Small Businesses & Ontario’s 2020 Budget

In October, Minister Sarkaria introduced two packages aimed at helping Ontario businesses to weather the storm and bounce back. The Main Street Recovery Package and Main Street Recovery Act, 2020 targeted those businesses who were forced to close their doors and were among the hardest hit; while the Better for People, Smarter for Business Package and Better for People, Smarter for Business Act, 2020 aimed at reducing Ontario’s regulatory burden placed on business by modernizing rules and digitalizing government to save businesses time and money, while encouraging innovation. Both bills remain before the Ontario Legislature and we continue to look to you for your support in moving them forward.

I would also like to flag that Minister Sarkaria’s announced Main Street Recovery Grant which targets assistance of $1,000 per small main street business with 2-9 employees will open for applications later this month. Stay tuned for the announcement on the specific date or keep checking Ontario.ca/smallbusiness for updates.

Today, to build on our supports for small businesses Ontario Finance Minister tabled the Ontario Government’s 2020 Budget. As you know, due to the COVID-19 pandemic the annual budget was shifted from Spring 2020 to Fall 2020. The 2020 Budget includes a myriad of initiatives aimed at helping our province weather the devastating effects of COVID-19.

Minister Sarkaria as the Minister of Small Business and our office, on behalf of Ontario’s Small Business community, have worked closely with Minster Phillips and his team to focus our government’s efforts on the things that matter most to small business. To respond particularly to the concerns that you have raised with the Minister and our office throughout the over 100 roundtables and the numerous conversations we have had with the sector since March 2020.

While I would encourage you to familiarize yourself with the broader 2020 Budget, the Minister would like to would like to particularly draw your attention to the following initiatives.

1. A New Electricity Plan for Growth & Job Creation – the 2020 Budget outlines our plan to reduce the burden on employers of the high-cost energy contracts signed by the previous Liberal Governments with non-hydro renewable energy producers. Starting January 1, 2021, roughly 85% of these high cost wind, solar and bioenergy contracts will be funded by the Province, not business ratepayers. Removing these costs from electricity bills will result in medium size (Class B) and larger industrial and commercial employers (Class A) saving about 14% and 16% respectively, on average, on their electricity bills. The Ontario Electricity Rebate will continue to protect households, farms and small businesses, including main street restaurants and retail shops.
2. A New Property Tax Plan for Employers – the 2020 Budget outlines our plan to reduce the burden on employers of varying business property taxes. To address this inequity, the Province will lower the significant Business Education Tax (BET) component of property bills to 0.88%. This will benefit over 200,000 business properties or 94% of all business properties in Ontario, providing an annual savings of $450M beginning in 2021.
3. A New Property Tax Plan for Small Businesses – the 2020 Budget will enable municipalities to partner with the province to reduce the burden on small businesses of business property taxes, by allowing municipalities to create a reduced small business property tax subclass. For all municipalities that agree to create a lower small business property tax subclass, the province will consider matching these municipal property tax reductions in order to provide further support for small businesses. Total municipal and provincial property tax relief for small businesses could total $385M by 2022-23.

With both property tax reductions, a small bakery shop in Toronto with an assessment value of $1.5M could save $10,500 in property taxes annually.

4. A New Employer Health Tax Plan for Small Business Employers – due to the COVID-19 Pandemic in March our government expanded our exemption from the Employer Health Tax (EHT) for 2020 from $490,000 to $1 million. In the 2020 Budget we are making this change permanent. This change will permanently reduce the EHT on a restaurant with $700,000 in payroll from $4,095 to 0, and would reduce the EHT on a Building Contractor with a payroll of $1.5 million from $19,695 to $9,750.

5. Ensuring Business Property Tax Assessments are based on permitted land use not speculative land uses – in the 2020 Budget to ensure the government is well-positioned to respond to input and any necessary amendments to the Assessment Act, the government is proposing the creation of optional new assessment tools to address concerns regarding assessments on permitted land use versus speculative land use.