tax (PIT) for low‐income Ontario taxpayers who have employment income.
The proposed tax credit would be calculated as the lesser of: $850; and 5.05 per cent of employment income.
This amount would then be reduced by 10 per cent of the greater of: Adjusted individual net income in excess of $30,000;
and Adjusted family net income in excess of $60,000. The resulting amount would then be limited to the taxpayer’s PIT otherwise payable, excluding the Ontario Health Premium.
If the taxpayer has a spouse or common‐law partner at the end of the year, the taxpayer’s adjusted family net income would include the income of that spouse or common‐law partner. People who are resident in Canada at the beginning of the year and resident in Ontario at the end of the year would be eligible for this credit.
Taxpayers who would not get this new tax relief would include those who have: No Ontario PIT payable; No employment income; More than $38,500 in adjusted individual net income; A higher‐income partner such that their adjusted family net income is greater than $68,500; or Been in prison for more than six months during the year.
EMPLOYER HEALTH TAX
The Employer Health Tax (EHT) is paid by employers on their Ontario payrolls. Private‐sector employers may be eligible for an exemption from EHT on up to $450,000 of payroll. Public‐sector employers, and private‐sector employers with payrolls over $5 million are not eligible for the exemption. Based on Ontario’s Consumer Price Index, the EHT exemption will increase from $450,000 to $490,000, as of January 1, 2019. This will provide about $40 million in additional tax relief to Ontario employers, with the EHT reduced by an average of $690 for about 58,000 employers.
2018 BUDGET ANNOUNCEMENTS NOT BEING IMPLEMENTED
Surtax The 2018 Ontario Budget proposed adjustments to the rates, brackets, surtax and credits for Ontario’s Personal Income Tax (PIT). The government will not proceed with those changes, preventing a PIT increase of about $200, on average, for approximately 1.8 million people.
Small Business Limit The 2018 Ontario Budget proposed to parallel a federal measure to phase out the $500,000 business limit for corporations that earn between $50,000 and $150,000 of passive investment income in a taxation year. The federal changes apply for tax years that begin after 2018. The government will propose legislation to ensure that Ontario will not parallel this new federal restriction. All eligible Ontario small businesses will continue to receive the Ontario small business deduction and avoid the double taxation to corporations that the Federal government introduced.
Copyright @2018 by Peter Wiesner CPA, CA