Annex: Details of Tax Measures and Other Legislative Initiatives


This Annex contains detailed information on tax measures and other legislative initiatives proposed or implemented in this Budget.

Ensuring Competitive Taxes for Industry

Introducing the New Ontario Made Manufacturing Investment Tax Credit

The government is proposing the new Ontario Made Manufacturing Investment Tax Credit. It is a new 10 per cent refundable Corporate Income Tax credit for capital investments in buildings, machinery and equipment used in manufacturing or processing to continue to bring back manufacturing to Ontario.

Eligible Corporations

The credit would be available to Canadian‐controlled private corporations (CCPCs) that make qualifying investments and that have a permanent establishment in Ontario.

For the purposes of this credit, a permanent establishment means a fixed place of business including an office, a factory or a workshop.

Qualifying Investments

Qualifying investments would be expenditures for certain capital property included in Class 1 or Class 53 for capital cost allowance (CCA) purposes.

Class 1 Property

Qualifying investments in Class 1 would include expenditures for constructing, renovating or acquiring buildings used for manufacturing or processing in Ontario that become available for use on or after March 23, 2023.

To qualify as a building used for manufacturing, 90 per cent of the floor space of the building must be used at the end of the corporation’s taxation year for manufacturing or processing in Ontario and the building must be eligible for the additional six per cent CCA permitted under the federal Income Tax Act.

Class 53 Property

Qualifying investments in Class 53 would include expenditures for machinery and equipment used in the manufacturing or processing of goods in Ontario. The machinery and equipment would have to be acquired and become available for use on or after March 23, 2023, and before 2026. After 2025, qualifying investments would include expenditures for machinery and equipment used in the manufacturing or processing of goods for sale or lease that are included in Class 43(a).

“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 CCA for a depreciable property.

Qualifying Investment Limit

The credit would be available for qualifying investments up to a limit of $20 million in a taxation year and would be prorated for a short taxation year. An associated group of corporations would be subject to the $20 million limit.

Three-Year Reviews

The government would undertake a review of the credit every three years. The review would evaluate the credit for effectiveness, compliance burden and administrative costs.

Helping Small Businesses Grow

The Ontario small business Corporate Income Tax (CIT) rate is available to Canadian-controlled private corporations (CCPCs) and associated groups of CCPCs. Ontario’s small business CIT rate is currently subject to a small business limit of $500,000 of active business income that phases out when a CCPC, or an associated group of CCPCs, has between $10 million and $15 million of taxable capital employed in Canada.

In the 2022 Ontario Economic Outlook and Fiscal Review, the government proposed to extend the phase‐out range for Ontario’s small business CIT rate to between $10 million and $50 million of taxable capital employed in Canada and is now introducing legislative amendments to implement this change. This change would mirror the federal government’s extension of the federal phase‐out range for the federal small business CIT rate, which was recently legislated.

This proposed measure would apply to taxation years that begin on or after April 7, 2022, for consistency with the federal effective date.

Modernizing Ontario’s Film and Television Tax Credits

The 2022 Budget and the 2022 Economic Outlook and Fiscal Review announced measures to modernize Ontario’s film and television tax credits and committed to exploring other opportunities to improve these programs. The government is continuing work on these commitments.

  • The government is extending film and television tax credit eligibility to professional film and television productions made available exclusively online. With this proposed change, Ontario would provide an estimated $58 million in additional support to the industry from 2022–23 to 2025–26. Draft regulatory amendments were posted on Ontario’s Regulatory Registry on February 21 and will be available for public comment until April 11, 2023. The government will review all comments and finalize the regulatory amendments in the coming months.
  • The government is proposing a requirement that film and television productions supported by Ontario tax credits provide on-screen acknowledgement of this support in their end credits. Draft regulatory amendments to implement this change were included as part of the draft amendments posted on the Ontario Regulatory Registry on February 21 for public consultation, as mentioned above.
  • The government is exploring opportunities to simplify the Ontario Computer Animation and Special Effects Tax Credit to reduce administrative complexity while continuing to ensure support remains targeted to professional productions with significant cultural or economic impact. The government is engaging with industry stakeholders to explore options.
  • The government is proceeding with a review of the Ontario Film and Television Tax Credit regional bonus to ensure it is providing effective and appropriate incentives and support for film and television production in all regions of Ontario.

Making Progress on Modernizing Ontario’s Tobacco Tax Administration

As outlined in the 2022 Budget, the government is moving ahead with a review and modernization of the Tobacco Tax Act to ease administrative burden while also strengthening oversight. As an initial step, technical amendments will be introduced to remove redundant and outdated requirements in the legislation to provide greater clarity and reduce burden for registrants.

Moving forward, the review will identify additional opportunities to further reduce administrative burden, align the legislation to the changing tobacco marketplace and best practices in other jurisdictions, and modernize compliance by enhancing digitization. The government will engage First Nations, industry and trade associations including those representing convenience stores, law enforcement and public health stakeholders to inform proposed legislative changes.

Building on the recommendations of the engagement with First Nations on unregulated tobacco in 2021, led by two independent Indigenous facilitators, the government is strengthening its partnerships with First Nations by focusing on community safety, economic development and business regulation.

Harmonizing Wine Tax in Response to World Trade Organization Settlement

The government of Ontario is proposing to set a single 12 per cent basic tax rate on wine and wine coolers sold in off-site winery retail stores, including wine boutiques. The new rate would come into effect on July 1, 2023.

The proposed amendment would replace the four separate basic tax rates that apply to wine sold in off-site winery retail stores with a single rate. The harmonized rate is expected to result in an overall tax reduction of about $4 million per year.

These proposed changes are in response to a World Trade Organization settlement reached between Canada and Australia.

Summary of Measures

Table A.1 reflects the cost of tax measures proposed or implemented in this Budget.

Table A.1
Summary of Measures
($ Millions)
  2022–23 2023–24 2024–25 2025–26
Introducing the New Ontario Made Manufacturing Investment Tax Credit 215 275 290
Harmonizing Wine Tax in Response to World Trade Organization Settlement 3 4 4
Helping Small Businesses Grow – Expanding the Phase-out Range of the Small Business Limit 25 80 80 80
Total 25 295 360 375

Table A.1 footnotes:

Notes: Numbers reflect the benefit to businesses. Positive numbers represent an increase in government expense or a decrease in government revenue. Estimates below $10 million are rounded to the nearest $1 million and estimates above $10 million are rounded to the nearest $5 million. Totals 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, or other statutes, 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.

Other Legislative Initiatives

Additional proposed legislative amendments include:

  • An amendment to the Financial Professionals Title Protection Act, 2019 to give the Financial Services Regulatory Authority of Ontario the power to make rules governing the use of protected titles by credential holders when a credentialing body’s approval has been revoked or an approved credentialing body ceases to operate.
  • An amendment to the Dedicated Funding for Public Transportation Act, 2013 to ensure that Ontario’s Gas Tax Program continues to provide two cents per litre of provincial gas tax revenue to municipalities in order to support local public transit. This would fulfill Ontario’s commitment to ensure that the gas tax rate reduction does not impact this program.
Updated: March 23, 2023
Published: March 23, 2023