2021 Ontario Fall Economic Update: Canadian Tax Lawyer’s Guidance

Introduction – 2021 Ontario Fall Economic Update

Ontario’s government delivered the province’s 2021 Fall Economic Update on November 4, 2021. This update introduces beneficial ownership information requirements for private Ontario corporations effective January 21, 2023. It also announces a temporary refundable Ontario Staycation tax credit and extends certain personal tax credits.

Reporting on Beneficial Ownership of privately held business corporations

Ontario is proposing to require privately held business corporations to collect and maintain ownership information on “individuals with significant control” effective January 1, 2023. This information will be available upon request to law enforcement, tax authorities, and certain regulatory authorities. Corporations that offer securities to the public and their wholly owned subsidiaries would be exempt from these requirements.

Individuals that meet the following requirements will be considered “individuals with significant control.”

• Owns, controls, or directs 25% or more of the voting shares of the corporation or shares that are worth 25% or more of the fair market value of all outstanding shares of the corporation; or
• Has direct or indirect influence over the corporation without owing at least 25% of the shares.

In addition, where a group of related persons collectively controls at least 25% of the shares of a corporation, then each person would be considered an individual with significant control.

The corporation would maintain the following information on individuals with significant control:

• Name, date of birth and address;
• Jurisdiction of residence for tax purposes;
• A description of how the individual has significant control over the corporation; and
• A description of the steps the corporation takes to keep this information current each year.

Ontario Staycation Tax Credit

A new, temporary refundable staycation tax credit for the 2022 tax year was announced by Ontario’s government. An individual could claim 20% credit of an eligible 2022 accommodation expenses of up to $1,000. A family could claim 20% credit of up to $2,000 for a maximum credit of $200 and $400, respectively.

The credit will be available if the stay was:

• Less than a month at an eligible accommodation such as hotel, motel, resort, lodge, bed-and-breakfast, cottage, or campground in Ontario;
• Between January 1 and December 31, 2022;
• Incurred for leisure;
• Paid by the Ontario tax filer, their spouse or common law partner, or their eligible child
• Not reimbursed by any person, including by a friend or an employer; and
• Subject to GST/HST.

Ontario Jobs Training Tax Credit

Ontario will extend the Ontario Jobs Training Tax Credit to 2022.The Ontario Jobs Training Tax Credit is a temporary, refundable personal income tax credit that helps workers get training that may be needed:

• for a career shift
• for re-training
• to sharpen their skills

An individual can claim 50% of eligible expenses to a maximum of $2,000. In addition, expenses that are eligible for the Canada Training Credit are also eligible for the Ontario Jobs Training Tax Credit.

Ontario Seniors’ Home Safety Tax Credit

Ontario will extend the Ontario Seniors’ Home Safety Tax Credit to 2022. This is a temporary refundable income tax credit. An eligible individual can claim 25% of eligible expenses to a maximum of $10,000. You are eligible if you are a senior or if you are someone who has a senior relative living with you.

Examples of eligible expenses are:

• grab bars and related reinforcements around the toilet, tub, and shower
• wheelchair ramps, stair/wheelchair lifts and elevators
• certain renovations to permit first floor occupancy or a secondary suite for a senior

Property tax review

The Minister of Finance announced the province’s decision to once again postpone a province-wide property assessment update due to pandemic. This means your property assessment remains the same as it was for the 2021 tax year, unless there have been changes to your property, for example:

• A change to your property including an addition, new construction, or renovation.
• A structure on your property was assessed for the first time
• A change to your property’s classification

In addition, the province proposed to introduce:

• Certain measures to support farming; and
• Changes to governance and accountability for the Municipal Property Assessment Corporation.

Pro Tax Tips – Compliance with the Beneficiary Ownership Regime

The provincial government has yet to decide the penalty for non-compliance. We believe that provincial penalties would be similar to those imposed at the federal level.

Effective June 13, 2019, federally incorporated companies are required to maintain a register of individuals with significant control. A corporation that fails to comply with this requirement can face a fine of up to $5,000.

In addition, a director, officer, or shareholder of a non-compliant corporation can be held personally liable for failing to comply and face a fine of up to $200,000 and up to six months imprisonment.

In the event that you think you may need a professional advice to help you comply with the Beneficiary Ownership Regime, it is highly recommended that you speak with an expert Canadian tax and corporate lawyer.

About the Author

---

David J. Rotfleisch

David J. Rotfleisch, a leading Canadian tax lawyer, is not only a certified specialist in taxation but also a chartered professional accountant. Most recently, David is a pioneer in Canadian crypto taxation.

As of April 2020, he was one of 12 Ontario Certified Specialists In Taxation™.

Learn more about David J. Rotfleisch