April 24, 2015

Ontario Budget 2015 – Summary

The Ontario government tabled its 2015 provincial budget on April 23, 2015 with the title “Building Ontario Up”. The budget proposes to find more innovative ways to grow the economy while maintaining vital public services. The budget focuses primarily on infrastructure spending and contains little in the way of tax and related measures that impact investors. Below is a summary of relevant budget measures.


Despite global economic uncertainty, Ontario’s economy is expected to continue to grow at a solid pace, boosted by a more competitive Canadian dollar, the acceleration in U.S. economic growth and lower oil prices. Ontario is projecting a deficit of $8.5 billion in 2015-16, the lowest level since the onset of the global recession. The Province will continue to take a “thoughtful and deliberate approach” to the path to a balanced budget, with a deficit of $4.8 billion forecast for 2016-17 and a return to balance by 2017-18.


Ontario Budget 2015.1

(click to enlarge)



Personal tax rates

No change to personal tax rates. Ontario tax rates and brackets for 2015 are as follows:

Bracket Rate1
$0 to $40,922 5.05%
Greater than $40,922 to $81,847 9.15%
Greater than $81,847 to $150,000 11.16%
Greater than $150,000 to $220,000 12.16%
Greater than $220,000 13.16%

1Ontario surtaxes also apply: 20% of provincial tax in excess of $4,418 + 36% of provincial tax in excess of $5,654.



Corporate tax rates

No change to corporate tax rates. Ontario corporate rates for 2015 are as follows:

General Manufacturing and Processing (M&P) CCPC – Small Business (income up to $500K) CCPC – Investment Income
11.5% 10% 4.5%1 11.5%

1Small business rate phased out for large corporations – ie. those with taxable capital in excess of $10 million

Apprenticeship Training Tax Credit (ATTC)

The Apprenticeship Training Tax Credit is a tax incentive available to businesses that hire and train apprentices. The credit was introduced in 2004 to encourage registrations in apprenticeship programs and is based on the salaries and wages paid to eligible apprentices in designated construction, industrial, motive power and certain service trades.

The ATTC provides a 35 per cent refundable tax credit (45 per cent for small businesses) on salaries and wages paid during the first 48 months of an apprenticeship program, up to an annual limit of $10,000 per apprentice. Believing that this credit can be more effectively utilized, Budget 2015 proposes the following changes effective April 23, 2015:

  •  Decrease the general tax credit rate from 35% to 25% and the rate for small businesses with salaries or wages under $400,000 per year from 45% to 30%;
  •  Decrease the annual maximum per apprentice from $10,000 to $5,000;
  •  Reduce the eligibility period from the first 48 months of an apprenticeship program to the first 36 months

With these proposed changes, the ATTC would return to the level of support offered prior to 2009 enhancements.



Ontario Retirement Pension Plan (ORPP)

In 2013, the Ontario government indicated a need for a stronger retirement income system facilitated through a three-pronged approach focused on a new Ontario pension plan, enhanced regulation of the financial advice sector and strengthened workplace pension plans. Since that time, the government has continued forward with its intention to introduce a new Ontario Retirement Pension Plan (ORPP) modeled after the Canada Pension Plan (CPP).

The ORPP would build on the strengths of the CPP and would:

  •  Offer a predictable stream of income in retirement for life, and index benefits to inflation;
  •  Aim to replace 15 per cent of an individual’s pre-retirement earnings up to $90,000 (in 2014 dollars);
  •  Require contribution rates to be the same for employers and employees, with a maximum combined rate not exceeding 3.8 per cent; and
  •  Require benefits to be earned as contributions are made, to ensure that younger generations would not pay additional costs associated with older workers’ benefits.

On December 8, 2014, the government introduced Bill 56, the Ontario Retirement Pension Plan Act, 2014 that outlines key parameters for the plan and a commitment to establish the ORPP by January 1, 2017. Before January 1, 2017, the province will introduce legislation that will finalize details of the plan, based on extensive actuarial and legal analysis and ongoing engagement with Ontarians.
Taxation of Trusts and Estates

The Federal government has announced changes to the taxation of testamentary trusts, certain pre-1987 inter vivos trusts and also estates that extend beyond 3 years. As opposed to being subject to graduated tax rates, effective 2016, income and gains earned in such trusts will be taxed at top tax rates. The changes are meant to prevent tax motivated abuse of such trusts and improve tax fairness and neutrality. Budget 2015 confirms that the Ontario government will parallel these changes for Ontario tax purposes.

Combating the Underground Economy

The underground economy generally refers to transactions that are undertaken with a deliberate effort to evade taxes. According to Statistics Canada, the country’s underground economy is estimated to be 2.3% of annual gross domestic product (GDP), and is estimated to largely occur in the construction, retail and hospitality sectors where cash payments are common. Applied to Ontario, this means approximately $15 billion in annual economic activity.

Budget 2015 proposes to address this activity by introducing legislation to make the use of certain tax-avoiding technologies illegal. The government will also pursue legislative options to improve its ability to share information within and with other governments.