This past Thursday, May 15, Ontario’s Minister of Finance, Peter Bethlenfalvy, announced the 2025 Provincial Budget with a plan to protect Ontario workers, businesses and jobs.
Personal and Corporate Income Tax Changes
Currently, the Ontario Provincial Budget does not outline any changes to personal and corporate income tax measures. The Budget fosters the Provincial goal to transform Ontario into a place to invest, create jobs and do business while investing in healthcare, businesses and various other critical services.
Tariff-related Measures
Given the uncertainty around U.S. tariff policy changes, which could significantly impact the Ontario economy, the Budget announces several scenarios to provide relief for Ontarians facing tariff-related disruptions. Notably, the creation of the Protecting Ontario Account is a newly proposed fund that will provide up to $5 billion to support jobs, transform businesses and grow strategic sectors of our economy that are impacted by U.S. tariffs.
Additionally, various provincially administered taxes will be deferred from April 1,2025 to October 1, 2025, to help businesses who are economically impacted by American tariffs. This measure is expected to provide 80,000 Canadian business and their owners with $9 billion in cash flow to ensure workers stay employed.
Below are three tax credit changes that you need to know about.
The Ontario Made Manufacturing Investment Tax Credit
Introduced in 2024, the Ontario Made Manufacturing Investment Tax Credit (OMMITC) has a temporary rate increase from 10% to 15% and the expansion in eligibility of the credit to non-Canadian Controlled Private Corporations (CCPC’s) for buildings and equipment used in provincial manufacturing and processing, after May 14, 2025, and before January 1, 2030.
Additionally, the Budget amends this tax credit to require the repayment of the credit that was claimed when the eligible property is sold, converted to non-manufacturing and processing, or removed from Ontario within five years after May 14, 2025.
These proposed changes will help lower business costs by providing an additional $1.3 billion in support over the next three years.
Introducing the Ontario Shortline Railway Investment Tax Credit
The Provincial Budget introduced the Ontario Shortline Railway Investment Tax Credit (OSRITC) which proposes a 50% refundable tax credit for capital property and labour expenditures on railway maintenance done after May 14, 2025, and before Jan 1, 2030, by corporations who qualify for the credit.
Ontario Fertility Treatment Tax Credit
Beginning January 1, 2025, Ontario has also announced the Ontario Fertility Treatment Tax Credit, providing refundable tax credit (equal to 25% on up to $20,000) on eligible fertility and surrogacy-related expenses. The Budget outlines details, stating annually that a maximum tax credit of $5,000 can be refunded and eligibility requirements are in line with the already existing medical expense tax credit (METC).
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