2019 Ontario Budget Overview

On April 11, 2019 Ontario’s finance minister Vic Fedeli unveiled Ontario’s first provincial budget under Premier Doug Ford.

In brief, the government aims to balance the budget by 2023-2024 and grow total revenue at an average annual rate of 3%, while program expenses will grow at an average annual rate of 1%.  Additionally, $26 billion is projected for individuals, families and businesses in relief over the next six years. The government projects a deficit of $11.7 billion in 2018-19, with projections that will steadily reduce the deficit to $5.6 billion in 2021-22.

Significant highlights include the following tax initiatives:

• Corporate/ Personal income tax rates remain the same
• A new Ontario Job Creation Investment Incentive
• The Ontario Childcare Access and Relief from Expenses (CARE) tax credit
• Reduction in estate administration tax for all estates

Business Income Tax Measures

Corporate Income Tax Rates

The budget did not announce changes to Ontario’s corporate tax rates and they will remain the same.

Ontario Job Creation Investment Incentive

In an effort to reduce corporate taxes, the government will provide $3.8 billion in tax relief over six years through faster write-offs of capital investments under the Ontario Job Creation Investment Incentive.

The incentive includes an immediate 100 percent write-off for:

• manufacturing and processing machinery and equipment
• clean energy equipment
• As well as an accelerated write-off for most other assets

This measure parallels the capital cost allowance enhancements announced in the federal government’s 2018 Budget and covered in further detail in the 2018 Fall Economic Statement

Passive Investment Income & Small Business Deduction Limit (SBD limit)

The provincial government does not intend to phase out the $500,000 SBD limit for Canadian-controlled private corporations (CCPCs) that earn between $50,000 and $150,000 of passive investment income in a taxation year, for taxation years beginning after 2018.

Other Tax Measures

Personal Income tax Rates

The budget did not announce changes to Ontario’s corporate tax rates and they will remain at the current rates.

CARE Tax Credit

The new Childcare Access and Relief from Expenses (CARE) tax credit is designed to provide up to 75 percent of eligible child care expenses for families. With this new refundable personal income tax credit, eligible families would receive up to 75 percent, which is gradually reduced as income rises, of their eligible child care expenses incurred as of January 1, 2019.

Estate Administration Tax

The Ontario government also proposed an Estate Administration Tax cut for all taxable estates. Effective January 1, 2020, the Estate Administration Tax would be eliminated for taxable estates with assets of $50,000 or less and would be reduced by $250 for larger taxable estates. Overall, this provides an average tax cut across all taxable estates of about 20 percent.

Tax Evasion & Avoidance

The Province will create a specialized unit of tax experts to work with federal and provincial officials in an effort to address tax loopholes and abuses.