2018 Ontario Budget Executive Summary

2018 Ontario Budget Tax Highlights for High Net Worth Individuals and Business Owners  

Similar to our 2018 Federal Budget Executive Summary, we have chosen not to summarize all tax measures proposed in this year’s Budget and have instead highlighted point we believe will be most impactful to you:

  • Ontario will cut the small business Corporate Income Tax (CIT) by 22 per cent – from 4.5 per cent to 3.5 per cent, effective January 1, 2018.
  • The Ontario R&D tax credit will increase from 3.5% to 5.5% on expenditures over $1 million, aiming to increase R&D and innovation investments in the province.
  • Simplifying personal income tax calculations, Ontario’s surtax will be eliminated and replaced with new tax rates and brackets. For example, an individual earning over $95,000 will see a slight increase of $168 in taxes annually.
  • Ontario will parallel the Federal government’s income sprinkling measures. Ontario will apply its top personal income tax rate of 20.53% to split income received by an adult family member. It will also mirror federal measures on passive investment income.
  • The budget will extend the eligibility for the Ontario Interactive Digital Media Tax Credit (IDMTC) to film and television websites purchased or licensed by a broadcaster and embedded in the broadcaster’s website.
  • The Ontario Charitable Donations Tax Credit (OCDTC) rate will rise to 17.5% for all taxpayers for eligible donations over $200.
  • The OITC for SME on eligible R&D expenditures to gross revenue that is between 10% and 20% will increase from 8% to 12% on a straight-line basis as the company’s ratio of R&D expenditures to gross revenue increases from 10% to 20%. 
  • The OITC for SME on eligible R&D expenditure to gross revenue that is above 20% will increase from 8% to 12%.