On March 25, the Ontario government delivered its economic and fiscal update. This update included Ontario’s Action Plan: Responding to COVID‑19, which outlines the government’s $17 billion response to ensure our health care system, communities and economy are positioned to weather the challenges ahead. This article summarizes key tax and other measures to support Ontario businesses, people and jobs, as introduced on March 25.
Temporary Doubling of the Employer Health Tax Exemption
The Employer Health Tax (EHT) is a payroll tax paid by employers based on their total annual Ontario remuneration, and has a top rate of 1.95 per cent. Private-sector employers with total annual Ontario remuneration of less than $5 million are currently eligible for an EHT exemption on up to $490,000 of their payroll. Private-sector employers (except registered charities) with total annual Ontario remuneration over $5 million, and public-sector employers are not eligible for the exemption.
The government will retroactively raise the 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.
Increasing the exemption to $1 million would provide additional EHT relief of up to $9,945 per eligible employer. With this additional relief, eligible employers could benefit by up to $19,500 in total EHT relief.
Providing Interest and Penalty Relief for Ontario Businesses
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 provincially administered 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; and
- 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. During the relief period, penalties and interest will not apply to late returns or remittances made 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).
Regional Opportunities Investment Tax Credit
The government is introducing a new 10 per cent refundable Corporate Income Tax credit for capital investments. An eligible corporation is a Canadian-controlled private corporation that makes qualifying investments that become available for use on or after March 25, 2020 in specified regions of Ontario would be eligible for the tax credit. “Available for use” refers to the rules set out in the Income Tax Act (Canada) that determine the taxation year in which a taxpayer can start to claim capital cost allowance for a depreciable property. Qualifying investments would be eligible expenditures 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. The tax credit would be available for expenditures in excess of $50,000 and up to a limit of $500,000 for qualifying investments that become available for use in the taxation year. Specified regions can be found here.
Postponing Planned Property Tax Reassessment
The government is postponing the planned property tax reassessment for 2021. This means that 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.
Support to Improve Cash Flow
Workplace Safety and Insurance Board Expenses
Working in conjunction with the government of Ontario, the Workplace Safety and Insurance Board (WSIB) will allow employers to defer payments for a period of six months. All employers covered by the WSIB’s workplace insurance are automatically eligible for the financial relief package. Schedule 1 employers with premiums owed to the WSIB will be allowed to defer reporting and payments until August 31, 2020. The deferral will also apply to Schedule 2 businesses that pay WSIB for the cost related to their workplace injury and illness claims. In addition, no interest will be accrued on outstanding premium payments and no penalties will be charged during this six-month deferral period.
Support for People
The Province is providing immediate financial support to vulnerable seniors, by doubling the Guaranteed Annual Income System (GAINS) maximum payment for low-income seniors, for six months starting in April 2020. This would increase the maximum payment to $166 per month for individuals and $332 per month for couples.
To help parents pay for the extra costs associated with the closure of schools and daycares, the government is providing a one-time payment of $200 per child up to 12 years of age, and $250 for those with special needs, including kids enrolled in private schools.
The government is temporarily suspending Ontario Student Assistance Program (OSAP) loan repayments between March 30, 2020 and September 30, 2020, during which time borrowers will not be required to make any loan or interest payments.
The government is taking further measures to support Ontario workers, with initiatives including:
- Passing legislation to provide job-protected leave to employees in isolation or quarantine, or those who need to be away from work to care for children because of school or daycare closures due to the COVID‑19 outbreak;
- Committing $100 million in funding through Employment Ontario for skills training programs for workers affected by the COVID‑19 outbreak; and
- Working with the federal government to find ways to support apprentices and enable businesses to continue to retain these skilled trades workers during the COVID‑19 outbreak.
The government is supporting people and businesses with the costs of electricity during the COVID‑19 outbreak with the following:
- Providing $9 million in direct support to families for their energy bills by expanding eligibility for the Low‑income Energy Assistance Program (LEAP) and by ensuring that their electricity and natural gas services are not disconnected for nonpayment during the COVID‑19 outbreak; and
- Supporting more affordable electricity bills for eligible residential, farm and small business consumers, by providing approximately $5.6 billion for electricity cost relief programs in
2020–21. This is an increase of approximately $1.5 billion compared to the 2019 Budget plan.
- The Province is also setting electricity prices for residential, farm and small business time-of-use customers at the lowest rate, known as the off-peak price, 24 hours a day for 45 days to support ratepayers in their increased daytime electricity usage as they respond to the COVID‑19 outbreak, addressing concerns about time-of-use metering.
Full details on Ontario’s economic and fiscal update and action plan can be found here.
This article has been written in general terms to provide broad guidance only. It should not be relied upon to cover specific situations and you should not act upon the information contained herein without obtaining specific professional advice. Please contact our office to discuss this information in the context of your specific circumstances. We accept no responsibility for any loss or damage resulting from your reliance on the information in this article.