Summary#

Bill 85, the Building a Strong Ontario Act (Budget Measures), 2023, is an omnibus Act that amends 10 existing Ontario Acts; it is not a single new service or agency. Its stated purpose is to implement budget measures. The changes include tax rules and credits, income benefits, transportation funding calculations, and new rule-making and information-gathering powers.

• Manufacturing tax credit: The Taxation Act, 2007 now allows eligible Canadian-controlled private corporations (CCPCs) to claim a 10% credit on eligible manufacturing investment costs, subject to eligibility rules and a spending cap.
• Taxes and assessments: The Act changes rules for certain small-business deductions, tuition credits, fuel and liquor taxes, and assessments of interjurisdictional carriers with inadequate records.
• Income benefits: It changes how some monthly benefits and increments under the Ontario Guaranteed Annual Income Act are calculated, and provides for cost-of-living increases to the maximum increment.
• Public transportation funding: It changes how the dedicated gasoline-tax amount for municipal transit grants is calculated when more than one gasoline tax rate applied during the previous fiscal year.
• New rule-making powers: The Financial Services Regulatory Authority of Ontario may make rules about individual variable insurance contracts. The Authority under the Financial Professionals Title Protection Act may make rules about protected titles when a credentialing body loses approval or stops operating.
• Information and tobacco rules: The Ministry of Finance may collect vessel and aircraft information from Transport Canada for tax administration and policy work. The Act also repeals tobacco-tax provisions about tear tape and its manufacturers’ permits.

What it means for you#

• Manufacturers: An eligible CCPC may claim a tax credit for qualifying property used in Ontario manufacturing or processing. The property and corporation must meet the Act’s conditions; associated corporations share a maximum eligible-expenditure cap.
• Ontario Guaranteed Annual Income beneficiaries: For July 2024 onward, the benefit reduction is 50 cents, rather than $1, for each full $24 or $48 specified in the Act. The maximum increment can rise with the cost of living, but does not rise in a year when the index does not increase.
• Students and former students: The Act changes eligibility for Ontario tax credits for unused tuition and education amounts, including retroactive rules tied to residency on the last day of a tax year.
• Businesses and carriers: The small-business deduction phases out over a wider taxable-capital range for tax years starting on or after April 7, 2022. For carriers with inadequate records, the Minister may use specified distance-per-litre assumptions or reduce reported kilometres per litre by 20% when assessing tax.
• Wine purchasers and sellers: The Act changes tax rules for wine and wine cooler bought from onsite winery stores and certain offsite winery stores. For qualifying purchases from an offsite store, the basic tax is 12% of retail price; volume and environmental taxes also apply under stated conditions.
• Taxpayers and the public: The Minister may collect vessel and aircraft information from Transport Canada for tax administration or tax-policy work. The Act requires a public notice describing the personal information collected and its use. It does not set out an individual application or review process for this collection.

Money#

No publicly available information on the Act’s total public cost or expected revenue impact.

• The manufacturing credit is 10% of eligible expenditures, with a $20-million expenditure cap for a corporation not associated with another qualifying corporation; associated corporations share a cap. The Act gives no estimate of the resulting tax reduction.
• The Act adjusts the formula for dedicated gasoline-tax funding for municipal transit grants. It does not give a grant total.
• It changes some taxes and tax deductions, but the supplied material gives no overall revenue estimate.
• The monthly benefit changes under the Ontario Guaranteed Annual Income Act may affect payments; no cost estimate is supplied.

What is unclear#

• The full parent Acts were not supplied, so the changes could not be checked against all current-law provisions or existing programs.
• The Act gives no estimate of how many corporations will qualify for the manufacturing credit or its total cost. Some eligible property may also be prescribed later by the Minister of Finance.
• The Act authorizes rules on protected titles and individual variable insurance contracts, but does not set out what those rules will require.
• It does not specify how Transport Canada information will be matched or used in individual cases beyond the listed purposes and required public notice.
• The supplied material does not give the fiscal effect of the liquor-tax, fuel-tax, tuition-credit, or small-business-deduction changes.

Case for#

• The manufacturing credit could lower the after-tax cost of eligible investment in Ontario manufacturing and processing. A possible argument for the credit is that it targets investment in property used for those activities, rather than all business spending.
• The transit-funding formula accounts for periods when different gasoline tax rates applied, which could make the calculation more accurate.
• Rules for protected titles could help address what happens when an approved credentialing body loses approval or stops operating.
• The information power could support tax administration and tax-policy evaluation; the Act also requires public notice about personal-information collection.

Case against#

• The manufacturing credit’s cost and reach are unknown, and eligibility rules and later ministerial prescriptions affect which investments qualify.
• The Act grants rule-making and information-gathering powers without setting out the detailed rules or how information will be handled in individual cases.
• Carrier assessments may use assumed fuel efficiency or a 20% reduction in reported kilometres per litre when records are inadequate; the Act does not describe a separate process for choosing between those methods.
• The tax and benefit changes take effect at different dates, and some apply retroactively. That may make it harder for affected people and businesses to know which rules apply to a past tax year or purchase.