The Ontario Liberal Government has tabled their Budget for February 25, 2016
KEY HIGHLIGHTS FROM THE BUDGET:
Corporate tax
• No change in provincial corporate tax rates
• Ontario corporate tax remains at 4.5% on the first $500,000 of active income and 11.5% on general income Research and Development
• Ontario Research & Development Tax Credit (ORDTC) will be reduced to 3.5% from 4.5%
• Ontario Innovation Tax Credit will be reduced to 8% from 10%
• Changes effective for taxation years after May 31, 2016
Personal tax
• No change in provincial individual tax rates
• Non-eligible dividend tax credit will be reduced to 4.28% for 2016
• The budget eliminates the Ontario Tuition and Education Tax Credit for studies after September 5, 2017. Unused credits that are available for carry forward will still be available for use after 2017 as long as the taxpayer remains a resident of Ontario
• The Children’s Activity and the Healthy Homes Renovation Tax Credits will be eliminated effective January 1, 2017 Ontario Retirement Pension Plan (ORPP)
• The provincial government is moving forward with implementing the ORPP by 2020. Legislation will be introduced this spring
Tobacco Tax, Alcohol and Fuel
• Effective February 26, 2016, tobacco tax rates will increase to 15.475 cents per cigarette and gram of tobacco product with additional increases based on inflation over the next five years
• Wine mark-up will increase by 2% in June 2016, April 2017 and 2018 and 1% in April 2019
• Tax on Non-Ontario wine purchased from a winery store will increase by 1% in June 2016 and annually in April from 2017 to 2019 by 1%
• The Ontario Liberals forecast that the pump price of gasoline will increase by 4.3 cents per litre and natural gas will increase by 3.3 cents per cubic metre starting in 2017 as they implement a cap-and-trade program to limit greenhouse gas emissions
Planning
• Individuals should take advantage of the expiring tax credits before they are eliminated
• Corporations engaged in Research and Development should accelerate activities and expenses in order to realize additional tax savings
