2024 Provincial budget commentary

Individual tax measures

New provincial policy framework to assist housing affordability

In 2017, Ontario’s Fair Housing Plan was implemented empowering Toronto and other interested municipalities with an option to introduce a tax on vacant homes. Currently, Toronto, Ottawa, and Hamilton have the authority to impose such tax. To help address housing affordability issues in the province, Ontario Budget 2024 proposes to extend authority to all municipalities to impose a tax on vacant homes. Municipalities will be supported through a new, forthcoming provincial policy framework that will set out best practices for implementing the tax, including encouraging a higher tax rate for vacant homes owned by foreigners. There is no date set for implementing this new policy framework.

Corporate tax measures

Changes to the Ontario computer animation and special effects tax credit

Ontario Budget 2024 proposes changing the eligibility criteria for the Ontario computer animation and special effects (OCASE) tax credit. This 18% credit supports computer animation and special effects activities on eligible film and television productions in Ontario. Instead of requiring qualifying productions to be certified for either the Ontario film and television tax credit or the Ontario production services tax credit, the OCASE tax credit will now have the following standalone eligibility requirements:

• The corporation must incur a minimum of $25,000 in Ontario labour expenditures cumulatively within the taxation year the credit is claimed and the prior taxation year for each production on which the credit is claimed. If the corporation meets this requirement, the production is also considered eligible for subsequent taxation years.
• The production cannot be an instructional video, music video, gaming video, or other excluded production.

The new eligibility requirements will apply to productions where computer animation and/or special effects work is started on or after March 26, 2024.

Other tax measures

Updates to senior citizen annual income payments

The Ontario Guaranteed Annual Income System (GAINS) provides monthly, non-taxable payments to qualifying low-income seniors. Starting July 2024, Ontario Budget 2024 proposes to increase the maximum monthly benefit from $83 to $87 for eligible single seniors and from $168 to $174 for couples. Additionally, going forward, the benefit will be indexed for inflation annually.

To expand the number of eligible recipients, the annual private income eligibility threshold is proposed to be increased from $1,992 to $4,176 for single seniors and from $3,984 to $8,352 for couples.

Ontario extends gasoline and fuel tax cuts

On July 1, 2022, the gasoline and fuel tax rates were cut by 5.7 and 5.3 cents per litre, respectively, reducing both rates to 9 cents per litre. Ontario Budget 2024 proposes to extend these rate cuts until Dec. 31, 2024.

Changes to alcohol taxation

The government plans to scrap the basic tax for Ontario wine and wine coolers in on-site winery retail stores starting April 1, 2024. A review of taxes and fees on other alcoholic beverages will also be conducted with the aim to boost competitiveness for Ontario producers and consumers.

Enhancing tobacco tax oversight

In order to align with other tax filing deadlines, Ontario Budget 2024 proposes to move the tobacco tax filing deadline for registrants from the 10th to the 28th of each month starting July 2024. The government also aims to make the online filing experience easier and more efficient for registrants. Additionally, the Tobacco Tax Act will be amended to strengthen fines for purchases of contraband tobacco.

Enhancements to the non-resident speculation tax

Ontario implemented a non‐resident speculation tax (NRST) in October 2022 on residential property purchased by a foreign entity. The government is aiming to strengthen the NRST with amendments to support compliance and improve fairness. In addition, Ontario is taking steps to increase information sharing between provincial, federal, and municipal governments to better understand vacancy and foreign‐purchasing patterns.

Individual tax measures

Changes to the Family Allowance

The Family Allowance payment is a refundable tax credit that supports eligible families with one or more dependent children under the age of 18 living with them. The tax credit has three main components: a basic amount for child support, a supplemented credit for handicapped children (SHC), and supplemented credit for handicapped children requiring exceptional care (SHCREC).

Quebec Budget 2024 includes various changes to the SHC and SHCREC eligibility criteria including modifying the SHC and expanding the SHCREC to apply to children under the age of two under certain circumstances.

The modifications will apply as of July 1, 2024.

Extension and introduction of means-tested social support measures

Certain means-tested social support measures were discussed, including:

• The shelter allowance program, which provides financial assistance to low-income households that spend specified percentages of income on housing that was slated to end on Sep. 30, 2024, is proposed to be extended to Sep. 30, 2027.
• An employment income supplement for social assistance program introduces a 10% employment income supplement for social assistance and social solidarity program recipients beginning in 2024.

