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Tax Flash Bulletin

2023 Ontario Budget Highlights

On March 23, 2023, Peter Bethlenfalvy, Minister of Finance and President of the Treasury Board tabled the 2023-24 Ontario budget. The government plans to review Ontario’s tax system to prioritize competitiveness, growth, and fairness. It will also continue investments in technology to modernize the tax administration system. We have highlighted selected tax proposals from the budget that affect individuals and small businesses in Ontario

INDIVIDUALS

Personal Tax Rates

The budget did not contain any changes to Ontario personal income tax rates or the surtax rates.  The Ontario surtax is a tax calculated on the base amount of Ontario tax.  Ontario indexed the 2023 provincial tax brackets 6.5 per cent inflation.

Ontario Income Tax Brackets and Tax Rates

2022 Taxable Income 2023 Taxable Income Tax Rate
$0 to $46,226 $0 to $49,231 5.05% 
$46,226 to $92,454 $49,231 to $98,463 9.15% 
$92,454 to $150,000 $98,463 to $150,000 11.16%
$150,000 to $220,000 $150,000 to $220,000
12.16% 
Over $220,000
Over $220,000 12.16% 

Ontario Surtaxes

2022 Ontario Tax 2022 Surtax Rate on Tax 2023 Ontario Tax 2023 Surtax Rate on Tax
$0 to $4,991 No surtax $0 to $5,315 No surtax
$4,991 to $6,387 20% in excess of $4,991 $5,315 to $6,802 20% in excess of $5,315
Over $6,387 36% in excess of $6,387
+ 20% of tax in excess of $4,991
 
Over $6,802 36% in excess of $6,802
+ 20% of tax in excess of $5,315
 

Top Combined Ontario and Federal Rates

Income Type 2022 2023
Salary, interest, pension, foreign 53.53% 53.53%
Eligible dividends 39.34% 39.34%
Non-eligible dividends 47.74% 47.74%
Capital gains 26.77% 26.77%

Top rates apply to taxable income over $235,675 ($221,708 for 2022)  based on known federal and provincial rates as of March 23, 2023

Other Taxes and Services 

  • Set a single 12 per cent basic tax rate on wine and wine coolers sold in off-site winery retail stores, effective July 1, 2023 to eliminate the current four separate tax rates
  • Extend the temporary gas tax cut (5.7 cents/L) and fuel tax cut (5.3 cents/L) until December 31, 2023 which keeps the rates at 9 cents per litre
  • Eliminate double fares for most local transit services in the Greater Golden Horseshoe when commuters also use GO Transit services
  • Expand eligibility for the Guaranteed Annual Income System (GAINS) so that 50 per cent more seniors receive benefits and index to inflation, starting July 2024
  • Expand list of ailments that pharmacists are permitted to prescribe medication such as skin conditions, infections, and pregnancy nausea

BUSINESSES 

The budget did not propose any changes to Ontario corporate tax rates or the $500,000 small business income (SBD) threshold. However, the budget proposes to extend the Ontario SBD top phase-out range of the taxable capital employed in Canada from $15 million to $50 million, effective April 7, 2022 to parallel the revised federal phase-out rates.

Ontario Corporate Tax Rates 

Income Type Provincial Federal Combined Calendar 2023
General corporate income 11.50% 15.00% 26.50%
Small business income 3.20% 9.00% 12.20%
Small business income over the federal limit and under the Ontario limit  3.20 15.00% 18.20%
CCPC* investment income  11.50% 38.67% 50.17%
Non-CCPC investment income 11.50% 15.00% 26.50%
Manufacturing & processing income 10.00% 15.00% 25.00%

* Canadian-controlled private corporation
Based on known federal and provincial rates as of March 22, 2023

Introduction of Ontario Made Manufacturing Investment Tax Credit

  • New 10 per cent refundable corporate income tax credit for capital investments in buildings, machinery, and equipment used in manufacturing or processing
  • Canadian-controlled private corporations that have a permanent establishment in Ontario are eligible
  • Qualifying investments include expenditures for certain capital property in Class 1 or Class 53/Class 43(a) for capital cost allowance purposes
  • Credit limit is $20 million in a taxation year for qualifying investments
  • Available for purchases on or after March 23, 2023 (Class 53 before 2026, Class 43(a) after 2025)

Refer to the 2023 Ontario Budget for further details

 

This has been prepared by the Professional Wealth Advisory Group of Raymond James Ltd. (RJL). Statistics and factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities nor is it meant to replace legal, accounting, taxation or other professional advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. The information is furnished on the basis and understanding that RJL is to be under no liability whatsoever in respect thereof. This is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., Member - Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a Member - Canadian Investor Protection Fund.