This Annex contains detailed information on tax measures and other legislative initiatives proposed in this Budget.
Enhancing the CARE Tax Credit for 2021
The government is proposing a temporary increase in the support provided by the Childcare Access and Relief from Expenses (CARE) tax credit for 2021.
This increase would provide a one-time top-up for CARE tax credit recipients equal to 20 per cent of their 2021 credit entitlements. This would increase 2021 support from the CARE tax credit for over 300,000 recipients from about $1,250 to about $1,500, on average.
Introduced in 2019, the CARE tax credit provides families with flexible child care support of up to 75 per cent of their eligible child care expenses. The CARE tax credit is provided in addition to the Child Care Expenses Deduction and focuses on lower- and moderate-income families.
The CARE tax credit is based on a tax filer’s:
- Family income, based on the income used in determining the tax filer’s Child Care Expenses Deduction; and
- Eligible child care expenses, defined as the tax filer’s total entitlement under the Child Care Expenses Deduction.
The top-up would be 20 per cent of the calculated CARE tax credit entitlement for 2021 and delivered when families file their 2021 Personal Income Tax returns.
The cost of this measure is projected to be $75 million over two years.
Introducing the Temporary Ontario Jobs Training Tax Credit
The government is proposing a new temporary Ontario Jobs Training Tax Credit for 2021. This Personal Income Tax credit would be refundable and provide support to eligible individuals whether or not they owe income tax for 2021. It would be calculated as 50 per cent of eligible expenses for 2021. The maximum credit would be $2,000.
Individuals would be able to claim the Ontario Jobs Training Tax Credit on their 2021 Personal Income Tax returns if they meet the following conditions:
- They are resident in Ontario on December 31, 2021; and
- They have a Canada training credit limit for 2021 greater than zero.
An individual can find their Canada training credit limit for 2021 on their latest notice of assessment or reassessment for 2020, which is provided by the Canada Revenue Agency (CRA). To have a positive Canada training credit limit for 2021, an individual must have met age and income conditions, among other requirements set out in the federal Income Tax Act, for 2019 or 2020. Eligible claimants for the credit would be at least 26 and not older than 65 at the end of 2021.
Eligible expenses would be the same as those that can be claimed for the Canada training credit. These include tuition and other fees paid to an eligible educational institution in Canada for courses taken in 2021, or fees paid to certain bodies in respect of an occupational, trade or professional examination taken in 2021.
The cost of this measure is projected to be $260 million over two years.
Enhancing the Regional Opportunities Investment Tax Credit
The Regional Opportunities Investment Tax Credit is a 10 per cent refundable Corporate Income Tax credit available to Canadian-controlled private corporations that make qualifying investments in eligible geographic areas of Ontario. The tax credit is available for eligible expenditures in excess of $50,000 and up to $500,000 in a year, for investments that become available for use on or after March 25, 2020.
Ontario is proposing to temporarily double the Regional Opportunities Investment Tax Credit rate. The proposed enhancement would allow corporations to claim a 20 per cent credit.
The enhanced credit would be available for eligible expenditures in excess of $50,000 and up to $500,000 for property that becomes available for use in the corporation’s taxation year, and in the period beginning on March 24, 2021 and ending before January 1, 2023.
“Available for use” refers to the rules set out in the federal Income Tax Act that determine the taxation year in which a taxpayer can start to claim capital cost allowance for a depreciable property.
Qualifying investments are eligible expenditures for capital property included in Class 1 and Class 6 for the purposes of calculating capital cost allowance. Qualifying investments include expenditures for constructing, renovating or acquiring eligible commercial and industrial buildings and other assets.
The cost of this measure is projected to be $61 million over three years.
Areas of the province where investments would be eligible are:
- City of Kawartha Lakes
- County of Bruce
- County of Elgin together with the City of St. Thomas
- County of Essex together with the City of Windsor and Township of Pelee
- County of Frontenac together with the City of Kingston
- County of Grey
- County of Haliburton
- County of Hastings together with the City of Belleville and City of Quinte West
- County of Huron
- County of Lambton
- County of Lanark together with the Town of Smiths Falls
- County of Lennox and Addington
- County of Middlesex together with the City of London
- County of Northumberland
- County of Oxford
- County of Perth together with the City of Stratford and the Town of St. Marys
- County of Peterborough together with the City of Peterborough
- County of Prince Edward
- County of Renfrew together with the City of Pembroke
- District of Algoma
- District of Cochrane
- District of Kenora
- District of Manitoulin
- District of Muskoka
- District of Nipissing
- District of Parry Sound
- District of Rainy River
- District of Sudbury together with the City of Greater Sudbury
- District of Thunder Bay
- District of Timiskaming
- Municipality of Chatham-Kent
- United Counties of Leeds and Grenville together with the City of Brockville, the Town of Gananoque and the Town of Prescott
- United Counties of Prescott and Russell
- United Counties of Stormont, Dundas and Glengarry together with the City of Cornwall
Making Progress on Addressing Unregulated Tobacco
Since 2020, the government has been consulting on unregulated tobacco with public health stakeholders, industry and retail associations, as well as First Nations partners. Building on the commitments made in the 2020 Budget, the Province has launched engagement with First Nations on tobacco in February 2021. These conversations are being led by independent Indigenous facilitators and are essential to informing solutions to unregulated tobacco. This engagement with First Nations will support the development of a made-in-Ontario tobacco strategy.
