March 23, 2023
Issue 2023-12
On March 23, 2023, Ontario’s Minister of Finance, Peter Bethlenfalvy, presented the province’s budget. The budget does not change corporate or personal income tax rates, but does:
This Tax Insights discusses these and other tax initiatives outlined in the budget.
The budget introduces the Ontario Made Manufacturing Investment Tax Credit, a 10% refundable tax credit on qualifying investments of up to $20 million (to be shared by an associated group) in a taxation year for eligible Canadian‑controlled private corporations (CCPCs) with a permanent establishment in Ontario. Qualifying investments include expenditures for certain buildings, machinery and equipment used in manufacturing or processing in Ontario (i.e. capital property in class 1 or class 53 for capital cost allowance [CCA] purposes), as follows:
The budget confirms that the government is continuing to work on previously announced measures to modernize and improve Ontario’s film and television tax credits, which include:
Ontario’s corporate income tax rates will remain as shown in the table below. The table also shows combined federal/Ontario corporate tax rates.
Federal and Ontario corporate rates |
Ontario |
Federal + Ontario |
|||
---|---|---|---|---|---|
|
2022 |
2023 |
2022 |
2023 |
|
General income |
11.5% |
26.5% |
|||
M&P income |
10% |
25% |
|||
Canadian-controlled private corporations (CCPCs) | active business income to $500,000 |
3.2% |
12.2% |
||
investment income |
11.5% |
50.17% |
The budget does not change Ontario’s personal income tax rates. Top combined federal/Ontario personal income tax rates are shown below. These rates apply to individuals with taxable income above $235,675 in 2023 ($221,708 in 2022).
Top combined federal/ Ontario rates |
2022 |
2023 |
|
---|---|---|---|
Ordinary income & interest |
53.53% |
||
Capital gains |
26.76% |
||
Canadian dividends |
eligible |
39.34% |
|
non-eligible |
47.74% |
Effective July 1, 2023, a single 12% basic tax rate will apply on wine and wine coolers sold in off‑site winery retail stores, including wine boutiques. The proposed change is in response to a World Trade Organization settlement reached between Canada and Australia. The single tax rate will replace the four separate basic tax rates that currently apply to wine sold in off‑site winery retail stores.