Finance Minister Charles Sousa tabled his third budget yesterday. The new budget provides $130-billion in new transit creation while simultaneously imposing austerity measures on health care and education.
Delivered fresh on the heels of the Federal Budget Commentary posted earlier this week, Millards Chartered Professional Accountants has released their Provincial Budget Commentary. The downloadable PDF provides an overview of the Provincial Budget and identifies the key points related to businesses operating in Ontario.
John Carr, CPA, CA, Millards Chartered Professional Accountants, Brantford
John Carr, CPA, CA, Millards Chartered Professional Accountants, has been a partner with Millards since 1988. He says that the Federal Budget Commentary provides a synopsis of the Provincial Budget and recommends that all Millards Chartered Professional Accountants business clients download it for their review and reference.
“We believe that one of our most important roles is to educate and inform our client partners. They count on us to guide them through the complexities of taxation and finance and we offer the Provincial Budget Commentary as a reference guide and tool to help them understand how the budget impacts them.”
Carr says that the Provincial Budget does not propose any changes to corporate income tax rates but that this week’s Federal Budget may offer benefits for small business.
“As a result of the 2015 Federal Budget, the proposed increase in the small business deduction will lower the income tax rate for small business by 0.5% per year. The income tax rate on the first $500,000 of active business income will decrease from 15.5% to 13.5% over the period from 2016 to 2019.”
The new Provincial Budget does contain decreases in tax credits for select sectors.
“Ontario has decreased many of its tax credits including the Apprenticeship Training Tax Credit, the Interactive Digital Media Tax Credit and the Film and Television Tax Credits. It is also proposing to eliminate the Sound Recording Tax Credit.”
The Apprenticeship Training Tax Credit reduction is a change that will negatively impact businesses in Ontario.
“For eligible expenditures related to apprentices who commenced an apprenticeship program after April 23, 2015 the government proposes to decrease the general tax credit rate from 35% to 25% and the rate for small business with salaries or wages under $400,000 per year from 45% to 30%.”
Another Provincial Budget announcement concerns property tax in Northern Ontario.
The Ontario Government announced that it is working to improve the property tax assessment system before the next province-wide reassessment in 2016. Ontario continues consultations on the Provincial Land Tax, which applies to land outside municipal areas in Northern Ontario. Currently this tax is significantly lower than the property tax levied by adjacent municipalities.
Other budget highlights include:
• 10-year $130-billion infrastructure plan, which includes $49.8 billion for transit construction in the GTA and Hamilton area.
• deficit is projected to decline to $8.5 billion this year, $4.8 billion in 2016-17.
• 60 per cent of Hydro One will be sold off, $4 billion of the net applied toward transit.
“One of the interesting budget items is the Provincial Government’s decision to take action on the environment.”
Ontario will join Quebec and California in moving forward with a cap-and-trade system as it’s carbon pricing mechanism. Ontario will consult throughout the summer, listening to experts, industry and environmental groups, as it develops the design of a cap-and-trade program which will set greenhouse gas limits for eligible businesses.
Click here to download the Provincial Budget Commentary
Do you have questions about the Provincial Budget Commentary or the 2015 Provincial Budget? Millards has 7 Southern Ontario locations to serve you. Contact Millards and find out more about our wide range of accounting, auditing and assurance services.
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