Ontario Finance Minister, Charles Sousa, delivered the province's 2017 Fall Economic Statement today, six months ahead of the election.  Here are the four key tax highlights that you should be aware of:

1. Reduction to the small business tax rate

On January 1, 2018, the tax rate applicable on the first $500,000 of profits generated from an active business carried on by a Canadian-controlled private corporation will be reduced from 4.5 per cent to 3.5 per cent. The chart below provides the Ontario, federal and combined small business tax rates expected for the 2018 and 2019 calendar years.

Year

Ontario

Federal

Combined

2017
(current)

4.5%

10.5%

15.0%

2018

3.5%

10.0%

13.5%

2019

3.5%

9%

12.5%

The 3.5 per cent will be prorated for taxation years that straddle the January 1, 2018 effective date.

2. Modernizing employer support for apprenticeship training

The Apprenticeship Training Tax Credit (ATTC) is a refundable tax credit of up to $5,000 per year (per qualified apprentice), available to businesses that hire and train certain apprentices in designated construction, industrial, motive power and specific service trades. The ATTC is available for the first 36 months of an apprenticeship program.

With the introduction of the Graduated Apprenticeship Grant for Employers (GAGE), the Government is proposing to eliminate the ATTC for employers with apprentices who register in an apprenticeship program after November 14, 2017. Those employers with apprentices already registered in an eligible program on or before November 14, 2017 will continue to be eligible for the ATTC for up to 36 months.

The GAGE is designed to encourage employers to ensure apprentices complete their training programs by providing the following employer grants:

  • $2,500 upon the apprentice's completion of level one and again at level two;
  • $3,500 upon the apprentice's completion of level three and again at level four; and
  • $4,700 upon the apprentice's attainment of certification (either through a certificate of apprenticeship or certificate of qualification if applicable).

The GAGE will be available to employers in an additional five trades – hairstylist, cook, horticultural/landscape technician, baker and appliance service technician.

3. Land Transfer Tax (LTT) on unregistered dispositions

The Government is proposing an amendment to the Land Transfer Act to authorize regulations to provide taxpayers with greater flexibility in complying with their LTT obligations. Currently, there is a requirement that the LTT be paid within 30 days of the date of an unregistered disposition of land.  For example, under this proposed amendment, taxpayers could be allowed the flexibility of filing returns quarterly without incurring interest charges. Further details will be provided at a later date.

4. Property tax measures

The Government has made several proposals to make the property tax system more flexible, with a focus on the following:

(a) Ensuring greater consistency in business vacancy rebate and reduction programs.

(b) Finalizing provincial land tax (PLT) reform initially introduced in 2013. The plan is to address the differences in PLT between areas inside and outside school boards.

(c) Encouraging small-scale agri-food business on farms. Commencing in 2018, the Government will enable property tax changes to be made at the local municipality level. Municipalities will be able to tax the first $50,000 of assessed value of qualifying value-added and commercial activities on farms at a rate of 75 per cent lower than the commercial or industrial tax rate that would otherwise apply. This treatment will be limited to on-farm processing and commercial facilities that are assessed below $1 million. The goal is to encourage job growth in the agriculture sector and support rural areas.

For more information regarding the tax changes and other measures discussed here, please contact your Crowe Soberman advisor today.

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.