Ontario budget and action plan proposes tax relief for small businesses

Toronto – 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.

Details of the 2020 budget and action plan were provided 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,” Premier Ford said. “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.”

The government also announced it will lower high Business Education Tax rates for over 200,000 employers, or 94 per cent of all business properties in Ontario, starting Jan. 1, 2021. This will create $450 million in immediate annual savings and mean a reduction of 30 per cent for many businesses currently paying 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.

Property tax 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 small bakery 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 shop owner would receive a total of $10,500 in property tax savings in 2021.

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.

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.

The Ontario government is also offering a grant of up to $1,000 for the costs of personal protective equipment, with applications for the $60-million Main Street Relief Grant becoming available online on Nov. 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 can apply for the Main Street Relief Grant for PPE or for property tax or energy rebates in affected regions through one application on a new online portal: ontario.ca/smallbusiness.

For more information on resources for businesses, visit the province’s business resources page.

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