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Ontario Budget Highlights

March 10th. 2016

The recent Ontario budget contained few surprises, particularly from a tax perspective.  The government continues to run a deficit, albeit smaller than predicted a year earlier, and promises this will end next year.


The Ontario Student Assistance Program (OSAP) has been completely revamped and simplified.  Under the new program, students from families with less than $50,000 of income will receive grants that are expected to cover their entire cost of education.  The amount of assistance provided will depend on family income, but overall, the intent is to reduce student debt loads and increase access for lower income students.


To help pay for these new grants, the province will no longer provide tax credits for tuition and time spent in post-secondary educational programs after September 2017.  Existing credits will continue to carry forward indefinitely to reduce students’ post-graduation income tax.  Parents and grandparents who have become accustomed to the $5,000 annual credit transfer from their dependent students, will be disappointed to lose the Ontario portion of that credit.


Another popular tax credit that is being axed next year is the Children’s Activity Credit.  No longer will dance classes, art programs, or hockey generate provincial tax credits or refunds.  The home renovation tax credit for seniors is also being scrapped, as it was not being used as extensively as expected.


Some seniors groups were shocked to hear the cost of prescriptions would be increasing for all but the lowest income members of this class.  However, the government obviously forgot that unhappy seniors are very influential at election time, and Kathleen Wynne has since stated the thresholds are “not carved in stone”.  We will have to wait and see how “low income” is defined.  The government also promised to pay for the shingles vaccine for high risk seniors (those between 65 and 70).


As the world moves towards pricing carbon, Ontario has announced more details of the “cap and trade” system that will take effect next year.  Under this program, Ontario companies will purchase credits reflecting the maximum amount of carbon pollution they can generate (the cap).  Those with excess credits will be able to sell (trade) them to others, who cannot meet their targets.  The market for credits will include Ontario, Quebec, and California.  This program will see the cost of gasoline and natural gas increase in 2017, as we all begin paying the price for burning carbon.


Implementation of the Ontario Retirement Pension Plan has been delayed by one year, with the first contributions to the plan scheduled for 2018.  This will first affect large and medium sized businesses and their employees, with employees of small businesses starting their forced savings in 2019.  The Ontario Retirement Pension Plan is the Ontario government’s response to a perception that we cannot be trusted to save for our own retirement, through RRSP’s, TFSA’s, or other means.  Wages up to $90,000 per year will soon be subject to pension contributions of 1.9% (matched by the employer), in addition to the CPP and other payroll deductions.




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