March 27, 2020
On March 25, 2020, the Province of Ontario announced new tax relief measures to respond to the COVID-19 pandemic. This announcement was largely drowned out by other news and federal announcements. The following summarizes some of the more noteworthy measures that have been introduced.
Postponed Property Tax Reassessments
Normally, the Municipal Property Assessment Corporation (MPAC) values properties in Ontario every four years to determine property taxes. This process was to have occurred in 2020. However, it will now be postponed until 2021. So, 2021 property taxes will be the same as those in place for 2020, not a good result for property owners given the current economic climate resulting from COVID-19.
Temporary Increase to Employer Health Tax Exemption
Effective January 1, 2020, practices with less than $5 million in “total Ontario remuneration” will have an exemption from employer health tax for the first $1 million of remuneration, replacing the existing exemption of $490,000. So, taxpayers who have already paid instalments based on the old exemption level can expect their returns to be credited in their favour.
New Regional Opportunities Investment Tax Credit
The Province is introducing a new tax credit available to Canadian-Controlled Private Corporations (which include Professional Corporations): The Regional Opportunities Investment Tax Credit. This will be a 10 percent refundable tax credit; in other words, the province will issue a cheque to qualifying taxpayers! Available for qualifying capital expenditures within Ontario, this credit excludes Ottawa, the Greater Toronto Area (GTA) and many regions near the GTA.
Qualifying expenditures range from $50,000 and $500,000 for Class 1 or 6 properties under capital cost allowance rules found in the Income Tax Act. (Class 1 generally includes most buildings acquired after 1987. This class also includes certain additions or alterations made to a Class 1 building or certain buildings of other CCA classes after 1987. Class 6 includes buildings constructed of frame, log, stucco on frame, galvanized iron, or corrugated metal subject to certain restrictions.)
If you are considering purchasing property rather than renewing your existing commercial lease or constructing (or renovating) an office, this credit could reduce costs by $5,000 to $50,000 depending upon the circumstances. (Note: Land is not depreciable property. So, for purposes of this credit, only the building portion of the purchase price applies for purposes of this credit.)
The credit is only available to the extent that the qualifying investment becomes “available for use” on or after March 25, 2020, as that term is used with respect to the capital cost allowance rules.
Further details pertaining to this credit will likely be forthcoming in the days that follow.
Deferred WSIB Premiums
Under Ontario’s proposals, practices will also be able to defer certain filing and remittance obligations. These amounts remain owing but will not have to be paid until August 31, 2020.
Where applicable, practices can defer remitting WSIB premiums for the period starting March 25 and ending August 31, 2020, with no penalty or interest. Moreover, interest on outstanding premium payments will also cease to accrue. All employers covered by the WSIB workplace insurance are automatically eligible for the relief.
It should be noted that an employer’s WSIB reporting obligations have not changed during this time.
Questions and inquiries about these new measures can be directed to Jonathan Tucker.