Tax Aspects of Ontario’s Action Plan to Respond to COVID-19

On March 25, 2020, the Ontario Government announced new tax relief measures to respond to the COVID-19 pandemic.

Temporary Increase to Employer Health Tax Exemption

Currently, businesses with less than $5 million in “total Ontario remuneration” have an exemption from employer health tax for the first $490,000 of remuneration. Retroactive to January 1, 2020, the exemption will increase to $1 million. Taxpayers who have already paid instalments on the basis of the $490,000 exemption can expect their returns to be corrected.

New Regional Opportunities Investment Tax Credit

Ontario is introducing the Regional Opportunities Investment Tax Credit, which will be a 10 per cent refundable tax credit available to Canadian-Controlled Private Corporations (CCPCs) who make qualifying capital expenditures in Ontario, but outside Ottawa, the Greater Toronto Area and many of the regions near the Greater Toronto Area.

Qualifying expenditures are between $50,000 and $500,000 on property classified, for the purposes of the capital cost allowance rules in the Income Tax Act, under Class 1 or Class 6 (including certain expenditures with respect to eligible commercial and industrial buildings). The credit is only available to the extent that the qualifying investment becomes “available for use” on or after March 25, 2020, as that term is used with respect to the capital cost allowance rules.

Deferral of Certain Taxes and WSIB Premiums

Under Ontario’s proposals, businesses will also be able to defer certain filing and remittance obligations. These amounts remain owing, but businesses will not have to pay until August 31.

With respect to WSIB, businesses can defer remitting premiums for the period starting March 25 and ending August 31, 2020, with no penalty or interest. Moreover, interest on outstanding premium payments will also cease to accrue. All employers covered by the WSIB workplace insurance are automatically eligible for the relief.

Beginning April 1 and up until August 31, 2020, businesses will not incur any penalty or interest if they miss filing or payment obligations for Employer Health Tax, Tobacco Tax, Fuel Tax, Gas Tax, Beer, Wine and Spirits Taxes, Mining Tax, Insurance Premium Tax, International Fuel Tax Agreement, Retail Sales Tax on Insurance Contracts and Benefit Plans and Race Tracks Tax.

Postponed Property Tax Reassessments

Normally, the Municipal Property Assessment Corporation (MPAC) values properties in Ontario every four years for determining property taxes. This process will be postponed until 2021 so that property taxes in 2021 will be the same as the valuations in place for 2020.

The government also proposed many non-tax measures that you can read by clicking here.

For more information, please contact a member of our Tax Group.