On April 11, 2019, the Ontario government tabled its 2019-20 fiscal budget, “Protecting What Matters Most” that sets out a five-year path to a balanced budget. The budget anticipates deficits of $11.7 billion for 2018-19 and $10.3 billion for 2019-20, and projects a modest surplus in 2023-24.
According to budget documents, the government has already reduced the deficit by $3.3 billion, going from $15 billion to a projected $11.7 billion for the 2018-19 fiscal year. The government is planning to further reduce the deficit by $1.4 billion in the 2019-20 fiscal years, lowering it to $10.3 billion. The government is projecting a modest surplus in 2023-24.
The budget does not include any changes to the corporate or personal tax rates. However, the government is providing $3.8 billion in Ontario Corporate Income Tax relief over six years to support business investment through the Ontario Job Creation Investment Incentive. The incentive will help businesses make investments in machinery upgrades and expansions to help them grow and stimulate job creation. These incentives are being implemented rather than cutting the corporate tax rate from 11.5 percent to 10.5 percent, as the Tories had promised in the election. They say this move will be more beneficial to businesses.
Budget 2019-20 includes the following measures that will be of interest to employers and payroll specialists:
- Modernizing and streamlining the Ministry of Labour enforcement efforts by helping employers to “educate themselves” on their workplace obligations. The move to encourage employers to be more “self-reliant” coincides with an $11 million cut to the ministry’s budget, from $317 million in 2017-18 to $306.1 million this year. According to the budget, the ministry will develop “automated digital tools” to help employers educate themselves about employment standards so the ministry can “focus on high-risk, high-impact investigations. For example, last March the Ministry of Labour announced a new online self-audit tool for employers to use to replace “cumbersome paper audits” and give “job creators a simple, easy and convenient way to demonstrate they follow the rules.”
- A review of the workers’ compensation system with a report provided to Labour Minister Laurie Scott is expected by the end of the year. The operational review of the Workplace Safety and Insurance Board (WSIB) is aimed at ensuring “cost efficiency and effectiveness” and the sustainability of the board’s funds. The review will look at how the WSIB functions in comparison to “competing jurisdictions and private sector insurers.” Privatizing the system is not part of the review’s mandate, but the independent advisers charged with leading it could make that recommendation. One adviser will be Sean Speer of the Macdonald-Laurier Institute and more advisers could be announced later.
- The budget papers also indicate that amendments will be made to the Pension Benefits Act to clarify rules relating to contribution holidays and to expand the target benefit framework to better enable non-union workplaces to participate.
- Reducing the minimum Ontario labour expenditure required to qualify as a specialized digital game corporation to $500,000 (currently a company must spend at least $1 million in its taxation year on Ontario labour expenditures for eligible digital games.) This change is effective for taxation years beginning after April 11, 2019.
- A plan to review the Ontario Innovation Tax Credit, as well as other research and development incentives, to consider the appropriate level of support for business, and will consult with businesses to develop a plan in the coming months.
- A plan to review the cultural media tax credit certification process to streamline administration, reduce the tax credit application backlog and help companies receive their tax credits faster.
- Introduction of a new, refundable Ontario Childcare Access and Relief from Expenses (CARE) personal tax credit beginning with the 2019 tax year. The new tax credit will be based on the taxpayer’s family income and eligible child care expenses used for purposes of determining the taxpayer’s child care expense deduction. The tax credit could provide up to $6,000 per child under the age of seven, up to $3,750 per child between the ages of seven and 16, and up to $8,250 per child with a severe disability. The new credit will be calculated as the amount of the taxpayer’s eligible child care expenses multiplied by the credit rate, which decreases as family income increases and is eliminated when family income is greater than $150,000. The budget indicates that, for the 2019 and 2020 tax years, taxpayers may claim the new tax credit on their tax returns. Starting with the 2021 tax year, Ontario intends to allow families to choose to either, apply for regular advance payments throughout the year or receive a single payment when filing their tax returns. The province says it will work with the Canada Revenue Agency and provide further details about advance payment delivery in time for the 2021 implementation.
- Investing $90 million in a new dental program for seniors 65 years old and over that will start by late summer 2019. This initiative will benefit individual seniors with annual incomes of $19,300 or less, and senior couples with combined annual incomes of less than $32,300. The service could be accessed through public health units, community health centres and aboriginal health access centres, with the potential for mobile dental units in the future. The program will cost nearly $100 million per year.
- Introducing a Driver Care Card, which would streamline access to care and make insurance claims processing easier; including, giving drivers more choice when deciding which auto insurance coverage suits their needs and giving them more control over their rates. However, the budget lacks details on these measures.
