Tax Flash Bulletin
2023 Ontario Budget Highlights
On March 23, 2023, Peter Bethlenfalvy, Minister of Finance and President of the Treasury Board tabled the 2023-24 Ontario budget. The government plans to review Ontario’s tax system to prioritize competitiveness, growth, and fairness. It will also continue investments in technology to modernize the tax administration system. We have highlighted selected tax proposals from the budget that affect individuals and small businesses in Ontario
INDIVIDUALS
Personal Tax Rates
The budget did not contain any changes to Ontario personal income tax rates or the surtax rates. The Ontario surtax is a tax calculated on the base amount of Ontario tax. Ontario indexed the 2023 provincial tax brackets 6.5 per cent inflation.
Ontario Income Tax Brackets and Tax Rates
| 2022 Taxable Income | 2023 Taxable Income | Tax Rate |
|---|---|---|
| $0 to $46,226 | $0 to $49,231 | 5.05% |
| $46,226 to $92,454 | $49,231 to $98,463 | 9.15% |
| $92,454 to $150,000 | $98,463 to $150,000 | 11.16% |
| $150,000 to $220,000 | $150,000 to $220,000 |
12.16% |
| Over $220,000 |
Over $220,000 | 12.16% |
Ontario Surtaxes
| 2022 Ontario Tax | 2022 Surtax Rate on Tax | 2023 Ontario Tax | 2023 Surtax Rate on Tax |
|---|---|---|---|
| $0 to $4,991 | No surtax | $0 to $5,315 | No surtax |
| $4,991 to $6,387 | 20% in excess of $4,991 | $5,315 to $6,802 | 20% in excess of $5,315 |
| Over $6,387 | 36% in excess of $6,387 + 20% of tax in excess of $4,991 |
Over $6,802 | 36% in excess of $6,802 + 20% of tax in excess of $5,315 |
Top Combined Ontario and Federal Rates
| Income Type | 2022 | 2023 |
|---|---|---|
| Salary, interest, pension, foreign | 53.53% | 53.53% |
| Eligible dividends | 39.34% | 39.34% |
| Non-eligible dividends | 47.74% | 47.74% |
| Capital gains | 26.77% | 26.77% |
Top rates apply to taxable income over $235,675 ($221,708 for 2022) based on known federal and provincial rates as of March 23, 2023
Other Taxes and Services
- Set a single 12 per cent basic tax rate on wine and wine coolers sold in off-site winery retail stores, effective July 1, 2023 to eliminate the current four separate tax rates
- Extend the temporary gas tax cut (5.7 cents/L) and fuel tax cut (5.3 cents/L) until December 31, 2023 which keeps the rates at 9 cents per litre
- Eliminate double fares for most local transit services in the Greater Golden Horseshoe when commuters also use GO Transit services
- Expand eligibility for the Guaranteed Annual Income System (GAINS) so that 50 per cent more seniors receive benefits and index to inflation, starting July 2024
- Expand list of ailments that pharmacists are permitted to prescribe medication such as skin conditions, infections, and pregnancy nausea
BUSINESSES
The budget did not propose any changes to Ontario corporate tax rates or the $500,000 small business income (SBD) threshold. However, the budget proposes to extend the Ontario SBD top phase-out range of the taxable capital employed in Canada from $15 million to $50 million, effective April 7, 2022 to parallel the revised federal phase-out rates.
Ontario Corporate Tax Rates
| Income Type | Provincial | Federal | Combined Calendar 2023 |
|---|---|---|---|
| General corporate income | 11.50% | 15.00% | 26.50% |
| Small business income | 3.20% | 9.00% | 12.20% |
| Small business income over the federal limit and under the Ontario limit | 3.20 | 15.00% | 18.20% |
| CCPC* investment income | 11.50% | 38.67% | 50.17% |
| Non-CCPC investment income | 11.50% | 15.00% | 26.50% |
| Manufacturing & processing income | 10.00% | 15.00% | 25.00% |
* Canadian-controlled private corporation
Based on known federal and provincial rates as of March 22, 2023
Introduction of Ontario Made Manufacturing Investment Tax Credit
- New 10 per cent refundable corporate income tax credit for capital investments in buildings, machinery, and equipment used in manufacturing or processing
- Canadian-controlled private corporations that have a permanent establishment in Ontario are eligible
- Qualifying investments include expenditures for certain capital property in Class 1 or Class 53/Class 43(a) for capital cost allowance purposes
- Credit limit is $20 million in a taxation year for qualifying investments
- Available for purchases on or after March 23, 2023 (Class 53 before 2026, Class 43(a) after 2025)
Refer to the 2023 Ontario Budget for further details
This has been prepared by the Professional Wealth Advisory Group of Raymond James Ltd. (RJL). Statistics and factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities nor is it meant to replace legal, accounting, taxation or other professional advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. The information is furnished on the basis and understanding that RJL is to be under no liability whatsoever in respect thereof. This is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., Member - Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a Member - Canadian Investor Protection Fund.