Ontario Provincial Budget Tax Updates 2024-2025
Overview
On March 26, 2024, Ontario’s government has announced changes to its provincial tax laws in its 2024-2025 budget “Building a Better Ontario”. This comprehensive summary highlights the key changes that will influence the Ontario tax environment in the coming years.
Personal Income Tax Measures
There are no proposed changes to personal income tax rates for 2024.
The income tax rates for the 2024 taxation year, based on your taxable income, are as follows:
| Taxable income | Rate |
| $51,446 or less | 5.05% |
| More than $51,446 but not more than $102,894 | 9.15% |
| More than $102,894 but not more than $150,000 | 11.16% |
| More than $150,000 but not more than $220,000 | 12.16% |
| More than $220,000 | 13.16% |
The current personal combined income tax rates for top marginal tax rate in 2024 are outlined below:
| Taxable income above $246,752 | Rate |
| Interest/regular income | 53.53% |
| Capital gains | 26.76% |
| Eligible dividends | 39.34% |
| Non‑eligible dividends | 47.74% |
Corporate Income Tax Measures
There are no proposed changes to corporate income tax rates or the $500,000 small-business limit for 2024.
The corporate income tax rates for Ontario in 2024 are as follows:
| Provincial tax rate | Federal and provincial combined tax rate | |
| Small-business tax rate | 3.20% | 12.20% |
| Manufacturing and processing tax rate | 10.00% | 25.00% |
| General corporate tax rate | 11.50% | 26.50% |
Simplifying the Ontario Computer Animation and Special Effects (OCASE) Tax Credit
The Ontario Computer Animation and Special Effects (OCASE) Tax Credit offers an 18% refundable corporate income tax credit to companies engaged in eligible computer animation and special effects activities for film and television productions in Ontario. Currently, to qualify for this credit, productions must also be certified for either the Ontario Film and Television Tax Credit or the Ontario Production Services Tax Credit. The Budget plans to eliminate this requirement and introduce new eligibility criteria:
- Qualifying corporations must spend at least $25,000 on Ontario labor expenditures for each production claimed under the OCASE Tax Credit. This spending threshold can be met within the claiming tax year or over two consecutive tax years. Once this threshold is met for a specific production, related expenditures of that production in those taxation years and in subsequent tax years become eligible.
- Certain productions, such as instructional videos, music videos, and gaming videos, would no longer qualify for the OCASE Tax Credit.
These new rules will apply to productions where qualifying corporations start computer animation and/or special effects work on or after March 26, 2024.
Reviewing the Ontario Film and Television Tax Credit (OFTTC) regional bonus
The OFTTC regional bonus is typically available to productions that are shot or animated predominantly in Ontario, outside the Greater Toronto Area and offers a 10% bonus on all Ontario labour expenditures incurred for the production.
Ontario’s government will review the OFTTC regional bonus to ensure it effectively supports film and television production across the province.
Sales Tax Measures
Extending the Temporary Gas Tax and Fuel Tax Rate Cuts
On July 1, 2022, the Ontario government implemented temporary reductions in the gasoline tax rate by 5.7 cents per litre and the fuel tax (diesel) rate by 5.3 cents per litre. Presently, both gasoline and fuel taxes stand at 9 cents per litre. These tax cuts were scheduled to conclude on June 30, 2024, at which point the tax rates will revert to 14.7 cents per litre for gasoline and 14.3 cents per litre for fuel.
The Budget extends the current rate cuts under the Gasoline Tax Act and the Fuel Tax Act for an extra six months, until December 31, 2024.
Reviewing Alcohol Taxation and Fees
Ontario’s government has decided to extend the freeze on beer basic tax indexation and LCBO mark-up rates for an additional two years. Additionally, there is a proposal to eliminate the 6.1 percent on-site wine basic tax that applies to sales of Ontario wine and wine coolers in on-site winery retail stores, with the new rate scheduled to take effect on April 1, 2024.
Furthermore, to foster a more competitive marketplace for both Ontario-based producers and consumers, the Budget plans to undertake a targeted review of taxes and fees related to beer, wine, and alcoholic beverages.
Modernizing Tobacco tax
The Budget announces certain changes to the Tobacco Tax Act, including administrative changes to simplify administrative requirements. Starting July 2024, the monthly filing deadline for tobacco tax registrants will shift from the tenth to the twenty‐eighth of each month to provide more filing time and match other tax filing deadlines.
Other Tax Measures
Housing supply and affordability
Municipal Vacant Home Tax
The Budget is extending authority to municipalities to impose a tax on vacant homes, to increase housing supply and address housing affordability. Municipalities will receive support through a new provincial policy framework delineating optimal approaches for implementing a Vacant Home Tax. The framework will also promote municipalities to establish elevated Vacant Home Tax rates specifically targeting vacant homes owned by foreign entities.
Lower Taxes on New Purpose-Built Rentals
Ontario is also granting municipalities the flexibility to implement a reduced municipal property tax rate on new multi-residential rental properties, effective as of March 26, 2024.
Non‐Resident Speculation Tax (NRST)
The Budget announces amendments to the Non‐Resident Speculation Tax (NRST) to support compliance and improve fairness.
Property Assessment and Taxation Review
Ontario’s government has initiated a comprehensive review of the property assessment and taxation system, with a focus on fairness, affordability, enhancing business competitiveness, and updating administrative tools. Initial consultations are underway to gather feedback on the review’s scope and key areas of focus. These consultations will expand to include a broader range of stakeholders from across the province in early spring. To provide stability for taxpayers, the provincewide property reassessment will remain postponed until the completion of this review.
Carbon tax referendum
The Budget announces that Ontario’s government has initiated legislation mandating the provincial government to seek Ontario residents’ approval through a referendum before enacting any new provincial carbon pricing program.
Reviewing Ontario’s Tax System
Ontario’s government announced an examination of the province’s tax structure in the 2023 Budget. Subsequently, consultations have been conducted with a group comprised of tax experts, economists, and business executives. Informed by the insights from these consultations, the tax system review will focus on opportunities to enhance productivity, particularly in innovation and research, foster equity, facilitate increased simplicity and transparency, and modernize administration.
Other Technical Amendments
Other proposed legislative amendments include amendments to the Estate Administration Tax Act, 1998 to include the term “small estate certificate” and “amended small estate certificate” under the definition of the term “estate certificate”, and to the Financial Administration Act to provide express authority for intra-day credit for loans entered into by the province of Ontario.
For further information, visit : https://budget.ontario.ca/2024/index.html
