2017 Ontario Budget Summary

Written by: Monica Alimchandani, CPA, CA, MTax, Partner at Sone Rovet Chasson LLP

May 10, 2017

The 2017 Ontario budget was delivered on April 27, 2017. Similar to the Federal budget, it did not increase personal or corporate income tax rates.  As a result, the combined Federal and Ontario income tax rates will remain as follows:

In addition, here are the highlights of the other tax measures impacting businesses and individuals mentioned in the Ontario budget:

Businesses

• Elimination of the Employer Health Tax (“EHT”) exemption for any employer that is a designated member of a partnership, effective no earlier than January 1, 2018. Furthermore, existing methods and structures are to be reviewed to ensure EHT relief is available for smaller employers;
• Similar to the Federal government, Ontario will review certain tax planning strategies involving private corporations;
• Paralleling changes made to the Federal Small Business Deduction, a Company’s Ontario Small Business Deduction limit will be reduced by the same amount as the federal business limit is reduced;
• Municipalities will be allowed to impose a tax on transient accommodation (hotel tax).

Individuals

• Introduction of the Ontario Seniors’ Public Transit tax credit effective July 1, 2017, which will be worth approximately $130 per year;
• A new Ontario Caregiver tax credit to replace the existing provincial caregiver and infirm dependant tax credits. This credit will not be available in respect of non-infirm seniors who reside with their adult children or grandchildren. The maximum amount of this new credit provides $4,794, and will be reduced dollar-for-dollar by the dependant’s net income above $16,401;
• Raising the annual salary threshold for when graduates begin repaying student loans from $25,000 to $35,000, starting in 2018;
• Children and youth under age 25 will receive free prescription drugs for acute and common chronic conditions, starting in 2018, regardless of family income or whether they already have private insurance. There will be no deductibles and no co-payments;
• Landlords will be unable to increase rent more than the rate of inflation without the approval of the Landlord and Tenant Board. For 2017, this increase is set at 1.5%.