On March 24, 2021, Minister of Finance and President of the Treasury Board, Peter Bethlenfalvy, presented the 2021 Ontario budget. This year’s budget focuses on protecting the health of Ontario residents while, at the same time, trying to protect the provincial economy. With a deficit of $33.1 billion forecast for the current year, the government does not expect to return to a balanced budget until 2029, give or take a couple of years because of the economic uncertainty created by the COVID-19 pandemic.
As anticipated, the budget includes substantial spending to address the pandemic, including $1 billion for Ontario’s ongoing vaccination efforts, $2.3 billion for COVID-19 testing and contact tracing, $1.4 billion for personal protective equipment, and $1.8 billion for hospital care. In addition, several pandemic relief programs have been extended or introduced to provide direct funding to long-term care, municipalities, families, small businesses, and the battered tourism industry.
The budget contains no new taxes or tax increases. However, several notable tax measures and significant funding initiatives were announced.
Income Tax Measures
Regional Opportunities Investment Tax Credit
The budget includes a proposal to double the rate for the Regional Opportunities Investment Tax Credit to 20% for property that becomes available for use in a taxation year and in the period that begins on March 24, 2021 and ends before January 1, 2023. This corporate income tax credit is only available for eligible expenditures in excess of $50,000 and up to $500,000 by Canadian-controlled private corporations in one of 34 areas designated by the province.
Anti-avoidance Provisions
The province has indicated that it intends to consult with the federal government on plans to modernize Canada’s anti-avoidance rules, including the General Anti-Avoidance Rule (GAAR), to protect provincial revenues.
Temporary Ontario Jobs Training Tax Credit
The province is proposing to introduce a temporary Ontario Jobs Training Tax Credit. This refundable personal income tax credit will be calculated based on 50% of eligible expenses, to a maximum of $2,000, for the 2021 tax year.
Eligibility for the credit will be tied to the Canada training credit limit for federal income tax purposes, as determined by the Canada Revenue Agency. Eligible expenses will also be the same as under the federal program, including tuition or fees paid in respect of post-secondary education courses, occupational skills courses, and occupational, trade, or professional exams.
Other Personal Income Tax Credits
The government will temporarily increase the Childcare Access and Relief from Expenses (CARE) Tax Credit for 2021 by providing a one-time bump equal to 20% of a recipient’s otherwise calculated credit amount. The CARE Tax Credit supports low and moderate-income families by providing a personal tax credit of up to 75% of eligible childcare expenses.
The introduction of a Seniors’ Home Safety Tax Credit for 2021 was also announced, with details to be provided at a later date.
Property Tax Measures
The widely anticipated announcement of the reassessment of all property in Ontario as part of this year’s budget fell flat. Instead, the province has decided to extend the assessment roll yet again. This will result in a six-year assessment roll spanning the
2017–2022 tax years.
As a result, property tax assessments in place for this year will be returned next year, subject to any physical changes to a property. This means that filing an appeal of an assessment in 2021 will also affect the 2022 tax year. Ontario property owners and tenants are reminded that the deadline for filing an appeal for the current assessment cycle is March 31, 2021.
The budget also indicates that the province is gathering feedback from stakeholders about the timing and valuation date for the next reassessment. The results of these consultations are expected to be released in the fall of 2021.
Commodity Tax Measures
Unregulated Tobacco
In this year’s budget, the province outlined its strategy to address unregulated tobacco sales. While continuing to consult with First Nations partners, retail associations, industry groups, and public health stakeholders, the government believes that it has the agreement and support required to move forward with its tobacco regulation strategy. To this end, Ontario intends to address tobacco smuggling and disrupt the efforts of organized crime by strengthening border enforcement in coordination with federal partners and supporting certain police initiatives that target contraband tobacco.
In addition, the province has indicated that it will strengthen its controls over certain segments of the tobacco industry by:
- increasing oversight over raw leaf tobacco using state-of-the-art digital technologies; and
- improving the regulation of on-reserve sales of cigars through discussions with cigar wholesalers.
Government Funding Initiatives
This year’s budget includes several initiatives designed to protect Ontario’s economy and support businesses during the province’s recovery from the pandemic, as well as improve competitiveness and build a strong foundation for future economic growth. Specifically, the province has committed to the following key investments:
- $400 million over four years to create an Invest Ontario Fund that will encourage investments in the key sectors of advanced manufacturing, technology, and life sciences;
- $56.4 million over the next four years to create the Ontario Vehicle Innovation Network (OVIN);
- $50 million over the next two years for the Northern Ontario Heritage Fund Corporation (NOHFC) to support investments in infrastructure, culture, economic development, and training;
- $100 million for the creation of a program to help hard-hit tourism and hospitality businesses;
- $50 million for grants to eligible faith-based and cultural organizations that are not currently able to access other provincial grants;
- $10 million for a one-year extension to the Enhanced Agri-food Workplace Protection Program to prevent and control
COVID-19 and any unforeseen health and safety issues; - $5 million for AgriRecovery initiatives related to livestock processing capacity;
- $5 million over the next two years for the Ontario Junior Exploration Program, which will provide junior mining companies up to $200,000 in funding for mineral exploration or development projects; and
- $1 million to support enhancements to the Ontario Made program to reach more retailers and manufacturers and encourage awareness among consumers of products made in Ontario.
More Information
Further information on the 2021 Ontario budget may be found on the province’s web site at: https://budget.ontario.ca/2021/
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirect® line at 1.800.667.1600.