On Thursday, November 15, 2018, the Honourable Victor Fedeli, Minister of Finance released the 2018 Ontario Economic and Fiscal Review (the "Review"). The Review highlighted Ontario's economic and fiscal outlook and discussed issues such as the province's projected debt, its business competitiveness, its housing shortage and the carbon tax. Here are four tax related items you should be aware of.

1. NO to Provincial Equivalent of Small Business Deduction Claw Back

The Review states that the Ontario government will not implement parallel measures enacted by the Federal government to claw back the corporate small business deduction limit when passive income of $50,000 or more is earned by a corporation or group of associated corporations.

2. NO to Increase in Personal Income Tax Rates

Ontario will not be moving ahead with the replacement of the provincial personal income tax surtax through an increase in the personal income tax rates. These measures were originally proposed by the former Ontario government in its final budget. The provincial personal income tax rates will remain as they are currently. Had the proposal been implemented, personal income tax rates would have increased slightly. A table showing the current combined Federal and Ontario personal income tax rates is reproduced below

2018 Taxable Income 2018 Marginal Tax Rates
Canadian Dividends
Eligible Non-Eligible
first $42,960 20.05% 10.03% -6.86% 7.81%
over $42,960 up to $46,605 24.15% 12.08% -1.20% 12.57%
over $46,605 up to $75,657 29.65% 14.83% 6.39% 18.95%
over $75,657 up to $85,923 31.48% 15.74% 8.92% 21.07%
over $85,923 up to $89,131 33.89% 16.95% 12.24% 23.87%
over $89,131 up to $93,208 37.91% 18.95% 17.79% 28.53%
over $93,208 up to $144,489 43.41% 21.70% 25.38% 34.91%
over $144,489 up to $150,000 46.41% 23.20% 29.52% 38.39%
over $150,000 up to $205,842 47.97% 23.98% 31.67% 40.20%
over $205,842 up to $220,000 51.97% 25.98% 37.19% 44.84%
over $220,000 53.53% 26.76% 39.34% 46.65%

3. NEW Low-Income Individuals and Families Tax (LIFT) Credit

The Review announced a new personal income tax credit, the LIFT Credit. This non-refundable tax credit will reduce or eliminate Ontario personal income tax for individuals who have employment income and total individual net income less than $38,500 (or family net income of $68,500).

4. YES to Employer Health Tax Exemption Increase

The Ontario government reiterated that the Employer Health Tax exemption will increase from $450,000 to $490,000 starting January 1, 2019.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.