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Ontario 2018 Fall Economic Outlook and Fiscal Review November 15, 2018

All proposals are subject to legislative approval.

Bill 57, Restoring Trust, Transparency and Accountability Act, 2018 was tabled on November 15, 2018, and included the income tax provisions indicated below. The Act received Royal Assent on December 6, 2018.

Personal Income Tax (PIT) Measures

The pension tax credit will, for taxation years ending after March 31, 2019, include amounts received under the Veterans Well-being Act (Canada) in the calculation of the credit.

Some Ontario non-refundable personal tax credits currently use the basic personal income tax amount in their calculation. The basic personal income tax amount is the provincial income tax prior to deducting any refundable or non-refundable tax credits, and before adding the Ontario Health Premium. The calculations for two of these provisions will now (effective January 1, 2018) use the tax payable prior to adding the Ontario Health Premium, and prior to adding or deducting any minimum tax amounts. The tax credits affected are:

- Taxation Act s. 9(13), tax credit for dependant with a mental or physical impairment, and

- Taxation Act s. 9(17), transfer of tax credits from a spouse or common-law partner.

Tax on Split Income (TOSI): S. 12.1 of the Taxation Act, which imposes an additional tax on split income, is amended for 2018 and subsequent taxation years, to allow an individual to reduce tax on split income by any amount deducted in respect of the mental or physical impairment tax credit or the tax credit for a dependant with a mental or physical impairment, as well as by the deductions currently allowed.

Non-Eligible Dividend Tax Credit

The Taxation Act s. 19.1 is amended so that the non-eligible dividend tax credit rate for 2018 and subsequent years will be 3.2863% of the taxable dividend. The Ontario 2018 and 2019 tax rate tables have been revised to reflect this change.

Low-income Individuals and Families Tax (LIFT) Credit

A new non-refundable tax credit will be in effect for low-income workers residing in Ontario, for the 2019 and subsequent taxation years. The new credit will provide a provincial income tax reduction of up to $850 for an individual and $1,700 for a couple.

Business Tax Measures

Small Business Deduction

It is proposed to amend S. 31 of the Taxation Act to allow a corporation to claim the provincial small business deduction if it would have been able to claim the deduction under s. 125 of the Federal Income Tax Act but for the application of s. 125(5.1) of that Act, the business limit reduction re passive investment income.

Other measures

Property Tax Exemption Royal Canadian Legion

- A proposed amendment to the Assessment Act would create a province-wide property tax exemption for properties occupied by branches of the Royal Canadian Legion.

Beer and Wine Tax

- Nov 1, 2018 beer basic tax rates increase cancelled. See Beer and Wine Tax.

Electricity Distribution Sector - Extension of Time Limited Tax Relief

- Tax relief from taxes on the sale of electricity assets by municipalities to the private sector will be extended by 4 years, to December 31, 2022. This applies to Transfer Tax and certain payments in lieu of taxes (PILs). See Time-limited relief on taxes pertaining to transfers of electricity assets on the Ontario website.

Other measures previously announced

The cap-and-trade carbon tax was cancelled by Bill 4, Cap and Trade Cancellation Act, 2018, which received Royal Assent on October 31, 2018

Repeal of the minimum wage increase to $15 per hour - included in Bill 47, Making Ontario Open for Business Act, 2018, tabled October 23, 2018. The government is proposing amendments to other provisions of Bill 148, Fair Workplaces, Better Jobs Act, 2017.

See Ontario Fall Economic Statement: past editions for more information on the 2018 Fall Economic Statement.

Revised: October 26, 2023