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2022 Ontario Budget Highlights

Ontario Budget 2022On April 28, 2022, the Ontario Provincial Government released their 2022 Budget called Ontario’s Plan to Build.

As an election has been called for June 2, the Ontario Legislature will be dissolved May 4 for campaigning. With no time to pass their new budget, these budget measures are proposed with the hope that a return to office will allow the measures to be passed.

This commentary summarizes the highlights of the new fiscal plan focusing on tax changes and other measures affecting individuals, and businesses. The full budget document is available on this link.

OVERVIEW

Ontario has made strong progress towards recovering from the COVID-19 pandemic. Our real gross domestic product (GDP) increased 4.3 per cent in 2021, and employment rose by 344,800 net jobs in 2021 or 4.9 per cent, the strongest annual pace of job growth on record.

After declining by 355,300 in 2020, due to the significant impact of COVID-19, employment in Ontario rose by 344,800 jobs in 2021, with the majority of the gains in full-time positions and in the private sector. As of March 2022, employment has recovered to 228,300 above the pre-pandemic level.

Ontario’s 2021–22 deficit is projected to be $13.5 billion — $19.6 billion lower than the outlook published in the 2021 Budget.

CORPORATE INCOME TAX

The corporate income tax rates are unchanged.

Corporate Income Tax Rates
As of January 1, 2022

 Ontario  Combined
Federal and Ontario
 General 11.5% 26.5%
 M&P: Manufacturing or Processing 10% 25%
 Canadian-controlled Private Corporations1 3.2% 12.2%
 1On first $500,000 of active business income.

 

TAX MEASURES

Temporary Gas Tax Cut

In 2019, the Ontario government introduced the Ontario Childcare Access and Relief from Expenses (CARE) refundable tax credit for families with income of less than $150,000.  The government is proposing a 20 per cent enhancement of the CARE tax credit for 2021. This would increase support from $1,250 to $1,500, on average in additional support for the childcare expenses.

To address rising costs for Ontario families and businesses, the Ontario government has passed the Tax Relief at the Pumps Act to cut the gas tax by 5.7 cents per litre and the fuel tax by 5.3 cents per litre for six months beginning July 1, 2022.

Low-income Individuals and Families Tax (LIFT) Credit

The government is proposing an enhancement to the Low-income Individuals and Families Tax (LIFT) Credit. The new LIFT Credit will include tax filers earning up to $50,000 individually or up to $82,500 for a household and provide up to $875 in tax relief.

Proposed Ontario Seniors Care at Home Tax Credit

A new personal income tax credit will help offset the cost of some expenses for seniors receiving care at home. The budget says the new Ontario Seniors Care at Home credit will refund up to 25 per cent of eligible expenses up to $6,000, for a maximum credit of $1,500. Under the terms of the new credit, anyone 70 or older, earning less than $65,000, can claim expenses associated with home nurse visits, a hospital bed at home, wheelchairs, attendants, canes, oxygen, eyeglasses or hearing aids.

Ontario Staycation Tax Credit

The new “staycation” tax credit is available for 2022 (to report in 2023 when filing your 2022 return).  This temporary credit aims to encourage Ontario families to explore the province, while helping the tourism and hospitality sectors recover from the financial impacts of the COVID 19 pandemic.

Ontario residents can claim 20% of their eligible 2022 accommodation expenses, for example, for a stay at a hotel, cottage or campground, when filing their personal Income Tax and Benefit Return for 2022. You can claim eligible expenses of up to $1,000 as an individual or $2,000 if you have a spouse, common-law partner or eligible children, to get back up to $200 as an individual or $400 as a family. Please retain your receipts for eligible expenses to include with next year’s tax info.

Tax Credits for Movies, Books and Animation

Due to the rise of online production and distribution, film and television productions that are distributed exclusively online will be eligible for a credit. The province will also scrap a rule that limited credits to books with more than 500 hard copy editions published.

The budget says the province will also look into simplifying a credit for computer animation and special effects, and review credits related to increasing filming in Ontario communities.

PERSONAL INCOME TAX

Personal income tax rates are unchanged.

2022 Top Marginal Personal Income Tax Rates
Combined Federal / Provincial

 Interest and regular income 53.53%
 Capital gains 26.76%
 Eligible dividends 39.34%
 Non-eligible dividends 47.74%