On February 25th, 2016, Ontario’s Finance Minister, Charles Sousa, presented the Liberal Government’s 2016 Provincial budget.
Here’s our quick take on the income tax highlights from that budget:
- CORPORATE TAX RATES: There is no change to projected corporate tax rates. The general rate will stay at 26.5% for 2016, with the small business rate will be 15% for 2016 and will be reduced, as previously announced, by 0.5% per year until 2019 when it will be 13.5%.
- PERSONAL TAX RATES: There is no change in previously announced personal tax rates. The top rates, applicable for income over $220,000, are:
- 53.53% for salary;
- 26.76% for capital gains;
- 39.34% for eligible dividends; and
- 45.30% for other than eligible dividends.
- R&D TAX CREDITS: Ontario’s existing research and development credits will be reduced by 3% of total eligible expenditures to 11.5% of total expenditures. This is the combined rate for the Ontario Research and Development Tax Credit and the Ontario Innovation Tax Credit. These changes are effective for expenditures incurred after June 1, 2016.
- ORPP: Contributions to the new Ontario Registered Pension Plan have been delayed one year to start in 2018.
- DISCONTINUED CREDITS: The Liberal Government will discontinue Ontario tuition and education tax credits, along with the Children’s Activity Tax Credit and the Healthy Homes Renovation Tax Credit for Seniors. These changes will be effective starting in 2017.
To view the full budget please visit the Ontario Government’s webpage here.
Some of these changes may have an impact on your personal and business taxes so please touch base with your accountant if you have any questions!