Budget Implementation Act, 2016, No. 2 Receives Royal Assent
Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures, received Royal Assent on December 15, 2016. For more information on the Act see “Budget Implementation Act, 2016, No. 2 is Released” from the October 2016 Charity & NFP Law Update.
Ontario Budget Receives Royal Assent
On December 8, 2016, Bill 70 – Building Ontario Up for Everyone Act (Budget Measures), 2016 received Royal Assent. Of interest to charities are the amendments to the Municipal Act, 2001 and the City of Toronto Act, 2006. These amendments provide for, among other things, charity rebates of at least 40 per cent of municipal tax for property in the commercial and industrial classes, as well as creating the ability for “the Minister of Finance to make regulations providing that the sections may apply to additional property classes not already prescribed under the Act”.
Amendment to the Ontario Employer Health Tax will Impact Registered Charities
As a matter of background concerning amendments that recently came into force, as of January 1, 2014, the amount of annual remuneration that may be exempt from Ontario’s Employer Health Tax (“EHT”) is $450,000, up from the previous $400,000. EHT is a payroll tax that all employers in Ontario are required to pay on the total remuneration paid to employees in a given year. The basic rule is that eligible employers are exempt from EHT on the first $450,000 of their total annual remuneration paid out. The amount of tax that employers are required to pay varies depending on the amount of remuneration paid. Currently the tax rates vary between 0.98% – 1.95%. Employers cannot claim the EHT exemption, though, if their annual payroll (including payroll of associated employers) is above $5 million. Eligible employers who are registered charities, however, can claim the EHT exemption even if their annual payroll is above $5 million.
As of January 1, 2017, amendments to the Employer Health Tax Act Regulations came into force whereby registered charities with two or more qualifying “charity campuses” are now permitted to claim an EHT exemption for each qualifying “charity campus”. What qualifies as a “charity campus” is summarized on the Ministry of Finance’s website and is stated as including, “all of a registered charity’s locations that are in one building, or on one parcel of land (property), or on contiguous properties (properties that touch along a boundary or at a point). If a registered charity has branches, sections, parishes, congregations or other divisions (internal divisions), a “charity campus includes all of the locations of the registered charity and all of the locations of any of its internal divisions that are in one building, or on one property or on contiguous properties.”
An “associated employer” is any employer “who is connected by ownership by a combination of ownership and relationships between individuals” (e.g. relatives, blood, marriage, adoption). Because there is only one available EHT exemption for an employer in any given year, associated employers, whether they are associated for the entire year, or only for a specific period of time throughout the year, must consider their combined total remuneration paid to determine whether they qualify for the EHT exemption. Employers that are associated with a registered charity, however, are not required to include the registered charity’s total annual remuneration to determine whether they qualify for the EHT exemption, and are not required to share its EHT exemption with the registered charity.
For more detailed information visit the Ministry of Finance website by clicking here.