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Ontario’s latest Fall Economic Statement showed signs of significant financial growth, mainly due to falling interest rates and higher tax revenues.
While residents are still feeling the effects of a rising unemployment rate and turbulent economy, the provincial government is projecting a $6.6 billion deficit in 2024-25 – an improvement from the 2024 Budget outlook – with plans to achieve a surplus of $0.9 billion in 2026-27.
This year’s statement focused on increasing affordability through a taxpayer rebate, along with an extension of the temporary gas tax rate cut and a proposed change to the provincial Alternative Minimum Tax (AMT) rate.
Understanding the province’s AMT rate decrease
Motivated by the Federal Government’s latest AMT rate increase from 15% to 20.5%, the Fall Economic Statement included a proposed decrease to the province’s AMT rate, a tax calculation that makes it more difficult for high-income earners to reduce tax bills through exemptions, credits, and deductions.
Effective this year, the provincial AMT rate is proposed to decrease from 33.67% to 24.63% of the federal AMT rate. This will result in maintaining an effective provincial tax rate of 5.05%, as in previous years.
Feeling the effects of Canada’s Capital Gains rate changes
While Premier Doug Ford spoke out against the federal government’s recent capital gains inclusion rate increase from 50% to 66.67%, the province credited its positive economic position to a $2.8 billion rise in personal tax income, citing capital gains as a significant source of revenue.
This increase led to the announcement of a $3 billion, one-time taxpayer rebate program, open to Ontario residents over 18 years old who have filed their 2023 income taxes by Dec. 31, 2024. The statement also proposed an added $200 rebate for each eligible child (under 18).
Supporting Ontarians through a Gas and Fuel Tax Cut extension
As spending continues to decline, the provincial government announced another extension to temporary Gas and Fuel cuts. The gas tax rate cut reduced gas by per litre and diesel to 5.3 cents per litre until June 30, 2025, capping the provincial portion of the gas and diesel tax to 9 cents per litre.
This is especially timely as the Federal carbon tax is expected to increase on April 1, 2025.
According to the province, the extension should lead to an average savings of $280 per household over three years.
Navigating a turbulent economy
As Ontarians continue to face rising unemployment and decreased spending, the province’s latest statement focused on supporting a growing economy through tax cuts and a one-time rebate.
For more on how the fall economic statement can affect your finances, connect with your trusted advisor at Zeifmans.
