Ontario’s Action Plan to Respond to COVID-19 – Tax Aspects
On March 25, 2020, the Ontario Government announced new tax relief measures in response to the COVID-19 pandemic.
Temporary Increase to Employer Health Tax Exemption
Businesses with less than $5 million in “total Ontario remuneration” currently 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
The new Regional Opportunities Investment Tax Credit will be a 10 per cent refundable tax credit available to Canadian-Controlled Private Corporations (CCPCs) who make qualifying capital expenditures in Ontario, but only if made outside Ottawa, the Greater Toronto Area and various other regions near the Greater Toronto Area.
Qualifying expenditures are those 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
Businesses will also be able to defer certain filing and remittance obligations. These amounts remain owing, but businesses will not have to pay them 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 not accrue. All employers covered by the WSIB workplace insurance are automatically eligible for the relief.
As mentioned in our recent communication to you, 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
The Municipal Property Assessment Corporation (MPAC) normally values properties in Ontario every four years for determining property taxes. This will be postponed until 2021. As a result, property taxes in 2021 will be the same as the valuations in place for 2020.
If you have any questions, please contact your Lipton advisor.