Category: Tourism & Hospitality

2025 Provincial Budget – Ontario

Posted on by ssiconolfi

On May 15, 2025, Ontario’s Minister of Finance, Peter Bethlenfalvy, presented the 2025 Ontario Budget – A Plan to Protect Ontario.  The province’s budget includes the following tax measures:

Business Tax Measures

 

Corporate income tax rates

Ontario’s corporate income tax rates have not changed.

Ontario tax deferral

The budget provides businesses a reminder that the payment of select provincially administered taxes (e.g. employer health, gas, fuel, and others) may be deferred for six months, from April 1, 2025, to October 1, 2025.  Although penalties will not apply for missed payments during this period, there is no deferral of tax return filing deadlines.

Ontario made manufacturing investment tax credit (OMMITC)

The refundable tax credit has increased from 10% to 15% on up to $20 Million of eligible investments per taxation year. Therefore, the maximum credit will increase from $2 Million to $3 Million per taxation year. The $20 Million limit must be shared amongst an associated group of corporations and will be prorated for short taxation years. Eligible investments include buildings and equipment used in manufacturing and processing (M&P) in Ontario, that are acquired and become available for use on or after May 15, 2025, and before January 1, 2030.

The credit has been extended to non-Canadian-controlled private corporations (“non-CCPCs”), which have a permanent establishment (“PE”) in Ontario.  Non-CCPCs are eligible for a non-refundable tax credit (“NRTC”). Any unused NRTC’s could be carried forward up to 10 taxation years and applied against taxes payable.

The budget includes a repayment of the credit where after May 14, 2025, the eligible capital property is sold, converted to non-M&P use, or removed from Ontario within five years. The repayment amount would be the lesser of:

  • The total value of the credit; and
  • The credit amount relative to the value of the property at the relevant time.
Ontario shortline railway investment tax credit (OSRITC)

The budget introduces a 50% refundable tax credit for capital property (included in capital cost allowance classes 1, 3, or 13) and labour expenditures on railway-related maintenance made on or after May 15, 2025, and before January 1, 2030, by qualifying corporations. A qualifying corporation must be licensed either provincially under the Shortline Railways Act (Ontario) or federally (class II & III) under the Railway Safety Act and must have a PE in Ontario. The credit will be limited to $8,500 per track mile in Ontario and the labour expenditures are limited to railway track maintenance expenditures paid to individuals who are residents of Ontario for work performed in Ontario.

 

Personal Tax Measures

 

Personal income tax rates

Ontario’s personal income tax rates have not changed.

Ontario fertility treatment tax credit

The Ontario government has introduced a new fertility treatment tax credit effective January 2025, aimed at helping individuals with the costs of fertility services. The credit will cover 25% on up to $20,000 of eligible fertility- and surrogacy-related expenses, with a maximum tax credit of $5,000 per year. Eligible expenses include in vitro fertilization (IVF) cycles, fertility medications, diagnostic testing, and travel for treatment. This credit is available in addition to the non-refundable federal and Ontario medical expense tax credits for the same eligible expenses.

 

Other Tax Measures

 

Changes to Gas and Fuel Tax

Effective July 1, 2025, the tax on propane used in licensed road vehicles will be eliminated.

Additionally, the Ontario government has made permanent the reduced tax rate of 9¢ per litre on gasoline and fuel, which had previously been lowered from 14.7¢ for gasoline and 14.3¢ for fuel. These temporary reductions were originally set to expire on June 30, 2025.

Changes to Alcohol taxes

Effective August 1, 2025, the Ontario government is proposing amendments to the Liquor Tax Act, 1996 that would reduce alcohol-related tax rates. The spirits basic tax rate would be lowered from 61.5% to 30.75%. For Ontario microbrewers, the beer basic tax rates would be reduced from 35.96¢ to 17.98¢ per litre for draft beer, and from 39.75¢ to 19.88¢ per litre for non-draft beer (with transitional rules applying). Additionally, the refundable corporate Small Beer Manufacturers’ Tax Credit (SBMTC) will be adjusted to reflect these new rates, offering enhanced relief to qualifying corporations for eligible sales occurring after July 31, 2025.

U.S. Tariffs and Canada’s Response: Uncertainty Complications Tariff Mitigation

Posted on by RSM US LLP

Executive summary

The ongoing tariff dispute between the U.S. and Canada has led to significant measures from both countries. As the situation remains dynamic, key strategies for Canadian businesses to manage these risks include using bonded warehouses, transfer pricing, tariff engineering, and diversifying supply chains.

 

U.S. tariffs on most Canadian goods—and Canada’s reciprocal measures—went into effect March 4 following a month-long delay. While tariffs on some Canadian goods were subsequently paused, tremendous trade uncertainty remains on both sides of the border.

The tariff situation continues to evolve as the U.S. administration eyes new products for protective tariffs and Canada rolls out its response at the federal and provincial levels.

Although the ongoing uncertainty makes planning tariff mitigation more complicated, the following strategies are still available for middle-market companies:

  • Bonded warehouses, foreign/free trade zones, and temporary import bonds. These mechanisms allow importers who meet certain requirements, such as limitations on work performed on the goods, to delay tariffs until the goods are distributed into the local market—or bypass tariffs where the goods are exported.
  • Transfer pricing. In related party transactions, transfer pricing ensures the price of the good is equivalent to the price in an arm’s length transaction. Companies should revisit their transfer pricing strategies to ensure the lowest defensible price is used.
  • Tariff engineering. This involves changes to the manufacturing process, manufacturing locations, and supply chain to change the classification of the goods.
  • Diversifying the supply chain and customers. The U.S. is the top export destination for numerous Canadian products. The current tariffs underscore the importance of diversification for Canadian businesses to limit the negative impacts of tariffs.
  • Participate in the comment period. Those operating in industries that could be affected by future tariffs—such as manufacturing, real estate and consumer products—could consider participating in the consultation.