Corporate tax measures

Amendments to the e-business and multimedia productions tax credit

Quebec Budget 2024 announces amendments to the wage-based tax credits for the development of e-business and production of multimedia titles, including the introduction of a non-refundable portion of the production of multimedia titles tax credit. The following changes will be made to both credits to harmonize their application:

• Introduction of an exclusion threshold equal to the basic personal amount such that the credit is applicable to qualified wages or labour expenditures that exceed the exclusion threshold.
• Removal of the limits on qualified wages and labour expenditures.
• Between 2025 and 2028, a gradual increase to the non-refundable portion of the tax credit for both credits until it reaches 10%, and a corresponding reduction to the refundable portion of the tax credit.

These changes will apply to taxation years starting after Dec. 31, 2024.

Adjustments to the film production services refundable tax credit

Currently, a corporation is eligible to claim 20% of its’ eligible production costs incurred as a refundable tax credit to the extent they related to a qualified production. Quebec Budget 2024 proposes to increase the film production services refundable tax credit by 5% while simultaneously limiting eligible costs incurred for computer-aided special effects and animation contracts to 65%.

These changes will apply to all productions whose application for approval is submitted to the Société de développement des entreprises culturelles (SODEC) either after March 12, 2024 or otherwise after May 31, 2024, based on the work progress of the production as of March 12, 2024.

Experienced workers tax credit abolished

After March 12, 2024, Quebec will eliminate the tax credit that was aimed at encouraging companies to retain employees over 60 years old. The tax credit has had limited impact and other measures already support this population.

Other tax measures

Ensuring tax fairness

Following efforts from Quebec Budget 2023, Quebec Budget 2024 aims to ensure the maintenance and fairness of the tax system through an investment of $96.5 million over the next five years. Tax audit and collection efforts will be strengthened. Hiring additional staff is also proposed in order to ensure fair application of tax laws by:

• encouraging taxpayers who have not filed their income tax returns to remedy their tax situation.
• strengthening Revenu Québec’s position to control and monitor high-risk sectors; and,
• increase efforts to collect tax debts.

Increase in specific tax on tobacco products

Quebec Budget 2024 proposes two increases to the specific tax on tobacco products. The increase aims to reduce tobacco consumption in the province in accordance with government health prevention policies. The rate change will be as follows:

The ad valorum tax on cigars will remain unchanged.

Taxing the used road vehicle

The Quebec Sales Tax (QST) regime includes an anti-avoidance rule with respect to the sale of used road vehicles between unrelated individuals. The rule operates to apply QST to the greater of the price paid for the transfer and the estimated value of the vehicle. However, when a used road vehicle is brought into Québec, following its transfer outside Québec between related individuals, QST used to apply because of the anti-avoidance rule. Quebec Budget 2024 proposes to amend the anti-avoidance rule to not apply when a used road vehicle is brought into Québec after its transfer between related individuals. The change will be effective for used road vehicles brought into Québec after March 12, 2024.

Additionally, to tackle under-declaration of the selling price of used vehicles, Quebec Budget 2024 proposes to extend the number of years published in the Guide d’Évaluation Hebdo (Automobiles et Camions Légers) from 9 to 14 starting on Jan. 1, 2025. This measure aims to strengthen the integrity and fairness of the current tax system where taxpayers declare a nominal selling price for used vehicles that are 10 years old or older, thereby evading QST.

Phasing out of rebates on purchase of EVs

In an effort to move towards a greener economy, the government incentivized consumers by granting rebates for the purchase of fully electric and plug-in hybrid vehicles under the Roulez Vert program. In light of the EV market maturing, Quebec Budget 2024 proposes a gradual phase-out of the rebates beginning Jan. 1, 2025, with a complete wind-down beginning Jan. 1, 2027. This measure is in line with the federal government’s $5,000 rebate on EVs which is available until March 31, 2025, or until the funds run out.

Individual tax measures

New lowest tax bracket introduced

A new personal income tax bracket of 8% on the first $60,000 of income was proposed, saving individuals up to $760 annually.

This new tax bracket is expected to be implemented for two years. Contingent on maintaining fiscal capacity and a balanced budget, it is expected that the personal income tax bracket will increase to 9% in 2026 and reduced back to 8% in 2027.

New “Alberta is Calling” attraction bonus

Alberta Budget 2024 introduces an “Alberta is Calling” attraction bonus aimed at assisting employers in recruiting and retaining skilled employees in key industries. Starting in April 2024, this one-time $5,000 refundable tax credit is available for individuals in eligible occupations who relocate to Alberta and meet certain eligibility criteria including full time work in a specified occupation, filing their 2024 taxes in Alberta, and living in Alberta for at least 12 months. More information on this credit is expected soon.

