2023 Ontario budget: Tax highlights

March 23, 2023

Issue 2023-12

In brief

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:

  • introduce the Ontario Made Manufacturing Investment Tax Credit, a refundable tax credit for manufacturing and processing in Ontario 
  • commit to previously announced measures to improve Ontario’s film and television tax credits 

This Tax Insights discusses these and other tax initiatives outlined in the budget. 

In detail

Business tax measures

Ontario Made Manufacturing Investment Tax Credit

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:

  • Class 1: construction, renovation or acquisition of buildings used for manufacturing and processing (M&P) in Ontario that become available for use after March 22, 2023 (90% of the building’s floor space must be used for M&P at the end of the taxation year and the building must be eligible for the additional 6% CCA permitted under the federal Income Tax Act)
  • Class 53: acquisition of machinery and equipment used in M&P in Ontario, available for use after March 22, 2023 and before 2026; after 2025, it will include class 43(a) expenditures for machinery and equipment used in the M&P of goods for sale or lease

Film and television tax credits

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:

  • implementing regulatory amendments to:
    • extend film and television tax credit eligibility to professional film and television productions made available exclusively online
    • require that film and television productions supported by Ontario tax credits provide on‑screen acknowledgement of this support in their end credits
  • exploring ways to simplify the Ontario Computer Animation and Special Effects Tax Credit
  • reviewing the Ontario Film and Television Tax Credit regional bonus to ensure it is effective in all provincial regions

Corporate income tax rates

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%

Personal tax measures

Personal income tax rates

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%

Other measures

Wine tax

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.

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Ken Griffin

Ken Griffin

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Tel: +1 416 815 5211

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Timothy Fitzsimmons

Partner, PwC Law LLP

Tel: +1 416 687 8584

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