On March 26, 2024, Minister of Finance Peter Bethlenfalvy tabled Ontario’s 2024 budget. Facing a high level of global economic uncertainty, the government has eschewed its previous plan to balance the budget this year and is now projecting a deficit of approximately $9.8 billion for 2024–25. However, the government has maintained its “building” theme, with significant capital investments planned for provincial and municipal infrastructure, including measures to facilitate housing construction, expand healthcare and education, and attract further investment in Ontario. The budget also contains spending for skills development and training programs and various initiatives to support healthcare, vulnerable populations, and community safety.
This year’s budget includes several significant tax measures—many of which were previously announced—as outlined below.
Gasoline and Fuel Tax Measures
Extension of Temporary Rate Reductions
As announced in advance of the budget, the government has committed to extending the temporary tax rate cuts for gasoline and diesel fuel that were put in place on July 1, 2022. The province’s gasoline and fuel tax rate reductions are 5.7 cents and 5.3 cents per litre, respectively, and were set to expire on June 30, 2024. Under the proposed extension, the tax rate on gasoline and diesel will remain at 9 cents per litre until December 31, 2024.
Carbon Pricing
The province has indicated that it will introduce legislation requiring a referendum before implementing any new provincial carbon pricing program and continue to ask the federal government to eliminate the federal carbon tax to help make life more affordable for Ontarians.
Alcohol Tax Measures
This year’s budget proposes to eliminate the wine basic tax, effective April 1, 2024. The wine basic tax currently applies to sales of Ontario wine and wine coolers in on-site winery retail stores. This measure follows the previously announced cancellation of 4.6% increases to the beer basic tax and Liquor Control Board of Ontario mark‐up rates that were to take effect on March 1, 2024.
In addition, to create an improved competitive marketplace for Ontario-based producers and consumers, a targeted government review of taxes and fees on all alcoholic beverages will be conducted.
Tobacco Tax Measures
To ease the compliance burden, this year’s budget contains a proposal to move the monthly filing deadline for tobacco tax registrants from the tenth to the twenty‐eighth of each month, effective July 2024. In addition, the government is proposing to enhance fines in the Tobacco Tax Act to address contraband tobacco and will continue to support police efforts to break the link between organized crime and illegal tobacco products.
Corporate Tax Measure
Adjustment to Computer Animation and Special Effects Tax Credit
As proposed in previous budgets, the government intends to simplify its Ontario Computer Animation and Special Effects Tax Credit, which provides eligible film and television production companies with an 18% refundable corporate income tax credit on qualifying expenditures.
Under proposed new rules, which will take effect for eligible computer animation or special effects work beginning on or after March 26, 2024, a production will no longer require certification under one of the province’s other film and television industry tax credits to qualify for the Computer Animation and Special Effects Tax Credit. Instead, a qualifying corporation will be required to meet a minimum labour expenditure threshold of $25,000 in Ontario for a film and television production prior to claiming the credit. In addition, certain productions will be excluded from tax credit eligibility, including instructional, music, and gaming videos.
Property Tax Update
Unfortunately, this year’s budget announcement provides little clarity on the government’s future plans for property taxation in Ontario. While the budget confirms that a general property reassessment will continue to be deferred until the ongoing property assessment and taxation system review is finished, the government has only acknowledged that consultations under this review have commenced and will continue this spring. No timeline for completion has been provided.
Speculation and Vacancy Tax Update
While specific measures were not announced, the budget indicates that the government intends to strengthen its Non-Resident Speculation Tax through amendments designed to improve compliance and fairness. Similarly, the government plans to extend the authority to implement a municipal tax on vacant homes to all municipalities and develop a policy framework to encourage them to set higher tax rates for foreign-owned homes.
More Information
In addition to the measures noted above, the government has indicated that it will continue its comprehensive review of the province’s tax system initiated last year, with a focus on identifying opportunities for modernization, supporting productivity, innovation, and research, and ensuring greater fairness and transparency.
Further details on Ontario’s 2024 budget may be found on the province’s website.
For information on new and extended government funding initiatives included in this year’s Ontario budget, please navigate to Mentor Works news here.
To read key updates from all of Canada’s 2024 provincial budgets, please visit our Key Changes | 2024 Canadian Federal and Provincial Budgets page.
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to contact the Ryan TaxDirect® line at 1.800.667.1600 or taxdirect@ryan.com.