On November 4, 2021, the Honourable Peter Bethlenfalvy, Minister of Finance, delivered the 2021 Ontario Economic Outlook and Fiscal Review. No personal or corporate tax rate changes were announced. As part of Ontario’s COVID-19 recovery efforts, the following tax measures were introduced:
Personal Income Tax Measures
Introduction of the Ontario Staycation Tax Credit
The Ontario Government (the “Government”) proposes a new temporary Ontario Staycation Tax Credit for the 2022 tax year. This refundable tax credit will provide Ontario residents with a 20 percent tax credit for eligible accommodation expenses up to $1,000 for an individual (maximum credit of $200) and up to $2,000 for a family (maximum credit of $400). Ontario residents can apply for this tax credit when they file their 2022 personal income tax return.
Eligible accommodation expenses must be:
- For a stay of less than a month at an eligible accommodation such as a hotel, motel, resort, lodge, bed-and-breakfast establishment, cottage, or campground in Ontario;
- For a stay between January 1 and December 31, 2022;
- Incurred for leisure (i.e., a non-business purpose);
- Paid by the Ontario tax filer, their spouse or common-law partner, or their eligible child, as set out on a detailed receipt;
- Not reimbursed to the tax filer, their spouse or common-law partner, or their eligible child, by any person, including by a friend or an employer; and
- Subject to Goods and Services Tax (GST) / Harmonized Sales Tax (HST), as set out on a detailed receipt.
Extension of the Ontario Jobs Training Tax Credit
The Government proposes to extend the 2021 Ontario Jobs Training Tax Credit to 2022. This refundable tax credit is calculated as 50 percent of eligible expenses for the year, up to a maximum credit of $2,000. The Ontario Jobs Training Tax Credit is available to individuals between 26 and 65 years of age that meet the following conditions:
- They are resident in Ontario on December 31 of the year; and
- They have a Canada training credit limit for the year that is greater than zero.
The Canada training credit limit for a tax year is based on income and other conditions set out in the Income Tax Act and can be found on the latest Notice of Assessment or Reassessment from the previous tax year.
Eligible expenses include tuition and other fees paid to an eligible educational institution in Canada during the year, or fees paid to certain occupational, trade, or professional bodies during the year.
Extension of the Ontario Seniors’ Home Safety Tax Credit
The Government proposes to extend the 2021 Ontario Seniors’ Home Safety Tax Credit to 2022. This refundable tax credit is calculated as 25 percent of eligible expenses for the year up to $10,000 (maximum credit of $2,500) and can be claimed by senior homeowners and renters or people who live with senior relatives. This credit can be shared by people in the same household, including spouses and common-law partners.
Eligible expenses must be paid or become payable in 2022 and must be incurred to improve the functionality, mobility, safety, or accessibility of the senior at their principal residence or a residence that they reasonably expect to become their principal residence within 24 months following the end of the year. To claim the tax credit, receipts must be obtained from the vendors. Eligible expenses include:
- Renovations to permit a first-floor occupancy or secondary suite for a senior;
- Grab bars and related reinforcements around the toilet, tub, and shower;
- Wheelchair ramps, stair / wheelchair lifts and elevators;
- Non-slip flooring;
- Additional light fixtures throughout the home and at exterior entrances;
- Automatic garage door openers; and
- Modular or removable versions of a permanent fixture, such as modular ramps and non-fixed bath lifts.
Corporate Ownership Information Disclosure
To prevent and better detect the use of corporations for tax evasion and other financial crimes, the Government proposes to amend the Business Corporations Act to introduce beneficial ownership information requirements, similar to other Canadian provinces. These amendments would be effective on January 1, 2023 and would require private corporations to collect and maintain beneficial ownership information with respect to “individuals with significant control” that can be provided on request to tax authorities, law enforcement, the Ontario Securities Commission, and other regulatory authorities. The information would need to be updated at least once each fiscal year and within 15 days of any changes.
“Individuals with significant control” hold at least 25 percent of votes or value in the corporation or have direct or indirect influence over the corporation. Where related persons collectively control at least 25 percent of the shares of the corporation, each of those related persons would be considered to be an individual with significant control.
Corporations would need to maintain the following information with respect to “individuals with significant control”:
- Name, date of birth, and address;
- Jurisdiction of residence for tax purposes;
- Date of becoming or no longer being an individual with significant control;
- A description of how the individual has significant control over the corporation, including a description of any interests and rights in shares of the corporation; and
- A description of the steps the corporation takes to keep this information current each year.
Property Tax Measures
After seeking out consultations, the Government has concluded that property assessments for the 2022 and 2023 tax years will continue to be based on the same valuation date that was used for 2021.
Other property tax measures to support stability and support a competitive business environment include:
- Temporarily suspend the five percent cap on payments in lieu of property tax (PILT) for federal authorities operating airports in Ontario.
- Amendments to the Assessment Act to simplify legislative requirements with respect to assessments of pipeline properties.
- Extend the period for matching provincial education tax assistance on the Brownfields Financial Tax Incentive Program (BFTIP) from three to six years for business developments, and ten years for residential developments.
- The Government will also move ahead with measures to enhance property tax programs that support farm businesses and encourage their expansion.
Other Technical Amendments
Amendments will be proposed to various statutes administered by the Minister.
Taxation Act, 2007:
- Clarify the Ontario Tax Reduction (OTR) and Low-income Individuals and Families Tax (LIFT) are available on the final tax return of a decease person.
- Ensure the OTR, LIFT credit and certain refundable credits are not available for a bankrupt individual.
- Update the Ontario Child Benefit definition of “shared-custody parent” similar to a recent change in the federal legislation.
- Clarify the availability of the tax credit for unused tuition education tax credits.
Corporations Tax Act: Clarify the permanent establishment rule in subsection 4(12) does not apply to the Ontario premium tax liability of an insurance corporation licensed to sell insurance in Ontario (deemed to have come into force on December 9, 2002).
Employer Health Tax Act: The instalment thresholds related to interest and penalties proposed to increase from $600,000 to $1.2 million.
Education Act: Clarify that rates prescribed by the Minister for the calculation of payments in lieu of taxes reflect the tax rate that would apply if properties subject to payments in lieu of taxes were taxable.
Municipal Act, 2001 and the City of Toronto Act, 2006: Clarify the Minister’s authority relating to determining relative tax burdens for business properties set by municipalities.
Contact your local MNP Advisor for more information.