The tuition and education tax credits will be discontinued
beginning in fall 2017, at the same time as the Ontario Student Grant is
introduced.
Tuition tax credit can be claimed for eligible tuition
fees paid in respect of studies up to and including September 4, 2017
Education tax credit can be claimed for months of study
before September 2017
Eligible portion of 2017 tax credits would be
transferable to a qualifying family member
Taxpayers resident in Ontario at December 31, 2017, with
unused tuition and education tax credits available for carry-forward will be
able to claim them in future years.
Tax filers who move to Ontario from other provinces after
December 31, 2017 would no longer be able to claim their accumulated tuition
and education tax credits in Ontario.
Ontario Student Grant (OSG)
Although not a tax measure, it relates to the elimination
of the tuition and education tax credits. Under the proposed new OSG:
90% of dependent college students from families with incomes less than
$50,000 would have total grants greater than an average college tuition;
70% of dependent university students from families with incomes less than
$50,000 would have total grants greater than an average university tuition;
More than 50% of students from families with incomes of $83,000 or less
will have non-repayable grants in excess of average tuition;
No Ontario student will receive less than they are currently eligible for
through the 30% off Ontario Tuition grant; and
Students from families with incomes of less than $50,000 will have no
provincial student debt.
The Federal 2015 budget announced reductions in the
gross-up rate for non-eligible dividends, along with reductions in the
federal small business corporate income tax rate. The change in the
gross-up rate automatically reduces Ontario's non-eligible dividend tax
credit rate from 4.5% of the taxable dividend to 4.2863%. The 2016
Ontario budget confirmed that this will be the tax credit rate for
2016. They will review the rate for 2017 and later years.
Simpler Personal Income Tax
The government will look for ways to simplify the PIT
calculation, including the Ontario surtax and Ontario Tax Reduction.
Tax on Split Income (Kiddie Tax)
The federal government applies the top marginal tax
rate to certain income that is split with certain related children.
Starting January 1, 2016, this type of split income will be taxed at
Ontario's top marginal personal income tax rate of 20.53%, and no surtax
would be paid on that income.
Business Tax Changes
Proposed Changes to R&D Tax
Credits
Ontario Research and Development Tax Credit (ORDTC) -
currently a 4.5% non-refundable tax credit on eligible R&D expenditures
- reduce to 3.5% for taxation years ending on or after June 1, 2016
Ontario Innovation Tax Credit (OITC) - a 10% refundable
tax credit for small to medium-sized companies on eligible R&D
expenditures - reduce to 8% for taxation years ending on or after June 1,
2016
The rate reductions would be prorated for taxation
years straddling June 1, 2016.
Apprenticeship Training Tax Credit (ATTC)
This refundable tax credit is being reviewed to ensure it
encourages businesses to help apprentices gain the certifications and skills
they need.
Other Measures
Tobacco Tax Changes
The budget proposes to increase the tobacco tax rate
from 13.975 cents to 15.475 cents per cigarette and per gram of tobacco
products other than cigarettes and cigars, effective 12:01 a.m. February
26, 2016.
Alcohol
Tax Changes
The basic tax on non-Ontario wine purchased at winery
retail stores will be increased by one percentage point in each of June 2016,
April 2017, April 2018 and April 2019.
There will also be
changes to minimum prices for wine and cider.