416-560-4318 | anil@akalinsurance.com anil.sharma@gmii.ca

To help Canadians facing hardships due to the COVID-2019 pandemic, Rod Phillips – Ontario’s Minister of Finance, presented a fiscal and economic update on March 25, 2020, which summarized the province’s action plan to support families, businesses, and workers during these hard times. Ontario’s provincial government released this update in place of a full fiscal budget, which it plans to release not later than November 15, 2020.

In this update, an aid package of $17 billion was announced to support Ontario’s communities, health care system, and economy during these uncertain times. The provincial government’s action plan is two-fold: to strengthen the region’s health care system along with supporting its people and safeguarding their jobs with direct funding of $7 billion; and $10 billion to boost immediate cash flow for the region’s businesses via tax and other deferrals. The province projects that implementing these measures will make its deficit climb to $20.5 billion for 2020–21.

Let’s take a closer look at some of the key measures declared as part of the provincial government’s COVID-2019 action plan.

For businesses

  1. A temporary increase of the EHT (Employer Health Tax) exemption to $1 million

Employers pay the EHT (a payroll tax) based on their total yearly Ontario remuneration, the top rate of which stands at 1.95%. Private-sector employers whose total yearly Ontario remuneration is less than $5 million are eligible, at present, for an EHT exemption of up to $1 million of their payroll (which is up from the usual $490,000). This tax exemption can be claimed only by employers who’re eligible employers as classified under the EHT Act. Public-sector employers and private-sector employers (with the exception of registered charities) with total yearly remuneration in excess of $5 million are not entitled to this exemption.

On January 1, 2021, the EHT exemption will return to $490,000.

  1. Deferral of WSIB payments for up to 6 months

To help reduce the financial burden of employers as a result of the rapidly growing COVID-2019 situation, employers would be allowed to defer WSIB (Workplace Safety and Insurance Board) payments for up to 6 months. For Schedule 1 employers, who have premiums owed to the WSIB, reporting and payments will be permitted to defer until August 31, 2020. This deferral will be applicable to Schedule 2 businesses too that pay WSIB for the cost pertaining to their workplace illness and injury claims. Neither any interest will accumulate on outstanding premium payments nor will any penalties be levied during this 6-month period.

covid ontario canada

  1. Introduction of the RITC (Regional Opportunities Investment Tax Credit)

A new 10% refundable Corporate Income Tax credit was recommended for capital investments, named the RITC. Private corporations that are controlled by Canadians, have expenses above $50,000 and up to a limit of $500,000, for qualifying investments, which would be accessible for use on or after March 25, 2020, in particular areas of Ontario, would qualify for the RITC.

The purview of qualifying investments would cover expenditures for capital property that would be included in Class 6 and Class 1 for the purposes of computing capital cost allowance. It would also comprise expenditures for renovating, constructing, or buying eligible industrial and commercial buildings and other assets.

For individuals

  1. Child care

For parents and caregivers, a 1-time payment of $200/child until the child’s age is 12 years, is proposed. For children with special needs, which include children enrolled in private schools, the proposed amount is $250.

A mandatory review will be carried out by the government every three years (as proposed) to assess the credit for administrative costs, usefulness, and compliance burden.

  1. Suspend OSAP loan repayments till September 30, 2020

The provincial action plan includes temporarily suspending loan repayments for OSAP (Ontario Student Assistance Program) between March 30, 2020 and September 30, 2020.  Borrowers won’t need to pay any loan or interest payments during this period.

  1. Support for seniors

For low-income seniors, additional support is proposed by doubling the GAINS (Guaranteed Annual Income System) maximum payment per month to $166 and $332 respectively for individuals and couples for 6 months as of April 2020.

  1. Energy savings

The Ontario provincial government’s COVID-2019 action plan includes expanding eligibility for the LEAP (Low‑income Energy Assistance Program) to ensure that natural gas and electricity services aren’t disconnected for non-payment during the present pandemic.

Additional measures

One of these measures includes setting electricity prices for farm, residential, and small business time-of-use consumers at the lowest rate (called the off-peak price), 24 hours/day for a period of 45 days to support the consumers in their increased electricity usage during the day and address fears related to time-of-use metering.

Additional measures announced also include funding for indigenous people and communities as well as the health care industry.

Download Presentation

Tax Strategies for Incorporated Professionals.

Thanks for Subscribing. You will receive an email with the link to download the presentation.