On April 28, 2022, Ontario’s Minister of Finance, Peter Bethlenfalvy, tabled the 2022 Budget, entitled Ontario’s Plan to Build. As the name suggests, the budget displays a focus on rebuilding the economy and infrastructure for families, seniors and workers.
The following is a summary of the key business and personal income tax measures, and indirect tax measures in the budget.
Business income tax measures
No changes were proposed to Ontario’s corporate income tax rates or the $500,000 small business limit.
Extending the Regional Opportunities Investment Tax Credit
The Budget proposes to extend the 10% increase to the Regional Opportunities Investment Tax Credit (ROITC) to Jan.1, 2024.
Budget 2021 temporarily increased the ROITC from 10% to 20% for qualifying expenditures between $50,000 and $500,000 for properties that become available for use in the period from March 24, 2021, to Jan. 1, 2023.
The ROITC is a refundable corporate income tax credit available for Canadian-controlled private corporations (CCPCs) that make qualifying investments in eligible geographic areas of Ontario.
Extending the film and television tax credits
The government proposes to extend the eligibility of two of the major media tax credits: (i) the Ontario Film and Television Tax Credit (OFTTC) and (ii) the Ontario Production Services Tax Credit (OPSTC).
OFTTC is a refundable tax credit based on eligible Ontario labour expenditures incurred by a qualifying production company with respect to an eligible Ontario production. Similarly, OPSTC is a refundable tax credit based upon Ontario qualifying production expenditures (labour, service contracts and tangible property expenditures) incurred by a qualifying corporation with respect to an eligible film or television production.
Updates to the Ontario Book Publishing Tax Credit
The Ontario Book Publishing Tax Credit (OBPTC) provides a refundable tax credit based on qualifying expenditures incurred by a qualifying corporation with respect to eligible book publishing activities and expenses related to publishing an electronic or digital version of an eligible literary work.
To be eligible for the OBPTC, one of the requirements is that the literary work must be published in an edition of at least 500 copies of a bound book. To help companies overcome the printing delays due to COVID-19, the government is permanently removing the 500-copy minimum threshold to be eligible for the credit for the 2022 taxation year.
Personal income tax measures
No changes were proposed to Ontario’s individual income tax rates.
Strengthening the Non-Resident Speculation Tax
Effective March 30, 2022, the government implemented several amendments in relation to the Non‐Resident Speculation Tax (NRST). The NRST is a tax on the purchase or acquisition of an interest in residential property located provincewide by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees.
The changes include (i) an increase to the NRST rate from 15% to 20%, (ii) an expansion of the NRST’s application provincewide, and (iii) an elimination of two rebates specific to international students and foreign nationals working in Ontario.
Agreements of purchase and sale entered into on or after March 30, 2022, will be subject to these changes. Rebates remain available for foreign nationals who become permanent residents of Canada within four years after the tax became payable if eligibility criteria are met.
Supporting lower income individuals and families
To help more individuals and families, the Ontario government is proposing to enhance the non‐refundable Low‐Income Individuals and Families Tax (LIFT) Credit.
Starting in 2022, the enhanced LIFT Credit would be calculated as the lesser of:
- $875 (up from the current $850); and
- 5.05% of employment income.
Individuals would be able to claim at least some of the LIFT credit if they have a net income up to $50,000 (up from $38,500), while for families their net income could be up to $82,500 (up from $68,500).
Helping Ontario’s seniors
The government is proposing a new refundable personal income tax credit to help seniors with
eligible medical expenses, including expenses that support aging at home. Eligible recipients of the
new Ontario Seniors Care at Home Tax Credit would receive up to 25% of their claimable medical expenses up to $6,000, for a maximum credit of $1,500.
Starting in the 2022 tax year, the proposed credit would support a wide range of medical expenses to help low‐ to moderate‐income senior families age at home. Eligible taxpayers are those who reside in Ontario and turned 70 years or older in the year.
The proposed credit could be claimed in addition to the non‐refundable federal and Ontario medical expense tax credits for the same eligible expenses. As such, the new credit would even assist seniors who do not owe any personal income tax.
Indirect tax measures
On April 14, 2022, the Tax Relief at the Pumps Act, 2022 (Bill 111) received Royal Assent, introducing amendments to the Gasoline Tax Act and Fuel Tax Act to temporarily reduce the gasoline tax and the fuel tax to 9 cents per litre from July 1, 2022 to Dec. 31, 2022. Currently, the gasoline tax rate is 14.7 cents per litre and the current fuel tax rate is 14.3 cents per litre. The reduction will not apply to leaded gasoline.
A mechanism has been designed to refund importers, wholesalers and retailers who may have inventories of gasoline or fuel for which tax was pre-collected at the higher rates. Under this process, importers, wholesalers and retailers who hold inventory purchased at the higher rate would be required to take inventory at 12:01 a.m. on July 1, 2022, and suppliers up the supply chain should then issue tax adjustments in the form of credits to accounts based on inventory reported. The request for a refund must be made to the supplier on or before Oct. 31, 2022, or some later date that the Minister may prescribe. Additionally, the Minister may allow a late refund application if there were mitigating factors that prevented a timely application.
The measure mirrors those in Alberta and will reduce the cost of fuel for Ontarians.
There is no provision in the Bill that addresses how the supplier will obtain credit for the amount of the refund that they provided to their customer. There will also be an increased risk to the suppliers if the Minister believes that the refund was not appropriate.