Corporate tax measures

Alberta Budget 2024 proposes no changes to corporate tax rates or corporate tax legislative amendments.

Other tax measures

Fuel tax relief program reinstated

The Alberta fuel tax relief program, which adjusts fuel tax rates quarterly based on the average West Texas Intermediate (WTI) price, was reinstated after being paused in 2023. This program was aimed at providing relief during financially feasible times.

Currently, the fuel tax rate for gasoline and diesel is 9 cents per litre until at least March 31, 2024, saving drivers approximately $124 million from January through March. Although partially reintroduced in January, average fuel prices in Alberta were lower compared to the program's initial introduction in April 2022. Going forward, quarterly tax rates will be determined based on the average WTI price preceding that particular quarter.

Legislative amendments to tourism levy

Amendments to the Tourism Levy Act were passed in fall 2023, implementing a commitment brought forth in Alberta Budget 2022, to require online brokers such as Airbnb, Vrbo, and Expedia to collect and remit a tourism levy on temporary accommodations booked through their platforms effective Oct. 1, 2024. Online brokers will be responsible for collection when payment is received from purchasers for all types of temporary accommodations. Short-term rental hosts will still be required to collect and remit the levy for stays booked before Oct. 1, 2024.

New electric vehicle tax

In addition to the existing registration fee, Alberta Budget 2024 proposes a new $200 annual tax on EVs effective Jan. 1, 2025, to be paid during vehicle registration. This tax will not be levied on hybrid vehicles. More specifics on this new tax will be released when legislation is introduced in fall 2024.

Tobacco tax increases

Effective March 1, 2024, the tax on cigarettes will increase by 2.5 cents to 30 cents per cigarette and the tax on smokeless tobacco will rise by 7.5 cents to 35 cents per gram, which brings Alberta's tobacco tax rates closer to those in neighboring provinces.

Provincial vaping tax

Starting Jan. 1, 2025, Alberta will be joining the federal-provincial coordinated vaping tax framework discussed back in Alberta Budget 2022 to impose provincial taxes on vaping substances in alignment with federal rates. The federal government will administer the collection of the tax on behalf of Alberta.

Education property tax rates frozen

Alberta's education property tax will be frozen at $2.56/$1,000 for residential/farmland property and $3.76/$1,000 for non-residential property for the duration of the 2024-25 fiscal year. Despite the freeze, an anticipated rise in property values means that the education property tax will still cover around 29.5% of education operating costs for the year.

Land titles registration levy

Alberta currently applies a $50 base fee with variable charges of $2.00 per $5,000 of property value and $1.50 per $5,000 of mortgage value for property transfers and mortgage registrations, respectively. Alberta will replace the variable charges with a flat rate of $5.00 per $5,000 of value for both property transfers and mortgage registrations. Despite the change, Albertans will continue to have the lowest charges compared to other provinces. Legislation implementing these changes is expected in spring 2024, with effective date details to follow.

Individual tax measures

Real estate measures to reduce housing prices

BC Budget 2024 announced real estate measures aimed at lowering property-related taxes.

• Effective Jan. 1, 2024, the threshold for the phase-out of the property tax reducing home-owner grant will increase from $2,125,000 to $2,150,000.
• New measures to disincentivize house flipping were introduced. Effective Jan. 1, 2025, the sale of residential properties held for less than two years will be subject to a separate tax that will apply at the full 20% rate for properties held for less than 366 days and gradually phase out for properties held for up to 730 days. Properties sold due to certain life circumstances (e.g. divorce, job loss etc.), will be exempted.
• Building on previous property tax relief measures, individual purchasers that meet certain criteria of new purpose-built rental buildings between Jan. 1, 2025, and Dec. 31, 2030, will be exempt from the general property transfer tax.
• Additional changes are proposed to the newly built home exemption, which reduces or eliminates the property transfer tax on qualifying purchases of a principal residence. Effective April 1, 2024, the threshold for the fair market value of a home to qualify for a full exemption is raised from $750,000 to $1,100,000. The exemption phases out above that threshold and is eliminated for newly built homes valued at $1,150,000 or higher.

Increase to the BC family benefit

The government has proposed a temporary increase to the BC family benefit for the 2024/2025 benefit year by introducing the BC family benefit bonus. Effective July 1, 2024, the bonus will provide a 25% increase to both the income threshold used to determine eligibility for the benefit as well as a 25% increase to the benefit itself, allowing an estimated 70% of BC families to qualify. The bonus is provided on a per family basis and includes a single-parent supplement. The family benefit amount and the income threshold will return to the normal level after the end of the 12-month benefit period.

