- Peter Wiesner CPA, CA
Ontario Budget Nov 5, 2020 -Highlights
The government’s fiscal plan involves a record $187 billion in expenses, with $30 billion specifically in pandemic-related spending.
The province will also have a record deficit of $38.5 billion.
The budget lays out three different scenarios that could see the province’s deficit levels change in the coming years depending on how long the pandemic lasts.
Currently, it is forecasting lower deficits of $33.1 billion in 2021-2022 and $28.2 billion in 2022-2023 if economic growth progresses at a moderate rate.
The fiscal plan does not lay out a path to balance, with the government saying that will come in the 2021 budget.
No new tax increases on the personal tax side. Top rate remains 53.53% over $220,000 in taxable income.
Corporate tax rate for a small business corporation in Ontario under $500,000 in taxable income goes from 12.5% to 12.2%.
Seniors’ Home Safety Tax Credit
Budget 2020 proposes the new temporary Seniors’ Home Safety Tax Credit, a refundable tax credit for eligible claimants whether or not they owe income tax for 2021.
The proposed credit would not be dependent on income and could be claimed for eligible expenses by senior homeowners, renters or people who live with relatives who are seniors.
The Seniors’ Home Safety Tax Credit would equal 25 percent of up to $10,000 in eligible expenses for a senior’s principal residence in Ontario. The maximum credit would be $2,500; the $10,000 maximum would be shared by the people who live together, including spouses and common-law partners.
To be eligible, expenses must be paid or become payable in 2021 and must relate to renovations that improve safety and accessibility or help a senior be more functional or mobile at home. 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;
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.
Individuals would be able to claim the credit if the improvement was made to their principal residence, or to a residence that is reasonably expected to become their principal residence within 24 months after the end of 2021.
Ontario EHT Changes
Ontario’s EHT is a payroll tax paid by employers based on total annual Ontario remuneration; the top rate is 1.95 percent. Private-sector employers with a total remuneration amount of less than $5 million were previously eligible for an EHT exemption on up to $490,000 of their payroll. As part of Ontario’s Action Plan: Responding to COVID-19 that was released in March 2020, the EHT exemption was temporarily increased from $490,000 to $1 million for 2020. This increase was set to expire January 1, 2021; Budget 2020 proposes to make the increase permanent.
Currently, employers with annual Ontario payroll over $600,000 are required to pay EHT by way of monthly installments. The government is proposing to double this threshold payroll amount to $1.2 million, beginning in 2021. Private-sector employers who claim the full exemption would be required to remit EHT installments when they owe more than $3,900 in EHT for the year.
To support Ontario’s tourism sector, the government is exploring ways to provide Ontario residents with support of up to 20% for eligible Ontario tourism expenses, to encourage them to discover Ontario in 2021 when public health experts advise that it is safe to do so. The government will consult with stakeholders; details will be announced later.
Wine Tax and Beer Tax Rates
Ontario will freeze beer tax rates until March 1, 2022, and is proposing to retroactively cancel the legislated increase in wine basic tax rates that became effective June 1, 2020 (the government has issued an order under the Financial Administration Act that prevents the scheduled increase from applying between June 1, 2020 and December 31, 2020).