2018 Ontario budget highlights

Big Picture

On March 28, 2018, the Liberal Ontario government presented its annual budget, entitled A Plan for Care and Opportunity. With a general election just around the corner in June, this year’s budget mainly focuses on new and enhanced investments in pharma, health and child care. For advisors, some regulatory and tax measures require attention. 

Highlights

Regulatory measures

  • Financial planners – The 2018 budget states that the government is developing a framework to regulate financial planners in Ontario, the purpose of which would be “to close the gap that currently allows financial planners to perform their work without regulatory oversight or specified proficiency requirements.”

    Specifically, the government states that this regulatory framework would establish restrictions on the use of titles. To that end, a consultation was recently launched on proposals to restrict the use of the title “Financial Planner” to individuals holding a recognized financial planning credential, as well as proposals to prohibit the use of titles similar to “Financial Planner.”

    The government is accepting comments from the public and stakeholders on its proposals until April 16, 2018. For details, visit the Ontario Ministry of Finance’s Consultation Paper.

  • Embedded commissions and best-interest duty – There is no mention of the consultation by the Canadian Securities Administrators and the Ontario Securities Commission (OSC) on the option of discontinuing embedded commissions.

    Fidelity Investments Canada submitted a comment paper outlining the importance of preserving choice and access for investors, and participated in multiple in-person consultations across the country on behalf of advisors and investors.

    There is also no mention of the Best Interest Standard or proposed targeted reforms. In its 2017 budget, the government committed to consulting with regulatory partners and stakeholders.

  • Strengthening OSC’s enforcement – The government plans to propose new tools for the OSC to enhance and expand its existing enforcement activities. It also proposes to strengthen the framework for securing compensation for investors who suffer financial losses due to the acts or omissions of registered firms.

It is important to note that these are only proposals. Fidelity Investments Canada will continue to work with regulators, stakeholders and advisors to provide constructive feedback, keep advisors informed if and when there are any relevant developments, and provide ongoing support.

Tax measures

  • Simplifying Ontario’s personal income tax – The 2018 budget proposes to simplify Ontario’s personal income tax system by eliminating the surtax and replacing it with new rates and brackets effective for the 2018 tax year. The government indicated that “over 83% of Ontario’s 11 million tax filers would not see any increase in their PIT as a result of the proposed changes, and many would pay less.

    TABLE 5.1: Current* and Proposed 2018 Ontario PIT Rates and Brackets
    TABLE 5.1:  Current* and Proposed 2018 Ontario PIT Rates and Brackets
    *Tax rates shown in the first column represent the impact of the surtax on Ontario’s statutory PIT rates (5.05%, 9.15%, 11.16%, 12.16%, and 13.16%, respectively). Surtax is calculated based on preliminary Ontario tax – that is, Basic Ontario Tax (statutory tax rates applied to taxable income) after non-refundable tax credits. A 20 per cent surtax rate applies to Ontario tax between $4,638 and $5,936, and a surtax rate of 56 per cent applies to Ontario tax greater than $5,936. For someone claiming only the BPA, the 20 per cent surtax rate begins to apply at taxable income of $75,653; the 56 per cent surtax rate begins to apply at $89,134. Source: 2018 Ontario Budget
  • Paralleling federal measures for private corporations – The Ontario government will parallel measures introduced by the federal government related to income sprinkling and passive investment income. It will, similarly, close tax loopholes related to the use of sophisticated financial instruments and structured share repurchase transactions by certain Canadian financial institutions to realize artificial tax losses.

Pharma, health and child care

  • Support for seniors – Starting in August 2019, OHIP+ will be expanded to seniors, eliminating the annual deductible and co-payment for seniors under the Ontario Drug Benefit (ODB) program. Seniors’ prescription medications funded through the ODB program will be free of charge regardless of income. There will also be a new Seniors’ Healthy Home Program, starting in 2019, which will provide a benefit of up to $750 annually for eligible households led by seniors 75 and over.

  • New Ontario drug and dental program – Starting in summer 2019, a new program will reimburse up to 80% of eligible prescription drug and dental expenses for individuals and their families who do not have coverage from an extended health plan. 

  • Child care for preschool-aged children – Beginning in September 2020, Ontario will implement free licensed child care for preschool-aged children from the age of two-and-a-half until they are eligible for kindergarten. The government indicates that an average Ontario family with a preschool-aged child could save over $17,000.

 



As at March 28, 2018. The information is for general knowledge only and should not be interpreted as legal, tax or financial advice or recommendations. This information may not be relied upon as investment advice, nor is it an indication of trading intent of any Fidelity Fund. Where such information is based in whole or in part on information provided by third parties, we cannot guarantee that it is accurate, complete or current at all times. Fidelity Investments Canada ULC and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered. These views are subject to change at any time based upon markets and other conditions, and Fidelity disclaims any responsibility to update such views. © 2018 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC.

Read a fund’s or pool’s prospectus or offering memorandum and speak to an advisor before investing. Read our privacy policy. By using or logging in to this website, you consent to the use of cookies as described in our privacy policy.

This site is for persons in Canada only. Mutual funds sponsored by Fidelity Investments Canada ULC are only qualified for sale in the provinces and territories of Canada.

840299.1.0