Ontario Disability Support Program (ODSP)

Finance intends on raising the amount a person with a disability on the ODSP can earn, from $200 to $1,000 per month, without impacting their income support benefits. This measure would encourage people on ODSP who want to increase their work hours to do so and promote more participation in the workforce. For each dollar earned above $1,000, the person with a disability would keep 25 cents of income support.

For those who are unable to work, Finance increased ODSP rates by 5% and plans to adjust ODSP rates to inflation beginning in July 2023.

Increasing Financial Support for Seniors

The government plans to double the Guaranteed Annual Income System (GAINS) payment for all recipients for 12 months starting in January 2023.  This measure would increase the maximum payment to $166 per month for single seniors and to $332 per month for couples, a maximum increase of almost $1,000 per person in 2023. They are also looking to introduce measures to expand eligibility in the coming months. Currently, eligibility is determined automatically for individuals who receive Old Age Security and the Guaranteed Income Supplement.

Temporary gas tax and fuel tax cuts

The economic outlook confirms the government’s intention to extend the temporary gas tax and fuel tax cuts for an additional 12 months. The government previously cut the gas tax and fuel tax rates on July 1, 2022 by 5.3 cents per litre. The government is proposing to extend the cuts to the gas tax and fuel tax rates so that the rate of tax on gasoline and fuel (diesel) would remain at 9 cents per litre until December 31, 2023.

Non-Resident Speculation Tax Rate

Effective October 25, 2022, the government increased the non-resident speculation tax rate from 20% to 25%. This tax applies to the purchase of a home located anywhere in Ontario by foreign nationals, foreign corporations or taxable trustees. Rebates remain available for foreign nationals who become permanent residents of Canada within four years after the tax became payable, if eligibility criteria are met.  Rebate details are available on the Ontario NRST website.

Tax Credits

Ontario Seniors Care at Home Tax Credit

The Ontario Seniors Care at Home Tax Credit is a refundable personal income tax credit to help seniors with eligible medical expenses, including expenses that support aging at home. The credit provides 25% of claimable medical expenses up to $6,000, for a maximum credit of $1,500. This amount will be reduced by 5% of family net income over $35,000. Individuals’ resident in Ontario that are 70 years of age or older or that have a spouse/common law partner 70 years of age or older are eligible. A detailed list of eligible expenses is available on the Ontario Seniors Care at Home Tax Credit website.

Film, Television and Media

The government is expanding Ontario’s film and television tax credits to professional film and television productions distributed exclusively online. In the coming months, proposed regulatory amendments to implement this measure will be provided for public review and comment. Furthermore, the government is looking to modernize various cultural media tax credits to encourage film and television production, computer animation and special effects activities, interactive digital media product development and book publishing in Ontario.

Budget Measures

The economic outlook also confirmed the government’s intention to mirror various federal measures including immediate expensing for capital asset purchases and increasing the range to $10 million to $50 million for which the small business tax rate is phased out.

Most Canadians believe they pay more taxes than their counterparts in the United States. Even politicians in the Canadian parliament have argued for lower taxes using this reasoning. Before claiming that Canadians pay more taxes, a few points need to be considered.

Key Takeaways

America’s wealthy are taxed 5% more than the federal tax rate.

Canada operates under a different tax system than the United States. For one thing, Canada’s Alternative Minimum Tax does not allow deductions on certain items.

The Mortgage Interest Deduction is praised by its supporters as being America’s most significant benefit of homeownership. However, if you do not own a home and earn meager wages, you will likely pay fewer taxes.

Personal Income Tax Guide

It is not practical to compare the statistics of tax income for both the United States and Canada. For one, the tax systems in the two countries are premised on different tenets. Because of this, it is only reasonable to delve into the contributions of various tax components.

Federal Income Taxes

A good look at the tax range for the year 2022 in both countries reveals that the United States charges a marginal tax rate of 10% to 37% on an individual’s income. In contrast, the average federal tax in Canada is 15% to 33% on an individual’s income.

State Versus Provincial Income Taxes

In the United States, state taxation systems are independent of the federal taxation system. Each state advances its own set of rules and tax rates. However, this is not the case in Canada, where provincial taxation systems are chained to the federal system, except in Quebec. In both countries, the wealthiest members of society pay a higher percentage of state taxes than those who earn less.

Unemployment Premiums

In Canada, employees pay premiums based on the number of wages earned. Although extra taxes are imposed on employees in Canada, they enjoy robust benefits from unemployment benefits and other programs such as maternity leave.

Healthcare

Canadians enjoy the benefit of a partially funded health plan. The plan ensures that everyone can access healthcare care without any additional contribution from the patient. Canadians rely on the Federal government to fund their care. This ensures that even people not employed can access care during illness.

Conclusion

It is impossible to compare the two different tax regimes without looking at the benefits packages of both countries. The comparison of the two systems is therefore not an exact one. It is easy to support a specific tax system when one only looks at the benefits it provides.