- Committing $11.2 billion of the total estimated $28.5 billion cost to support four rapid transit projects in the Greater Toronto Area (GTA), significantly over-delivering on the government’s initial commitment to inject an additional $5 billion in capital funds into subway extensions. The four projects include: the Yonge North Subway Extension; the Scarborough Subway Extension; the Eglinton Crosstown West Extension; and a new subway, the Ontario Line. In addition, the government is introducing the largest increase in GO Transit rail service in five years, including more trips per day, introducing route expansion and looking at the feasibility of providing flexible food and beverage services across the GO Transit rail network.
- Creating a new Northern Ontario Internship Program that will remove a requirement that internship applicants be recent university or college graduates, allowing new workers, people starting a new career and the unemployed and the underemployed to be eligible for the program.
- Fighting the federal government’s job-killing carbon tax that will increase costs for automotive, manufacturing, transportation, mining and forestry activities and are putting thousands of jobs at risk.
- Cutting red tape by 25 percent by 2020. Once fully implemented, these changes are expected to provide Ontario businesses with over $400 million in ongoing savings on their compliance costs.
- Calling on the federal government to press the United States administration for immediate and permanent removal of its tariffs on Canadian steel and aluminum and to ensure that no other trade impediments such as quotas are introduced.
Other tax measures that may be of interests:
- Effective January 1, 2020, the elimination of the Estate Administration Tax on the first $50,000 of an estate’s value, and would be reduced by $250 for larger taxable estates. The Estate Administration Tax will continue to apply at the current rate of 1.5 percent for every $1,000, or part thereof, of the value of the estate exceeding $50,000. The budget also extends the filing deadline of the Estate Administration Tax Information Return with the Ministry of Finance to 180 days (from 90 days) after the receipt of an estate certificate and extends the deadline for filing amended information returns to 60 days (from 30 days). The budget also says that Ontario will explore options to provide further Estate Administration Tax relief, including additional tax relief in respect to charitable donations. However, the budget does not provide additional details.
- Creation of a specialized unit of tax experts to work with federal and provincial tax officials to find and address tax loopholes and abuse.
- Review of the property tax assessment system to explore opportunities to enhance the accuracy and stability of property tax assessments, support a competitive business environment and provide relief to residents, among other things. The government says it will seek input on these issues through consultation with residents, businesses, municipalities and other stakeholders.
- Ending hallway health care and putting patients first by accelerating the development of 30,000 long-term care beds and delivering on mental health and addictions supports with an additional investment of $384 million in hospitals, an additional $267 million in home and community care and $3.8 billion for mental health, addictions and housing supports over 10 years, beginning with the creation of a mental health and addictions system.
- Expansion of the sale of beer and wine to corner stores, big box stores and more grocery stores.
- Creation of a tailgating permit for eligible sporting events, introducing legislation to let municipalities make rules about alcohol consumption in public spaces, such as parks and extending hours of alcohol service at licensed establishments, allowing them to start serving alcohol at 9 a.m.
- Commitment of up to $1 billion over the next five years to create up to 30,000 child care spaces in schools, including approximately 10,000 spaces in new schools, making life easier for parents and families by helping them find more affordable child care.
- Improvement of the condition of schools to support better learning and keep children and students safe by investing $1.4 billion in school renewal in the 2019–20 school year.
- Strengthening Ontario’s education curriculum, with particular emphasis on math and science, as well as job skills such as trades and coding, and life skills such as financial literacy.
- Lowering of tuition rates by 10 percent for students at every publicly funded college and university, starting in the 2019–20 school year and freezing tuition fees for the 2020–21 school year. Students enrolled in a college program will see an average tuition reduction of approximately $340, and students enrolled in an undergraduate arts and science degree will see an average tuition reduction of $660.
- Making home ownership and renting more affordable by helping to increase the supply of housing that people need through the forthcoming Housing Supply Action Plan.
- Issuing new driver’s licences and licence plates following the exhaustion of existing stock. The new Ontario Licence Plate and Driver’s Licence will include the elements of Ontario’s new trillium and wider visual identity system, accompanied by a new licence plate tagline that speaks to Ontario’s welcoming and inclusive culture, along with the government’s people-focused mandate: “A Place to Grow.”
On April 11, 2019, the Ontario government tabled Bill 100, Protecting What Matters Most Act (Budget Measures), 2019 to implement some of the 2019 budget measures needing legislative approval. Bill 100 includes the amendments to the Pension Benefits Act.