ON Budget: summary and impacts for propane
Ontario Finance Minister Vic Fedeli delivered the government’s first Ontario Budget on April 11, 2019. The budget highlights the province’s $15 billion deficit and daily expenditures of $40 million more than revenues.
The backbone of the budget is an “Ontario Recovery Plan” to return the provincial budget to surplus by 2023-24 and begin reducing the province’s net debt burden. There are no changes to corporate or personal income tax rates and new spending is targeted at infrastructure, healthcare and public education.
The province’s economy is expected to grow each year from 2019 to 2024 and employment is forecast to rise at an average annual rate of 1.1 per cent over the same period.
There are several new and re-announced initiatives in the budget to support Ontario businesses, job creators and workers. Among the most relevant for CPA members are:
- Ontario Job Creation Investment Incentive: The government will provide $3.8 billion in capital cost write-offs in the coming years, targeted at manufacturing machinery and clean energy equipment. The incentive compliments capital cost allowance changes in the Federal Fall Economic Statement 2018. It promises to lower the marginal tax rate from 16 per cent to 12.6 per cent in 2019 to help Ontario businesses compete for business investment and jobs in the wake of US tax reform.
The incentive provides an increased first year Capital Cost Allowance (CCA) deduction on eligible depreciable property acquired after November 2018, and available for use before 2028, as follows:
- A 100% CCA deduction – eligible manufacturing and processing and specified clean energy equipment are eligible for a 100% CCA deduction in the first year that it becomes available for use.
- The Accelerated Investment Initiative (all) – other eligible depreciable capital property is generally eligible for a maximum first-year CCA deduction on the net additions to a CCA class that is 1.5 times the standard CCA deduction for that class, subject to a maximum of 100%.
These deductions will be phased out for property that becomes available for use after 2023 and before 2028.
2. Infrastructure: The government is allocating $14.7 billion in 2019-20 and $144 billion over the next ten years to infrastructure, including funding for building and renovating hospitals and public schools, improving existing rail corridors in Southern Ontario, funding municipal light rail, and expanding the City of Toronto’s subway and rapid rail systems.
The Budget also contains reaffirmed commitments to:
- Reform skills training and social assistance programs.
- Improve electricity programs and modernize the Ontario Energy Board.
- Northern development and expansion of the Ring of Fire through repeal of the Far North Act.
- Reduce regulatory and red tape burdens for Ontario businesses.
The CPA will focus outreach efforts on the programs highlighted above and advocate for the inclusion of propane in these initiatives as they are developed.