2021 Ontario Budget Highlights and
Announcement of Federal Budget Date

MARCH 25, 2021

Ontario Budget

Yesterday Ontario presented their budget which did not include any major tax changes but instead focused heavily on spending, with projected deficits of $20 - $30 billion in each of the next three years.

Modernizing Anti-Avoidance Rules – The Ontario government did not specifically address any tax planning measures but did support the federal government’s plan to consult on the modernization of Canada’s anti-avoidance rules, in particular the General Anti‑Avoidance Rule (GAAR). The Ontario government encourages the federal government to consider ways to combat artificial income shifting through the use of trusts and corporate continuances. We await the Federal government's 2021 budget. 

Corporate Tax Measures

Ontario Small Business Support Grant - To help small businesses most affected by government restrictions from COVID‑19, Ontario is providing a second round of Ontario Small Business Support Grant payments to eligible recipients. Approximately 120,000 small businesses will automatically benefit from an additional $1.7 billion in relief through this second round of support in the form of grants of between $10,000 and $20,000. To learn more about this program and how to qualify please review the application guide found here. The deadline is March 31, 2021.

Regional Opportunities Investment Tax Credit – Ontario is proposing to temporarily increase this tax credit to 20 per cent. Currently, this is a 10 per cent refundable corporate tax credit available to Canadian-controlled private corporations that make qualifying investments in eligible geographic areas of Ontario. Qualifying investments include those that invest more than $50,000 to construct, renovate or acquire eligible commercial and industrial buildings in eligible regions. Residential buildings are not eligible. The list of qualifying regions can be found here.

Personal Tax Measures

Temporary Ontario Jobs Training Tax Credit – A refundable tax credit to support eligible individuals whether or not they owe income tax for 2021. It is 50 per cent of eligible expenses, such as tuition and other fees paid to an eligible educational institution in Canada for courses taken in 2021, or fees paid to certain bodies in respect of an occupational, trade or professional examination taken in 2021, to a maximum credit of $2,000.

CARE Tax Credit Enhancement– This is a tax credit that was introduced in the 2019 Ontario budget. It enhances the child care expenses tax credit for families with income below $150,000. The current credit can be as high as $6,000 per child ($8,250 per child with a disability). For 2021, the credit will be enhanced by a one-time top-up equal to 20 per cent of the 2021 credit entitlements.

Previously Announced

Canada United Small Business Relief Fund - Ontario Chamber of Commerce provides a grant of up to $5,000 for PPE costs incurred by small businesses. In order to qualify, the business must have under $3M in 2019 revenues and less than 75 employees. The grant is to cover expenses incurred after March 15, 2020 and receipts are required. More information is available on the government site at - https://occ.ca/canada-united-small-business-relief-fund/

Federal Budget

The federal budget has been set for April 19, 2021.

It’s possible that significant changes could occur with respect to the capital gains inclusion rate. For business owners planning a sale of their business over the next year it's worth considering whether to complete any steps pre-budget. It's also possible that the ability to use multiple capital gain exemptions within a family could be altered.

For clients planning significant transactions in 2021, we are completing steps pre-budget to mitigate the impact of possible changes. If you have a major capital gain anticipated in 2021 and want to explore possible options pre budget please call your RMT team as soon as possible. Additionally, if you have unrealized gains in your stock portfolio and are looking to reposition your assets you should consider doing this prior to the budget.