April 3, 2020

Relief from Certain Ontario Taxes

Tax filing and remittance deadlines will remain the same. However, beginning April 1, 2020, penalties and interest will not apply to Ontario businesses that miss any filing or remittance deadline under select provincial taxes. This will continue for a period of five months.

The following provincial taxes are included in the relief period:

  • Employer Health Tax
  • Tobacco Tax
  • Fuel Tax
  • Gas Tax
  • Beer, Wine & Spirits Tax
  • Mining Tax
  • Insurance Premium Tax
  • International Fuel Tax Agreement
  • Retail Sales Tax on Insurance Contracts and Benefit Plans
  • Race Tracks Tax

If a business is unable to file their return or remittance during the relief period, they do not need to contact or notify the Ministry of Finance. Penalties and interest will be waived automatically for all late returns or remittances by Ontario businesses during the relief period.

Ontario businesses are also not required to provide the Ministry of Finance with information about the impact of COVID‑19 on their staff or daily operations during the relief period.

Ontario businesses are required to file any late returns or remittances by the end of the relief period (August 31, 2020).

The Ministry will continue to review what challenges businesses are experiencing in light of COVID‑19 and develop rules around returning to normal accordingly. Any transition plan will be communicated to all tax clients before the relief period ends.

Note that the relief period does not include business accounts with outstanding taxes, interest or penalties owing to the government from previous filing periods. Existing debts from before the relief period will continue to accrue interest.

The government is also temporarily suspending audit interactions with most Ontario business and representatives for the month of April 2020.

Employer Health Tax

The annual Employer Health Tax (“EHT”) Exemption of $490,000 has been increased to $1,000,000 for 2020.  The filing of any returns and payments of any EHT taxes has also been deferred in accordance with the preceding paragraph. The rules regarding the sharing of the annual exemption among associated entities and the loss of the exemption to private sector employers (except registered charities) when the annual Ontario payroll (including associated entities) exceeds $5,000,000 have not been changed.

The annual exemption will revert to $490,000 for 2021.

Regional Opportunities Investment Tax Credit (“ROITC”)

The proposed ROITC is a new 10 per cent refundable Corporate Income Tax credit for capital investments.  A Canadian‐controlled private corporation that makes qualifying investments that become available for use on or after March 25, 2020 in specified regions of Ontario would be eligible for the tax credit.

“Available for use” refers to the rules set out in the Income Tax Act (Canada) that determine the

taxation year in which a taxpayer can start to claim capital cost allowance for a depreciable property.

Qualifying investments include expenditures for constructing, renovating or acquiring eligible commercial and industrial buildings and other capital property included in Class 1 and Class 6 for the purposes of calculating capital cost allowance.

The tax credit would be available for expenditures in excess of $50,000 and up to a limit of $500,000 for qualifying investments that become available for use by a Canadian‐controlled private corporation in the taxation year.

The only regions that are not eligible are the regions that make up the Golden Horseshoe area (Toronto, York, Durham, Peel, Halton, Simcoe, Dufferin, Wellington-Peel, Waterloo, Brant, Hamilton, Niagara, Haldimand and Norfolk) and Ottawa.

The government proposes to include a mandatory review to be undertaken every three years. The review would evaluate the credit for effectiveness, compliance burden and administrative costs.

Workplace Safety and Insurance Board (WSIB) payments

Employers will be allowed to defer WSIB payments for up to six months. Specifically, Schedule 1 employers (i.e., employers operating under the collective liability insurance principle) that owe premiums to the WSIB may defer reporting and payments of any premiums until August 31, 2020.  Deferral is also available to Schedule 2 organizations (i.e., employers that are individually responsible for the full cost of accident claims filed by their workers). During this deferral period, interest will not accrue on outstanding payments and no penalties will be charged.

Postponement of property tax reassessment 

Property taxation is based on the assessed value of properties and in Ontario those assessments are updated every four years. The next property valuation update, known as a reassessment, had been scheduled to be completed by the Municipal Property Assessment Corporation (MPAC) in 2020 for the 2021 taxation year. This reassessment has now been postponed until 2021.

This means that assessments for the 2021 taxation year will continue to be based on the same valuation date that was in effect for the 2020 taxation year.

Disclaimer:  The COVID-19 Canadian tax policies in the above article are changing rapidly as the governments introduce new measures. Certain details have yet to be published. We will aim to update them as soon as they are available.