News and Insights

Ontario Budget 2018

Tax Development Mar 28, 2018

On March 28, 2018, the Honourable Charles Sousa, Minister of Finance, presented the 2018 Ontario budget, titled “A Plan for Care and Opportunity.”  This budget announced a number of significant investments in health care, child care, home care and mental health, as well as new measures to create more job opportunities for the residents of Ontario.  In addition to the commodity tax issues discussed below, the following is a summary of other tax measures announced:

  • Adjustments to the Ontario personal income tax rates and brackets, as well as  the elimination of the surtax;
  • Enhancements to the Ontario Research and Development Tax Credit and the Ontario Innovation Tax Credit;
  • Restrictions on the eligibility of small employers for the Employer Health Tax exemption; and
  • Changes to parallel federal measures announced on income sprinkling, the small business limit, and closing tax loopholes. 

Excise Duty on Cannabis

In conjunction with the federal government’s taxation framework for cannabis, the province intends to enter into an agreement with the federal government to receive 75 percent of the federal excise duty collected on cannabis intended for sale in Ontario.

First Nations HST Point-of-Sale Rebate

Goods purchased off-reserve by status Indians, bands or band councils are generally eligible for a point-of-sale rebate of the provincial portion of the Harmonized Sales Tax (HST), currently at 8 percent.  Consistent with the treatment applied to the sale of tobacco and alcohol, the sale of cannabis for recreational use will not be eligible for the HST point-of-sale rebate upon legalization. 

Medical cannabis purchased from a federal licensed producer by a registered status Indian will continue to be eligible for the Ontario HST point-of-sale rebate for purchases made off-reserve by a status Indian.

Tobacco Tax

Consistent with a 2017 budget announcement and a goal to discourage smoking, this year’s budget announced that tobacco tax rates will increase by 2 cents to 18.475 cents per cigarette or gram of tobacco products, excluding cigars, effective March 29, 2018. This equates to a $4.00 increase in tax for a carton of 200 cigarettes.  In 2019, an additional increase of $4.00 per carton is planned by the government.  Tobacco product wholesalers that do not collect tobacco tax will be required to complete an inventory of tobacco products on hand at 11:59 pm on March 28, 2018 and remit the increased tax amount based on the inventory held.

The budget also proposed a number of compliance measures to curb the availability of unregulated tobacco.

More Information

Further information on Ontario’s 2018 budget may be found on the province's website at:  Ontario Budget 2018

If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirectTM line at 1.800.667.1600.