Ontario's Action Plan: Protect, Support, Recover Promotes Job Creation by Reducing Taxes on Employers

2020 Ontario Budget Enables Significant Provincial and Municipal Property Tax Relief

News.Ontario.ca
Nov. 11, 2020

The Ontario government is proposing to give municipalities the flexibility to target property tax relief to small businesses. The province is also considering matching these reductions, which would provide small businesses with as much as $385 million in municipal and provincial property tax relief. This initiative is part of the 2020 Budget, Ontario's Action Plan: Protect, Support, Recover.

Details were provided today by Premier Doug Ford, Rod Phillips, Minister of Finance, Prabmeet Sarkaria, Associate Minister of Small Business and Red Tape Reduction, and Stan Cho, Parliamentary Assistant to the Minister of Finance.

"Small businesses are the backbone of Ontario's economy, but many have been suffering through the pandemic and struggling to stay on their feet," said Premier Ford. "Our municipal partners came to us with an idea to provide more support for small businesses through property tax relief, and in our fall budget, we delivered. Our government is also helping small business owners by eliminating unfair taxes on jobs and lowering the Business Education Tax."

Through the 2020 Budget, the government also announced that it will level the playing field by lowering high Business Education Tax (BET) rates for over 200,000 employers, or 94 per cent of all business properties in Ontario, starting January 1, 2021. This will create $450 million in immediate annual savings and represents a reduction of 30 per cent for many businesses currently subject to the highest BET rate in the province.

Property taxes are one of the most unavoidable costs businesses face. They must be paid, even when business is slow, as it has been for so many this year. In Ontario, there is a wide range of BET rates across the province, despite promises made by governments over the last 25 years to fix this inequity. This creates an unfair challenge for businesses operating in communities where rates are higher.

"Time and time again, we have heard that unfair property tax rates in some parts of the province are creating barriers to job creation and growth," said Minister Phillips. "We heard loud and clear that levelling the playing field and addressing unfair property tax rates is one of the most important things we can do to support small business in our communities."

Rates will be reduced to 0.88 per cent. For many employers, this represents a reduction of 30 per cent.

Taken together, these property tax measures could mean a business like a bakery shop in Toronto could receive $5,000 in municipal tax relief and $4,000 in provincial property tax relief if the local government applies a 30 per cent discount with the proposed new small business property subclass. Combined with a $1,500 BET reduction, this bakery shop owner would receive a total of $10,500 in property tax savings in 2021.

"Ontario's landmark Budget -- the first delivered during a global pandemic -- in part focuses on what matters most to small businesses, and will help establish a solid foundation on which they can reliably recover and rebuild," said Associate Minister Sarkaria. "Partnering with municipalities to bring tax relief to our small businesses will strengthen our recovery and help our job creators weather this storm."

"I want to thank the provincial government for stepping forward with vital support for businesses during these challenging times. The new proposed changes in Ontario's latest budget are another example of how the government is helping those impacted by the COVID-19 pandemic," said John Tory, Mayor of Toronto. "Throughout the pandemic, small businesses have been dealing with financial hardships that have made it difficult for them to stay afloat and get ahead. These tax cuts will not only provide relief for these businesses in the short and long term, but ensure that once the pandemic is over, our small businesses can survive."

The government is also acting to reduce taxes on jobs. Back in March, the government more than doubled the Employer Health Tax exemption to $1 million for 2020. Employers across Ontario have indicated that this measure helped them keep workers on the job during COVID-19. Ontario's 2020 Budget proposes to make this exemption increase permanent. That means an additional 30,000 employers would no longer pay this tax.

The Ontario government is also helping main street businesses stay open and stay safe by offering a grant of up to $1,000 for the costs of personal protective equipment (PPE), with applications for the $60-million Main Street Relief Grant becoming available online on November 16, 2020. Small businesses with two to nine employees in the retail, accommodations and food services, repair and maintenance, and personal and laundry services sectors can apply for this one-time grant. Eligible businesses, whether applying for the Main Street Relief Grant for PPE or for property tax or energy rebates in affected regions, will be able to do it all through one application on a new online portal. For more information, please visit ontario.ca/smallbusiness.

Quick Facts

• Ontario’s Action Plan sets out a total of $45 billion in support over three years to make available the necessary health resources to continue protecting people, deliver critical programs and tax measures to support individuals, families and job creators impacted by the virus, and lay the groundwork for a robust long-term economic recovery for the province.
• As part of this plan, the government is investing $4.8 billion this year to lay a strong foundation for the long-term economic recovery of the province.

Ontario has also committed $300 million to provide eligible small businesses in modified Stage 2 public health restrictions, or, going forward, in areas categorized as Control or Lockdown, to cover costs associated with property taxes and energy bills.