Increases to the climate action tax credit

Effective July 1, 2024, the maximum payments for the climate action tax credit which assists low-income individuals and families will increase from $447 to $504 for adults, from $223.50 to $252 for spouses or common-law partners, and from $111.50 to $126 per child. The income thresholds for the credit phase out will also increase.

Corporate tax measures

Training tax credits

BC Budget 2024 proposes to extend the application of the training tax credit for employers to the end of 2027. This credit for employers is a refundable income tax credit based on eligible wages paid to eligible employees (certain types of apprentices enrolled in a skilled trade) during a period. This credit applies to sole proprietors, partnerships and corporations that are subject to BC income tax for the year that the credit is being claimed. The tax credit applies at different rates based on whether apprentices are in Red Seal programs or non-Red Seal programs, with enhanced credits for apprentices with disabilities or that are Indian Act registered.

No changes will be made to the applicable rates.

Oil and gas exploration expenses excluded from the mining exploration tax credit

The mining exploration tax credit (METC) applies to eligible corporations and active members of partnerships that conduct grassroots mineral exploration in BC. The credit is calculated as 20% of qualified mining exploration expenses less the amount of any grants/subsidies received or receivable. Effective Feb. 23, 2024, oil and gas exploration expenditures will no longer qualify for the METC.

This amendment follows Canada’s G20 climate change mitigation initiatives as highlighted in Federal Budget 2022, which made fossil fuel exploration expenditures ineligible from qualifying as flow-through shares.

Animation productions excluded from the regional and distant location tax credits

Animation productions are eligible for various tax credits that contain refundable corporate income tax credits.

BC Budget 2024 proposes to exclude animated productions from being eligible for regional and distant location regional credits for productions that start principal photography on or after June 1, 2024. This change is aimed at discouraging a growing trend of animation companies using these credits to subsidize remote teleworkers.

Shipbuilding and ship repair industry tax credit extended

BC Budget 2024 proposes to extend the shipbuilding and ship repair tax credit for two years to the end of 2026.

This refundable tax credit is available to employers whose principal business is constructing, repairing, or converting non-personal ships and that employ certain apprentices in trades programs in the BC shipbuilding and repair industry.

This credit is enhanced for employers who have employees that qualify for the federal disability tax credit and/or the Indian Act.

Other tax measures

Changes to the Provincial Sales Tax (PST) Act, PST Exemption and Refund Regulation

BC Budget 2024 proposes various changes to the PST Act, including:

• Effective July 1, 2024, availability for PST refunds will be reduced for persons that act as though they are the end purchaser but intend to export and resell the goods outside BC.
• Effective April 1, 2013, the definition of “software” and related terms will be amended for purposes of the PST Act, including clarifications and new definitions for “infrastructure as a service” and “software as a service”.
• Effective July 1, 2024, new administrative penalties will be introduced such as for failure or repeated failure to file and failure to provide information.
• Effective on Royal Assent, availability for PST refunds will be extended to purchasers that return tangible personal property where the purchaser self-assessed PST from sellers that did not collect PST.

BC Budget 2024 also proposes various changes to the PST Exemption and Refund Regulation, including:

• Effective February 23, 2024, the production machinery and equipment exemption will be clarified to include projects that use sunlight, wind, tides, air, or water to manufacture clean energy.
• Clarifications will be added for when services are provided with taxable leased goods.

Changes to the biomethane credit refund for carbon taxes

The biomethane tax credit offsets carbon taxes owed by sellers of biomethane in situations where biomethane is blended with natural gas. Effective April 1, 2024, the biomethane credit refund to sellers is modified to be determined solely by the sum of biomethane credits provided by the qualifying retail dealer in the reporting period. This enables refunds to be claimed in future years on any surplus biomethane not utilized for fulfilling contracts from previous periods. There will also be a limitation on refunds for biomethane acquired or blended more than two years prior to the reporting period.

Employer health tax exemption threshold increased

Effective Jan. 1, 2024, the employer health tax that must be paid by employers in BC with payroll expenses above a “notch rate” minimum threshold, was increased from $500,000 to $1,000,000. Additionally, the notch rate is increased from 2.925% to 5.850% up to the full rate threshold of $1,500,000. The full rate for payroll expenses above $1,500,000 will remain at 1.95%.