On March 25, the Minister of Finance, Rod Phillips delivered a 1-year fiscal updated entitled "Ontario's Action Plan 2020: Responding to COVID-19."

The government will provide $7 billion in additional resources for the health care system and provide direct support for people and jobs. It will also make available $10 billion in support for people and businesses through tax credits and deferrals to improve their cash flow, protection of jobs and household budgets, while providing resources to protect their health. The fiscal update includes historic levels of prudence, including a dedicated $1.0 billion COVID‐19 contingency fund as part of the additional health care investments, an increased contingency fund of $1.3 billion and a reserve of $2.5 billion to provide continued flexibility.

Fiscal Update Highlights:

$3.7 billion to support people and jobs, including:

• Making electricity bills more affordable for eligible residential, farm & small business consumers through a $1.5 billion increase in electricity cost relief.  The government is also setting electricity pricing for time-of-use customers at the lowest rate (off-peak - 10.1 cents per KWH), 24 hours a day for 45 days;
• Cutting taxes by $355 million for about 57,000 employers through a proposed temporary increase to the Employer Health Tax (EHT) exemption;
• Helping to support regions lagging in employment growth with a proposed new Corporate Income Tax credit - the Regional Opportunities Investment Tax Credit;

$10 billion in support for people and businesses to improve cash flows by:

• Providing a five-month interest and penalty free period to making payments for the majority of provincially administered taxes, providing $6 billion in relief to help support Ontario businesses
• Deferring the upcoming quarterly (June 30) remittance of education property tax  to school boards by 90 days. This will provide municipalities with the flexibility to, in turn, provide property tax deferrals of over $1.8 billion to local residents and businesses; and 
• Providing $1.9 billion in new financial relief by the WSIB allowing employers to defer payments for a period of six months.  

Fiscal prudence:  

• A dedicated $1.0 billion COVID-19 contingency fund as part of the additional health care investments;
• An increased contingency fund of $1.3 billion; and
• Reserve of $2.5 billion (largest in Ontario’s history).

Key Business Sector Details:

 

Employer Health Tax 

• The government is cutting taxes by $355 million for about 57,000 employers by proposing a temporary increase to the Employer Health Tax (EHT) exemption from $490,000 to $1 million for 

• 2020. With this plan, more than 90 per cent of private-sector employers would not pay EHT in 2020. 

• Eligible private-sector employers with annual payrolls up to $5 million would be exempt from EHT on the first $1 million of total Ontario remuneration in 2020. 
• The maximum EHT relief from the exemption would increase by $9,945 to $19,500 for 2020 for eligible employers. 
• The exemption would return to its current level of $490,000 on January 1, 2021.  

Regional Opportunities Investment Tax Credit

• To support business investment in regions of the province where employment growth has been significantly below the provincial average, Ontario is proposing a new 10 per cent refundable Corporate Income Tax credit. 
• The Regional Opportunities Investment Tax Credit would be available to eligible businesses that construct, renovate or acquire qualifying commercial and industrial buildings in designated regions of the province, saving them up to $45,000 in the year. 

Support for People and Businesses to Improve Cash Flow

• Ontario is making $10 billion available to improve cash flows for people and businesses through tax and other deferrals over the coming months to provide relief during this challenging economic time, in coordination with the federal government. 

$6 Billion in Tax Deferrals

• To help support Ontario businesses, the government is providing a five-month interest and penalty-free period for businesses to make payments for the majority of provincially administered taxes.  
• Beginning April 1, 2020, the Province is providing flexibility to about 100,000 businesses in Ontario to help manage their cash flows. 
• This will continue for a period of five months, up until August 31, 2020, and is expected to make available $6 billion to improve the cash flows of Ontario businesses. 
• For this period, the Province will not apply any penalty or interest on any late-filed returns or incomplete or late tax payments under select provincially administered taxes, such as the Employer Health Tax, Tobacco Tax and Gas Tax. 
• The initiative and relief period complement the relief from interest and penalties from not remitting Corporate Income Tax owing that was announced by the federal government on March 18, 2020.

$1.8 Billion in Education Property Tax Deferrals

• Many residents and businesses are facing challenges in making property tax payments. 
• The government is working with municipalities as they introduce measures to provide property tax relief, by allowing taxpayers to defer property tax payments. 
• To encourage these actions, the government is deferring the property tax payments municipalities make to school boards by 90 days. 
• In addition to collecting municipal property taxes, municipalities collect and remit education property taxes to school boards on a quarterly basis. 
• Deferring the June 30 quarterly remittance to school boards by 90 days will provide municipalities with the flexibility to, in turn, provide over $1.8 billion in property tax deferrals to residents and businesses. 
• To ensure this does not have a financial impact on school boards, the Province will adjust payments to school boards to offset the deferral.  

$1.9 Billion in Workplace Safety Expenses

• The WSIB will allow employers to defer payments for a period of six months. This will provide employers with $1.9 billion in financial relief. 
• All employers covered by the WSIB’s workplace insurance are automatically eligible for the financial relief package. 
• Schedule 1 employers with premiums owed to the WSIB will be allowed to defer reporting and payments until August 31, 2020. 
• The deferral will also apply to Schedule 2 businesses that pay WSIB for the cost related to their workplace injury and illness claims. 
• In addition, no interest will be accrued on outstanding premium payments and no penalties will be charged during this six-month deferral period.  

Responsibly Managing the Province’s Finances 

• Through its action plan, Ontario is immediately allocating the necessary resources to tackle the COVID-19 outbreak, while continuing to invest in people. 
• The 2020–21 deficit is projected to be $20.5 billion.