Finance Minister Peter Bethlenfalvy delivered the province’s 2021 Economic Outlook and Fiscal Review (the “Fiscal Review”) on November 4, 2021. More commonly known as the Fall Economic Statement, the Fiscal Review serves as a precursor to the Ford government’s 2022 budget.
Titled “Build Ontario”, the Fiscal Review provides an improved economic outlook, laying out how the government intends to build a foundation for recovery. The province’s deficit for fiscal year 2021-22 has been revised downward since the release of the province’s March budget from $33.1 billion to $21.5 billion. Furthermore, real GDP growth is projected to be over 4% for both 2021 (4.3%) and 2022 (4.5%).
|Original estimate (Budget 2021)
Beneficial Ownership reporting
The government is proposing to introduce rules applicable to privately held business corporations (publicly held corporations and their subsidiaries are exempt) requiring them to collect and maintain records on beneficial ownership. This information would be available upon request to various authorities, including tax authorities. The purpose of these new requirements is to reduce the use of corporations for tax evasion, money laundering or other financial crimes. These new rules would become effective on January 1, 2023.
The requirement would be applicable to an “individual with significant control”, meaning someone who owns, controls or directs at least 25% of voting shares or shares worth at least 25% of the fair market value of all outstanding shares. It also includes individuals with “direct or indirect influence over the corporation” even without meeting the 25% ownership requirement.
Certain information on these individuals would need to be collected:
- name, date of birth and address
- jurisdiction of residence, for tax purposes
- date they became or no longer are an individual with significant control
- description of how that individual has significant control and any interest and rights in the corporation’s shares
- a description of how the corporation maintains the required records each year
Updates would be required annually, as well as within 15 days from when the corporation becomes aware of a change.
The government states that it will undergo stakeholder consultations to ensure undue burden is not placed on business owners, although timing has not yet been provided.
Small Business Digitization Action Plan
The government has pledged to invest $40 million over the next two years to help Ontario businesses increase their digital presence. The Fiscal Review states that grants will be available to help businesses expand their reach online as well as Digital Transformation Grants to help them fund the implementation of digital strategies.
An additional $10 million over the next two years will create a new Small Business Digitization Competence Centre. Its purpose will be to provide small businesses with training and support with new equipment and processes.
Ontario Staycation Tax Credit
This new measure provides a refundable tax credit of 20% on eligible accommodation expenses up to $1,000 (maximum tax credit of $200) for an individual, or $2,000 (maximum tax credit of $400) for a family.
This refundable tax credit can be claimed on the individual’s tax return. It will be available on stays of less than a month at eligible forms of accommodation, including hotels, motels, resorts, lodges, BnBs, cottages, campgrounds, etc., in Ontario during calendar year 2022. The stay(s) must be personal in nature and not be reimbursed.
Ontario Jobs Training Tax Credit
This measure, which was introduced in Budget 2021, provides a refundable tax credit of up to $2,000 for residents of Ontario who have a Canada training credit limit. The credit is equal to 50% of eligible expenses for the year and can be claimed on an individual’s tax return. The Fiscal Review extends this refundable tax credit for an additional year, making it available for both 2021 and 2022.
Ontario Seniors’ Home Safety Tax Credit
This measure, which was introduced in Budget 2020 and applicable for 2021, provides seniors with a refundable tax credit of 25% of eligible home renovation expenses, up to a maximum credit of $2,500. The tax credit (claimed on an individual’s tax return), can be claimed on a maximum $10,000 of eligible expenses per household, provided the home is the principal residence of the senior or it will be their principal residence within 24 months following the end of the year.
The Fiscal Review extends this refundable tax credit for an additional year, making it available for both 2021 and 2022.
The Fiscal Review includes the government’s recent announcement to increase the general minimum wage to $15/hour as of January 1, 2022. This new $15 rate will also apply to liquor servers, who currently earn $12.55/hour as compared to the current general minimum wage of $14.35/hour.
Other Tax Measures
Various property tax measures
The government announced that property assessments for both 2022 and 2023 will be based on the same valuation date used for 2021, after consultation with stakeholders.
The government proposes to exempt the Universite de l’Ontario francais’ new campus from property tax.
The government will also temporarily suspend the 5% cap on annual increases for airports, which make payments in lieu of property tax tied to the annual number of airline passengers. The purpose of this change is to allow municipalities to recover greater payments as airports return to pre-pandemic levels.
The government will extend the period for providing provincial education tax assistance under the Brownfields Financial Tax Incentive Program, which provides incentives to redevelop contaminated lands. The period will be increased from three years to six years for business developments and 10 years for residential developments.
For on-farm businesses:
- Municipalities that have adopted the optional small-scale on-farm business subclass will have the option to increase the assessment threshold available to obtain a reduced tax rate from $50,000 to $100,000.
- Farm property tax treatment available to the processing of maple sap would be provided to all edible tree saps.
- For farm woodlots, the property tax exemption would be increased from 20 to 30 acres.
In the Taxation Act, 2007,
- To make the Ontario Tax Reduction (OTR) and Low-income Individuals and Families Tax (LIFT) credit available on a deceased person’s final tax return.
- To make the OTR, LIFT and certain refundable credits unavailable to a bankrupt person.
- To update the definition of “shared-custody parent” for the Ontario Child Benefit to agree with the federal definition.
- To clarify the availability of the credit for unused tuition education tax credits.
In the Corporations Tax Act, clarifying that the permanent establishment rule in 4(12) does not apply to the Ontario premium tax liability of an insurance corporation licensed to sell insurance in Ontario.
In the Employer Health Tax Act, increasing instalment thresholds for interest and penalties from $600,000 to $1.2 million.
The Canada Training Credit was introduced in the 2019 federal budget and allows individuals to claim a refundable tax credit on eligible tuition and fees paid for eligible training and education up to a limit. The limit, available for individuals between 25 – 65 years of age, accumulates annually at $250/year up to a maximum lifetime limit of $5,000. Students, homeworkers, hunting and fishing guides, and wilderness guides will also see an equivalent increase to their minimum wage of 4.5%. Going forward, minimum wage increases will be tied to the Ontario Consumer Price Index as of October 1, 2022.
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