Ontario 2021 Budget: Impact on Business Owners and Individuals

The Ontario Government announced their 2020-2021 Budget on March 24th with the majority of initiatives focusing around two pillars: Protecting People’s Health and Protecting Ontario’s Economy. Investments are directed to many different priority groups with a focus on the COVID-19 vaccination effort, long-term care homes, and supporting businesses heavily impacted by the pandemic. A deficit of $38.5 billion is projected for 2020-21. 2021-22 and 2022-23 see projected deficits of $33.1 billion and $27.7 billion respectively. There were no changes to corporate or personal income tax rates. If you have any questions about how the measures below may impact you or your business, please reach out to your Bateman MacKay Business Advisor.

Corporate Budget Measures

The proposed measures related to businesses include:

  • A second round of Ontario Small Business Grant Payments between $10,000 and $20,000
    • Eligible small businesses must have less than 100 employees and have experienced a revenue decline of 20% or more
    • Businesses that have already received the first payment will not have to reapply and will automatically receive the second
    • Following the budget announcement, the deadline to apply was extended to April 7th. Any business that is eligible and has not applied should do so immediately
  • Temporarily double the Regional Opportunities Investment Tax Credit (ROITC) from 10% to 20%
    • Increase the maximum credit to $90,000 per taxation year
    • For qualifying investments that become available for use after March 23, 2021, and Before January 1, 2023
  • Ontario Tourism and Hospitality Small Business Support Grant
    • One-time payment of between $10,000 to $20,000 to eligible small businesses
    • Eligible businesses include hotels, motels, travel agencies, amusement and water parks, hunting and fishing camps, and recreational and vacation camps that have less than 100 employees and a revenue decline of 20% or more
    • Recipients of the Ontario Small Business Grant are not eligible for this grant.

January 1, 2021, Corporate Income Tax Rates

OntarioFederal and Ontario
General11.50%26.50%
Manufacturing & Processing10.00%25.00%
Small Business*3.20%12.20%

*On first $500,000 of active business income.

Personal Measures

The proposed personal measures from the 2020-21 budget include:

  • New Ontario Jobs Training Tax Credit
    • A temporary, refundable personal tax credit for 2021 for eligible expenses that can be claimed for the Canada Training Credit
    • Ontario residents who are between 26 and 65 years old at the end of 2021 and have a Canada training credit limit for 2021 greater than zero can claim 50% of eligible expenses up to $2,000
  • Third round of COVID-19 Child Benefit Payments
    • Parents will receive $400 per child in grade 12 or under and $500 for children/youth with special needs (age 21 years and younger)
    • Parents who previously received the benefit do not need to apply again
  • 20% Enhancement to the Childcare Access and Relief from Expenses (CARE) Tax Credit
    • Temporary increase of 20% for the 2021 tax year
    • A support increase from $1,250 to $1,500 on average

Personal Combined Federal and Ontario Top Marginal Tax Rates

2021
Interest and regular income53.53%
Capital gains26.76%
Eligible dividends39.34%
Non-eligible dividends47.74%

Other Significant Budget Measures

  • Further delaying property tax reassessments
  • Significant investments in the vaccination effort and PPE for front line workers and vulnerable people
  • Investment in long-term care conditions, additional beds, and workers
  • $2.8 billion investment in broadband infrastructure
  • $1 billion for financial relief to municipalities
  • $175 million for mental health and addiction issues
  • $50 million for faith-based and cultural organizations

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