Ontario Action Plan
Dear Valued Clients,
As you might have heard in yesterday’s news, the Ontario government announced some additional resources in response to the COVID-19 pandemic, and we are sharing these updates with you.
Here are just some of the refined support programs which have been outlined in the Economic and Fiscal Update Act, 2020 (Bill 188), which was passed on March 25, 2020:
Ontario pledged $17 Billion to ensure our health care system, communities, and economy are supported while dealing with the anticipated challenges ahead. The action plan includes a dedicated $1 Billion COVID-19 contingency fund for additional health care investments, in addition to $3.3 Billion in additional health care resources to protect and support Ontarians. An unprecedented $2.5 Billion reserve and an increased contingency fund of $1.3 billion are also being set aside to provide continued flexibility for support which will be required to deal with the ever- changing global circumstances.
Guaranteed Annual Income System (GAINS)
Ontario will be doubling the GAINS maximum payment for low-income seniors for six months starting April 2020. This will increase the maximum payment to $166 for individuals and $332 for couples.
To assist parents with the extra costs arising from daycare and school closures, including those with children enrolled in private schools, Ontario is providing a one-time payment of $200 per child up to 12 years of age and $250 for children with special needs.
Ontario Student Assistance Program (OSAP)
OSAP loan repayments are deferred for 6 months which allows students to take a break from making any loan payment from March 30, 2020 to September 30, 2020. No interest will be accrued during this period.
In addition to the information we provided yesterday, legislation which provides job protection to those on leave due to COVID-19, will be retroactive to January 25, 2020. This applies to employees who are sick or in isolation or quarantine, employees who are looking after someone.
Skills Training Programs
A fund for workers impacted by the economic situation will also be provided with $100 million set aside for Skills Training Programs. The province will be working with the federal government to assist apprentices in skilled trades and to help businesses retain those same workers dealing with the outcome of this economic downfall.
Electricity & Hydro Bill Relief
Ontario will be reducing electricity bills for eligible residential, farm and small-business consumers by providing approximately $5.6 billion for electricity cost relief programs. These updates for the fiscal year of 2020-2021 will see an increase of $1.5 billion from the 2019 budget. The province will also be reducing hydro bill amounts by eliminating time-of-use electricity rates for residential, farm and small-business customers, and setting rates to the lowest off-peak price, 24 hours each day for 45 days.
Low Income Energy Assistance Program
Ontario is also expanding the eligibility for those with low incomes to benefit from the $9 Million of direct support for families. Furthermore, the province promises that electricity and natural gas services will not be shut off if bills are temporarily unpaid.
Workplace Safety and Insurance Board (WSIB) Payments
Ontario will provide employers with approximately $1.9 billion in relief by allowing them to defer WSIB payments for up to 6 months. Schedule 1 employers (employers operating under the collective liability insurance principle) who owe WSIB premiums may defer payments and reporting until August 31, 2020. Schedule 2 employers (employers individually responsible for the full cost of accident claims filed by their workers) can also be eligible for the deferral. No interest will be accrued on outstanding payments and no penalties will be charged during this period ending August 31, 2020.
2020 Employer Health Tax (EHT) Exemption Doubled
At this time, the first $490,000 of payroll is exempt from Ontario EHT for eligible private-sector employers and this exemption must be shared by an associated group of employers. Employers who qualify for the exemption pay EHT at a rate of 1.95% on payroll in excess of $490,000. The exemption is eliminated for private-sector employers (including groups of associated employers) with annual Ontario payrolls over $5,000,000. Employers who do not qualify for the exemption are subject to graduated rates ranging from 0.98% to 1.95%, with the 1.95% rate generally applicable for payrolls over $400,000. Ontario will retroactively raise the EHT exemption from $490,000 to $1,000,000 for 2020. The exemption will return to $490,000 on January 1, 2021.
Extended Filing and Payment Deadlines
The government is also allowing businesses to defer filing and remittances for a period of 5 months, beginning April 1, 2020 to August 31, 2020. The deadline extensions will apply to the following provincially administered tax programs: Employer Health Tax; Tobacco Tax; Fuel Tax; Gas Tax; Beer, Wine and Spirits Taxes; Mining Tax; Insurance Premium Tax; International Fuel Tax Agreement; Retail Sales Tax on Insurance Contracts and Benefit Plans; and Race Tracks Tax. There will be no interest or penalties applied on late returns or remittances made under these tax programs during this period of 5 months. This addition measure is separate from the deferral announced by the federal government to delay income tax balances and instalments owed on or after March 18, 2020 and before September 2020.
Regional Opportunities Investment Tax Credit
Ontario introduced a 10% refundable Corporate Income Tax Credit for Canadian-Controlled Private Corporations (CCPC) which make eligible capital investments, on or after March 25,2020 in specified Ontario regions (non-urban centers). Qualifying investments include expenditures for capital property (Class 1 and Class 6) for capital cost allowance purposes. Examples of such expenditures would be for constructing, renovating, or acquiring eligible commercial and industrial buildings. This tax credit will be available for qualifying expenditures over $50,000 and limited to $500,000 of additions in a taxation year.
Postponement of Property Tax Reassessment
Any property valuation update or reassessment which has been previously scheduled to be completed by the Municipal Property Assessment Corporation in 2020 for the 2021 taxation year has been postponed. Assessments for the 2021 taxation year will be based on the same valuation date which was already in effect for the 2020 taxation year.
For more information, please visit: https://news.ontario.ca/mof/en/2020/03/ontarios-ac...
This newsletter and the details provided are solely shared for informational purposes and does not constitute legal advice or opinion. Please do not hesitate to reach out to your manager with any questions.
Pramen Prasad CPA, CA, CMA Managing Partner
Prasad & Company LLP