While the consultation is ongoing, the government is taking action by enhancing and expanding existing programs that have proven to be successful in addressing unregulated tobacco. This includes:
- Continuing to support the Akwesasne Mohawk Police Service in addressing cross-border smuggling through funding for their dedicated SAVE Team marine unit;
- Increasing funding to the OPP’s Contraband Tobacco Enforcement Team to continue to disrupt the role of organized crime in unregulated tobacco;
- Collaborating with federal partners on strengthening border enforcement and addressing tobacco smuggling;
- Continuing to enhance Ontario Ministry of Finance oversight of raw leaf tobacco through the use of more innovative digital technologies; and
- Working closely with cigar wholesalers to clarify and strengthen guidance regarding on‑reserve sales.
Modernizing Anti-Avoidance Rules
As noted in the federal Fall Economic Statement 2020, tax avoidance transactions have grown increasingly complex. Sophisticated arrangements that seek to avoid or evade tax can undermine the public’s confidence in the tax system. Ontario is supportive of the federal government’s plan to consult on the modernization of Canada’s anti-avoidance rules, in particular the General Anti‑Avoidance Rule (GAAR). As part of the consultation, Ontario encourages the federal government to consider ways to combat artificial income shifting, such as through the use of trusts or corporate continuances, that put provincial tax revenue at risk.
Summary of Measures
Table A.1 reflects the fiscal impacts of new measures proposed in this Budget.
| Interim1 2020–21 |
Medium-Term Outlook 2021–22 |
Medium-Term Outlook 2022–23 |
Medium-Term Outlook 2023–24 |
|
|---|---|---|---|---|
| Enhancing the CARE Tax Credit for 2021 | 20 | 55 | – | – |
| Introducing the Temporary Ontario Jobs Training Tax Credit | 65 | 195 | – | – |
| Enhancing the Regional Opportunities Investment Tax Credit until the end of 2022 |
6 | 30 | 25 | – |
| Total | 90 | 280 | 25 | – |
Table A.1 footnotes:
[1] Interim represents the 2021 Budget projection for the 2020–21 fiscal year.
Notes: Positive numbers represent an increase in government expenditures.
Numbers may not add due to rounding.
Source: Ontario Ministry of Finance.
Technical Amendments
Amendments may be proposed to various statutes administered by the Ontario Minister of Finance to improve administrative effectiveness or enforcement, maintain the integrity and equity of Ontario’s tax and revenue collections system, or enhance legislative clarity or regulatory flexibility to preserve policy intent.
In addition, amendments may be proposed to other statutes to improve administrative effectiveness or enforcement, or enhance legislative clarity or regulatory flexibility to preserve policy intent, including in the following:
- Electricity Act, 1998
Other Legislative Initiatives
Additional proposed legislative amendments include:
- An amendment to the Credit Unions and Caisses Populaires Act, 1994 and Credit Unions and Caisses Populaires Act, 2020 to allow for the payment of certain fees from the Deposit Insurance Reserve Fund with respect to credit agreements entered into by the Financial Services Regulatory Authority of Ontario (FSRA) to provide financial assistance to the credit union sector.
- Technical amendments to the Financial Services Regulatory Authority of Ontario Act, 2016 that would enable FSRA to make a rule governing fees for activities in respect of the Financial Professionals Title Protection Act, 2019. Corresponding technical amendments to the Financial Professionals Title Protection Act, 2019 would address the existing overlapping authority related to fees, with further technical amendments to reflect the proposed approach to collect fees from FSRA approved credentialing bodies.
- Amendments that will be proposed in the future to align certain Ontario statutes with proposed legislation to modernize the governance of the Ontario Securities Commission (OSC) and proposed changes to the Securities Act and the Commodity Futures Act.