Federal and Ontario Budget Update
March 31, 2023
The Federal and Ontario governments recently had their 2023 budgets tabled.
All of the items below are proposed and subject to change if/when enacted into law.
On March 23, 2023 the Ontario government tabled their 2023 budget.
The most notable tax related item was the introduction of the Ontario Made Manufacturing Investment Tax Credit. This tax credit:
- Would provide a 10 per cent refundable Corporate Income Tax credit on qualifying investments in buildings, machinery and equipment for use in manufacturing or processing in the province. A corporation could receive a tax credit of up to $2 million a year.
- Is for Canadian Controlled Private Corporations (CCPCs) that have a permanent establishment in Ontario.
- Qualifying investments include Class 1 buildings (used for manufacturing) and Class 53 manufacturing equipment that become available for use on or after March 23, 2023.
- There is a $20M limit on qualifying investments that must be shared among associated groups.
On March 28, 2023, the Federal Government tabled Budget 2023, which proposed a broad array of provisions impacting many individuals and businesses.
The Budget did not include any changes to the personal or corporate tax rates or the inclusion rate on taxable capital gains.
Some of the items of interest include the following:
- Intergenerational Business Transfers - Amendments were introduced to ensure that the rules implemented to help allow tax efficient transfers of businesses to children (implemented in Bill C-208 in 2021) will only apply to genuine intergenerational business transfers.
- Introduction of employee ownership trusts to facilitate business sales to employees.
- Significant modifications to the alternative minimum tax (AMT) to target high-income earners.
- Modifications to RESPs and RDSPs to add additional flexibility.
- New and expanded green investment credits.