Canada: 2016 Ontario Budget Commentary - February 25, 2016


On February 25, 2016 Finance Minister Charles Sousa tabled his fourth Budget.

The deficit for the 2015-16 fiscal year is projected to be $5.7 billion, which is $2.8 billion less than forecasted in the 2015 Budget. The deficit is projected to drop to $4.3 billion for 2016-17 and to be eliminated by 2017-18. Furthermore, the government is also projecting a balanced budget in 2018-19.

The Budget does not include any changes to Ontario’s personal tax rates but certain personal tax credits are being eliminated. In addition, changes to the so-called “sin taxes” are proposed. From a business perspective, although there are no changes to corporate tax rates, there are proposed reductions to certain credits.

Measures Affecting Individuals

Personal Income Tax Rates

While this Budget does not propose any changes to personal income tax rates, federal personal rates were changed effective January 1, 2016. The resulting top marginal rates where income is over $220,000 are as follows:

Type of Income 2016 2015
Salary and other income 53.53% 49.53%
Capital gains 26.76% 24.76%
Eligible dividends 39.34% 33.82%
Non-eligible dividends 45.30% 40.13%

Tuition and Education Tax Credits

The Budget proposes a radical restructuring of post-secondary education funding. The changes are intended to target increased support for students from lower income families.

Ontario Tuition and Education Credits (“TEC”) are being eliminated effective fall 2017. Tuition for studies after September 4, 2017 will not be eligible for the credit. In addition, months of study after August 2017 will not be eligible. Where the student is a resident of Ontario as of December 31, 2017, any carry forward TEC will continue to carry forward and can be claimed in the future. If the student becomes an Ontario resident after 2017, any tuition and education amounts carried forward from another province cannotbe claimed.

The TEC, as well as the 30% Off Tuition Grant, Ontario Access Grants and other grants, will be replaced by the Ontario Student Grant (“OSG”) starting with the 2017-18 school year. Where family income is $50,000 or less the OSG should exceed average tuition. No student will receive less than that to which they are currently entitled. 

Children’s Activity Tax Credit

The Children’s Activity Credit (“CATC”) is a refundable credit designed to assist parents with the cost of enrolling children in various extracurricular activities. The CATC is to be eliminated effective January 1, 2017, as it largely benefits higher income families.

Healthy Homes Renovation Tax Credit

The Healthy Homes Renovation Tax Credit (“HHRTC”) is intended to assist with home renovations that improve safety and/or accessibility of the home for seniors. The HHRTC is 15% of up to $10,000 of eligible expenditures. Since there has been little “take up” on the HHRTC, it is to be eliminated January 1, 2017.

Tax on Split Income

The Budget proposes that, effective January 1, 2016, Ontario will parallel the federal taxation of income split with related minors, commonly referred to as “Kiddie Tax”. Split income will be taxed at Ontario’s top marginal rate, with no surtax applying.

Simplification of Personal Income Tax

The Budget indicates that the government is planning to examine ways to simplify the personal tax calculation.

Measures Affecting Businesses

Corporate Income Tax Rates

The Budget proposes no changes to corporate income tax rates, which are as follows for 2016:

Income Ontario Federal Combined
Small Business income 4.5% 10.5% 15.0%
CCPC1 investment income 11.5% 38.67% 50.17%
Manufacturing and Processing income 10.0% 15.0% 25.0%
General income 11.5% 15.0% 26.5%

Research and Development Tax Credits

The Budget proposes reductions to research and development tax credits.

The Ontario Research and Development Tax Credit (“ORDTC”) is a 4.5% non-refundable credit. The ORDTC rate is to be reduced to 3.5% of eligible expenditures effective June 1, 2016.

The Ontario Innovation Tax Credit (“OITC”) is a 10% refundable credit for small to medium companies. The rate is to be reduced to 8% of eligible expenditures effective June 1, 2016.

Where the taxation year straddles June 1, 2016 the rate will be pro-rated for both the ORDTC and the OITC.

Apprenticeship Training Tax Credit

As announced in the 2015 Budget, the Apprenticeship Training Tax Credit (“ATTC”) is being reviewed to ensure that it meets its objectives. Budget 2016 confirms that the ATTC review is continuing along with other reviews of initiatives in support of apprenticeships.

Workplace Safety Insurance Premiums

As a consequence of steps taken in respect of cost reductions and improving the financial condition of the Workplace Safety and Insurance Board (“WSIB”), the Budget projects a significant reduction in WSIB premiums, starting in 2017.

Other Taxes

Tobacco Tax

Effective 12:01 a.m. February 26, 2016, the tobacco tax is being increased from 13.975 cents to 15.475 cents per cigarette and gram of tobacco products other than cigars. The Budget proposes to inflation index the tobacco tax annually after 2016.

Alcohol Charges

The Budget proposes the following changes in respect of alcohol charges:

  • Increase in the ad valorem wine mark-up by the LCBO by two percentage points effective June 2016 with further increases of two percentage points in each of April 2017 and 2018 and one percentage point in April 2019;
  • Increase in the basic tax on non-Ontario wine purchased at winery retail stores by one percentage point in each of June 2016, April 2017, April 2018 and April 2019;
  • Increase in the minimum retail price for table wine to $7.95 per 750 ml bottle, including deposit, phased in over three years;
  • Phase-in of minimum retail prices for cider, fortified wine and low-alcohol wine over three years;
  • Establishment of higher basic wine tax rates for sales at winery retail outlets in grocery stores; and
  • Replacement of the current mark-up and commission structure with a tax on purchases at on-site distillery retail stores.

Underground Economy

The Budget indicates that the government is continuing to focus on underground economy activities in all high-risk sectors. It will work with the Canada Revenue Agency in launching specialized audit teams. It will also propose legislation to enhance enforcement capabilities.

Tackling Climate Change

The Budget indicates that Ontario intends to move forward with a cap-and-trade system in respect of carbon pricing, effective January 1, 2017. The program will place a cap on greenhouse gas emissions, create tradable emissions allowances for a given period and require covered emitters to hold allowances equal to their emissions in that period. Those who reduce their emissions will be able to sell their excess allowances in the carbon market. As a result of this program, it is projected that the price of gas at the pump will increase by 4.3 cents per litre, average household natural gas costs will rise by $5 per month and residential electricity costs decrease by $2 per month.

Ontario Retirement Pension Plan

Legislation to implement the Ontario Retirement Pension Plan will be introduced in spring 2016. The employer verification and enrolment process will start in 2017, with employer and employee contributions beginning in 2018.

Property Tax Measures

The Budget confirms the continued review of the property tax assessment system including the Business Property Tax Capping Program, the Vacant Unit Rebate and Vacant/Excess Land Subclasses. Ontario will also continue consultations on the Provincial Land Tax which applies to land outside municipal areas in Northern Ontario.

User Fees

As of January 2016, hospitals have been directed not to raise their daily parking rates for the next three years. The Budget introduces additional measures effective October 1, 2016 that will reduce parking costs for frequent hospital users.

Ontario has revised its fee schedule for court services and will continue to update licensing and vehicle validation fees. The government will eliminate certain fees related to adoptions and the Drive Clean emissions test. Other fees will be reviewed for potential elimination or updating.


1. Canadian-Controlled Private Corporation

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Collins Barrow National Incorporated
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Collins Barrow National Incorporated
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions