Finance Minister Peter Bethlenfalvy delivered the 2024 Ontario Fall Economic Statement (ON FES 2024) on October 30, 2024. The 2024 Ontario Economic Outlook and Fiscal Review: Building Ontario For You serves as a precursor to Ontario’s 2025 budget. ON FES 2024 introduces some notable personal tax measures but doesn’t include significant changes to business tax measures.
The ON FES 2024 estimates a $6.6 billion deficit for the 2024-25 fiscal year, an improvement of $3.2 billion from the $9.8 billion deficit projected in the 2024 budget.
Ontario attributes the smaller deficit to higher-than-expected tax revenues, which includes those resulting from the federal government’s proposed increase to the capital gains inclusion rate and lower-than-expected interest costs. These savings are net of additional spending on items like the proposed taxpayer rebates, increased health sector supports, and an increase to Ontario’s contingency fund.
Estimated surplus (deficits)
| |
2024 - 25 |
2025 - 26 |
2026 - 27 |
| Original estimate (Budget 2024) |
($9.8B) |
($4.6B) |
$0.5B |
| Revised estimate (Fiscal Review 2024) |
($6.6B) |
($1.5B) |
$0.9B |
Personal tax measures
New taxpayer rebates
Ontario proposes to introduce a refundable personal income tax credit that offers eligible tax filers a one-time $200 rebate. To qualify, the individual must meet all the following criteria:
- Be 18 years or older at the end of 2023
- Reside in Ontario on December 31, 2023
- File their 2023 income tax and benefit returns by December 31, 2024
- Not be bankrupt or have been incarcerated in 2024
For Ontario families that receive the 2024 Canada Child Benefit, another one-time $200 rebate is proposed for each child under the age of 18. The rebate would be provided to the Ontario resident who receives the benefit in respect of the child. For Ontario families with children who don’t receive the 2024 Canada Child Benefit, an alternative process will be available to claim the rebate.
AMT update
Ontario proposes to lower its alternative minimum tax (AMT) rate to 24.63% (from 33.67%) starting with the 2024 tax year. In addition, Ontario will adjust its AMT credit rate to 24.63% to mirror the proposed rate, starting with the 2025 tax year. This change is to ensure that Ontario’s effective AMT rate remains unchanged at 5.05%, in response to the federal government’s recent changes to increase the federal AMT rate, starting in the 2024 tax year.
New tax credit for fertility treatment
Ontario proposes a new tax credit of up to 25% of eligible fertility treatment expenses for Ontario residents, effective January 2025. Eligible expenses include in vitro fertilization cycles, fertility drugs, travel, and diagnostic testing. Ontario intends to invest an additional $150 million over two years to expand the Ontario Fertility Program.
Sales and excise tax measures
Gas tax
Ontario extends cuts to the gas tax, including diesel, to June 30, 2025 (previously set to expire on December 31, 2024). The relief includes a continued reduction of 5.7 cents/litre for gas and 5.3 cents/litre for diesel. These reductions hold the provincial gas and diesel tax component of fuel prices to 9 cents/litre.
Other notable measures
Hydroelectric energy
Ontario is investing more than $2.6 billion to expand and refurbish 12 clean electricity generating stations. The investment is intended to secure 4,362 MW of hydro electricity generation which will power 4.3 million homes.
Previously announced measures
GAAR
Ontario will mirror the federal government’s changes related to the general anti-avoidance rule (GAAR), effective January 1, 2024.
Mandatory disclosure rules
Ontario proposes to include the disclosure of “notifiable transactions” and “uncertain tax treatments” effective from June 2023. This would mirror the expanded federal mandatory disclosure rules.
Beer tax freeze
Ontario proposes to pause the estimated 4.6% increase to the beer basic tax scheduled for March 1, 2024. This freeze will be in place for two years, until March 1, 2026.
Takeaway
Have questions? Let’s talk. Contact your local advisor or reach out to us here.
Disclaimer
The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal, or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.
