Tax Alert: Ontario Economic and Fiscal Plan

Tax Alert – Ontario

March 26, 2020

The 2020 Ontario Budget was scheduled for release on March 25, 2020; however, as the province is responding to the COVID-19 crisis, it deferred its release and instead delivered the March 2020 Economic and Fiscal Update.

The following tax measures were announced:

Temporary Doubling of Employer Health Tax (EHT) Exemption

Ontario’s EHT is a payroll tax paid by employers based on total annual Ontario remuneration; the top rate is 1.95 percent. Private-sector employers (excluding registered charities) with a total remuneration amount of less than $5 million are currently eligible for an EHT exemption on up to $490,000 of their payroll.

In order to provide immediate financial relief to employers during the COVID-19 outbreak, the government is proposing to retroactively raise the current EHT exemption from $490,000 to $1 million for 2020. The exemption would return to its current level of $490,000 on January 1, 2021.

Interest and Penalty Relief

Beginning April 1, 2020, penalties and interest will not apply to Ontario’s businesses that miss any filing or remittance deadlines under select provincially administered taxes. This will continue for a period of five months, up until August 31, 2020, under the following tax programs:

• Employer Health Tax
• Tobacco Tax
• Fuel Tax
• Gas Tax
• Beer, Wine and Spirits Taxes
• Mining Tax
• Insurance Premium Tax
• International Fuel Tax Agreement
• Retail Sales Tax on Insurance Contracts and Benefit Plans
• Race Tracks Tax

The interest and penalty relief period is available to all Ontario businesses that are required to file returns and make remittances under these tax programs. This initiative complements the relief from interest and penalties from not remitting corporate income tax owing that was announced by the federal government on March 18, 2020.

Businesses will not be required to provide any documentation supporting their reasons for late filing or payments and they will not be required to advise the Ontario Ministry of Finance of their inability to meet their deadline(s).

New Regional Opportunities Investment Tax Credit

The government is proposing to introduce a new 10-percent refundable Corporate Income Tax credit for capital investments – the Regional Opportunities Investment Tax Credit.

Canadian-controlled private corporations (CCPCs) making qualifying investments that become available for use on or after March 25, 2020 in specified regions of Ontario will be eligible for the tax credit. Qualifying investments is defined as eligible expenditures, in excess of $50,000 and up to a limit of $500,000, for capital property included in Class 1 and Class 6 for the purposes of calculating capital cost allowance. Qualifying investments would include expenditures for constructing, renovating or acquiring eligible commercial and industrial buildings and other assets.

Postponement of Property Tax Reassessment

The government announced the postponement of planned property tax reassessments scheduled to take place for the 2021 taxation year; assessments for the 2021 taxation year will continue to be based on the same valuation date that was in effect for the 2020 taxation year.

For further details on any of the above, please contact your local MNP Advisor or visit mnp.ca