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Ontario 2016 Budget

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Ontario -> Budgets -> Budget 2016

Ontario 2016 Budget - February 25, 2016

All proposals are subject to legislative approval.

Personal Tax Measures

Tuition and Education Tax Credits

The tuition and education tax credits will be discontinued beginning in fall 2017, at the same time as the Ontario Student Grant is introduced.

bulletTuition tax credit can be claimed for eligible tuition fees paid up to September 4, 2017
bulletEducation tax credit can be claimed for months of study before September 2017
bulletEligible portion of 2017 tax credits would be transferable to a qualifying family member
bulletTaxpayers 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.
bulletTax 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:

bullet90% of dependent college students from families with incomes less than $50,000 would have total grants greater than an average college tuition;
bullet70% of dependent university students from families with incomes less than $50,000 would have total grants greater than an average university tuition;
bulletMore than 50% of students from families with incomes of $83,000 or less will have non-repayable grants in excess of average tuition;
bulletNo Ontario student will receive less than they are currently eligible for through the 30% off Ontario Tuition grant; and
bulletStudents from families with incomes of less than $50,000 will have no provincial student debt.

For more information on the OSG, see the Ontario Budget Chapter I and search for Ontario student grant.

Children's Activity Tax Credit

This tax credit will be discontinued effective January 1, 2017.

Healthy Homes Renovation Tax Credit

This tax credit will be discontinued effective January 1, 2017.

Dividend Tax Credit for Non-Eligible (Small Business) Dividends

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

bulletOntario 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
bulletOntario 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.

The complete 2016 budget can be found on the Ontario Budget website.  See also their Tax Measures (pdf), which also includes information about the Ontario property tax and assessment system.

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.

 

Revised: February 26, 2016

 

 

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