Tax Highlights from the 2020 Ontario budget
On November 5, 2020, Finance Minister Rod Phillips presented the Province’s budget.
The Ontario 2020 budget:
- Permanently increases the Employer Health Tax exemption to $1 million;
- Proposes a new Seniors’ Home Safety Tax Credit for the 2021 taxation year;
- Extend filing deadlines for the Ontario Research and Development Tax Credit; and,
- Extends filing deadlines for certain cultural media tax credits.
Business Initiatives in Ontario’s 2020 Budget
Employer Health Tax (EHT)
Previously, the EHT exemption had been temporarily increased from $490,000 to $1 million.
The Ontario 2020 budget proposes to:
- Make the $1 million EHT exemption permanent
- Make the next scheduled inflationary adjustment of the EHT exemption January 1, 2029
- Make the annual payroll threshold for payment of monthly EHT installments $1,200,000 (previously
Ontario Research and Development Tax Credit (ORDTC)
Currently, corporations must file their ORDTC claim within 18 months of their taxation year-end.
The budget proposes to extend this deadline, if it would ordinarily fall in the period between March 13, 2020 and December 30, 2020, to the earlier of:
- Six months after the standard deadlines, and
- December 31, 2020.
This mirrors the Federal scientific research and experimental development claim filing deadline extensions.
Cultural Media Tax Credits
The Ontario 2020 budget purposes to temporarily extend some timelines and amend some requirements
for four cultural media tax credits:
- Ontario Film and Television Tax Credit;
- Ontario Production Services Tax Credit;
- Ontario Interactive Digital Media Tax Credit; and,
- Ontario Book Publishing Tax Credit.
Corporate Income Tax Rates
The budget did not change the Ontario corporate income tax rates, which remain as follows:
|Federal and Ontario Income Tax Rates||Ontario||Federal + Ontario|
|CCPCs||Active business income to $500k||3.50%||3.20%||12.50%||12.20%|
The Ontario small business tax rate decreased to 3.2% on January 1, 2020.
Personal Tax Initiatives in Ontario’s 2020 Budget
Seniors’ Home Safety Tax Credit (SHSTC)
This tax credit will apply for improvements made to a senior’s principal residence in Ontario to facilitate safety and accessibility. The SHSTC will provide a refundable tax credit of 25% on up to $10,000 of eligible expenses (maximum credit of $2,500) that are paid or become payable in 2021. Individuals, who share a home, including spouses and common-law partners, can share these eligible expenses. Taxpayers must retain receipts and claim the SHSTC on their 2021 personal income tax returns.
The government is considering ways to provide Ontario residents with support of up to 20% for eligible Ontario tourism expenses. This is to encourage Ontario residents to discover Ontario in 2021, but only when it is safe to do so.
Personal Income Tax Rates
The budget does not change the Ontario personal income tax rates. The combined Federal/Ontario personal income rates at the top marginal rate (taxable income greater than $220,000) are as follows:
- Ordinary income – 53.53%
- Capital gains – 26.76%
- Eligible dividends – 39.34%
- Non-eligible dividends – 47.74%
For more tax information please contact the professional tax accountants at Hogg, Shain & Scheck.