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.
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.
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.
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.