Ontario 2018 Budget - March 28, 2018
All proposals are subject to legislative approval. The government did not include most of the tax measures below in Bill 31, and the legislative session ended on May 8, 2018. An election was held on June 7, 2018, and the Liberal government was replaced with a Conservative government.
Bill 31, Plan for Care and Opportunity Act (Budget Measures), 2018 received Royal Assent on May 8, 2018, but does not include the business and personal tax measures shown below.
Personal Income Tax (PIT) Measures
Personal Income Tax Brackets and Rates
The budget proposes to eliminate the surtax, revise the PIT brackets and rates, and enhance the Ontario Charitable Donations Tax Credit (OCDC), effective for the 2018 taxation year. See our table which compares the current marginal tax rates to the proposed marginal tax rates.
Ontario Charitable Donations Tax Credit (OCDTC) Rate
The budget proposes to increase the OCDTC rate for the portion of donations exceeding $200, from the current 11.16% to 17.5%. The first $200 of donations would continue to be eligible for an OCTC rate of 5.05%
Other Proposed Tax Measures
- Enhance the Ontario Research and Development Tax Credit by increasing the rate from 3.5% to 5.5% on expenditures over $1 million in a taxation year, for expenditures incurred on or after March 28, 2018.
- Incorporate federal anti-avoidance rules related to the multiplication of the SBD into the Employer Health Tax (EHT) Act, and follow the eligibility criteria for the SBD for the EHT exemption. The EHT exemption would only be available to individuals, charities, not-for-profit organizations, private trusts and partnerships, and Canadian-controlled private corporations (CCPCs). Legislation for proposed changes would become effective January 1, 2019, but there will be opportunity for public comment before the legislation is introduced.
- Federal measures regarding income sprinkling will be automatically paralleled once federal amendments are approved, and Ontario's top PIT rate of 20.53% will be applied to split income received by an adult family member.
- The 2018 federal budget proposed to phase out the federal small business limit on a straight-line basis for CCPCs and associated corporations that earn between $50,000 and $150,000 of passive investment income in the taxation year. The business limit of a corporation would be the lower of the business limit determined on the basis of taxable capital and the business limit determined on the basis of passive investment income. Ontario proposes to parallel the federal measure on passive investment income.
- Ontario will enter into an agreement with the federal government under which Ontario would receive 75% of the federal excise duty collected on cannabis intended for sale in the province.
- A Status Indian registered to obtain medical cannabis from a licensed producer in accordance with federal law will continue to be eligible for a rebate of the 8% provincial portion of the HST for purchases that are delivered off-reserve.
- OHIP+ will be expanded to seniors starting in August 2019, eliminating the annual deductible and co-payment for seniors under the ODB program.
- The government will introduce a new Ontario Drug and Dental Program for individuals and their families who do not have coverage from an extended health plan, starting in summer 2019. This program would reimburse participants for up to 80% of eligible prescription drug and dental expenses, up to an annual maximum of $400 for singles, $600 for couples, plus $50 for each child in the family.
- Free preschool for children aged 2 1/2 until eligible for kindergarten, starting in September 2020.
Revised: November 15, 2018
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