You can read more about the ongoing tariff dispute below. The measures detailed below were accurate as of March 6 and are subject to change.

U.S. tariffs on Canada

The following tariffs impacting goods originating from Canada have been confirmed by executive order or official statement from the White House.

The term “CUSMA goods” refers to goods which meet the Canada-United States-Mexico Free Trade Agreement (CUSMA) rules of origin for goods originating in the territory of Canada, the U.S., and Mexico. Generally speaking, CUSMA goods will be wholly obtained or produced in North America, and/or meet requirements on regional content, processing or changes in tariff classification outlined in the CUSMA.

Scheduled effective date

Amount

Affected goods

March 4 – March 6

10%

Energy and energy resources[1]

March 4 – March 6

25%

All, except energy and energy resources

March 7

10%

Energy, energy resources, and potash which are not CUSMA goods

March 7

25%

All non-CUSMA goods not captured in the 10% tariff.

March 12

25%

Steel and aluminium products and derivatives
 

Products whose value does not exceed US $800 will qualify for the de minimis exemption to the tariffs. The exception is only a temporary reprieve for goods subject to the March 7 tariffs as it will be removed once systems are in place to collect tariffs on these low-value imports.

U.S. President Donald Trump has also indicated the administration is considering the following additional tariffs. The details, including countries impacted, are not publicly finalized.

Scheduled effective date

Details

April 2

Reciprocal tariffs

April 2

Automobiles and agricultural products

Unknown

Approximately 25% tariff on semiconductors and pharmaceuticals

Along with the previously announced tariffs, the U.S. has indicated it is conducting reviews into other areas of concern:

  • April 1, 2025: Report on impact and recommendations regarding CUSMA.
  • August 12, 2025: Recommendations on reciprocal tariffs to respond to tariff and non-tariff measures, including value-added taxes believed to injure U.S. interests.
  • Nov. 22, 2025: Report on copper and copper products including potential recommendations for tariffs or export controls.
  • Nov. 26, 2025: Report on lumber and timber including potential recommendations for tariffs or export controls.
  • Unknown: Response to digital services taxes introduced by several countries, including Canada, on recommendation by the Organization for Economic Co-operation and Development (OECD).

Canada’s tariff response

Prime Minister Justin Trudeau confirmed on March 4 that Canada would implement a two-phase tariff response originally announced on Feb. 1. Trudeau added he would work with the provinces on further measures and look for other ways to support affected Canadians. One potential option he suggested was expansion and additional flexibility for employment insurance (EI).

Innovation Minister François-Philippe Champagne announced the guidance to the Investment Canada Act will be updated to require consideration of Canada’s economic security in allowing foreign acquisitions of or mergers with Canadian companies.

Along with initiating disputes before the World Trade Organization and using the CUSMA dispute resolution measures, Canada implemented its two-phase tariff response. A 25%t tariff was imposed on a subset of goods originating from the U.S. on March 4 and is scheduled to extend to a further list of goods following a 21-day consultation period. This tariff applies to both commercial and personal-use goods.

The following is a non-exhaustive and high-level list of impacted goods:

Initial group of goods

  • Food and drink products including dairy products, confectionaries, fruits and vegetables, beverages (alcoholic and non-alcoholic), cereals and spices.
  • Hygiene and beauty products, including perfumes, deodorants, soap and shavers.
  • Home furniture, décor, and home appliances.
  • Pneumatic tires, motorcycles, and unmanned aircraft.
  • Personal use bags (including handbags, suitcases).
  • Clothing, footwear, and accessories.
  • Products for outdoor activities (such as tents, sails, and life jackets).
  • Wood and wood products.
  • Paper and cardboard products (e.g. toilet paper, notebooks, and boxes).
  • Plastic packaging materials.
  • Tools.
  • Firearms and related products.
  • Tobacco and related products.

Extended group of goods

  • Live animals, fish, crustaceans, invertebrates, insects, and birds and the products thereof.
  • Flowers and trees, including their seeds/bulbs and the products thereof (e.g. bark, chocolate, and teas).
  • Vegetables, fruits, berries, cereals, mushrooms, and nuts and the products thereof (including oils, waffles, beverages, and pasta).
  • Minerals, clay, stones, ores, ceramic, metals, glass, and rocks (including products derived from coal).
  • Mineral or chemical fertilizers.
  • Electrical energy.
  • Polymers, resins, cellulose, and asbestos products.
  • Items used in artistic and athletic activities, as well as some toys, video game consoles, and collector items.
  • Apparel, accessories hygiene, cleaning products, home goods, and home appliances.
  • Machinery for construction, agriculture, printing, and additive manufacturing.
  • Certain vehicles, trailers, tankers, and boats.
  • Various electronic resistors, insulators, and semiconductor devices.
  • Various screws, bolts, springs, nuts, magnets, and batteries.

These tariffs will not apply to:

  • Certain equipment in the production of any vehicle, machine, or appliance, including original equipment manufacturer tires.
  • Goods made in the U.S. entering Canada for repair.
  • With certain exceptions, goods classified under Chapter 98 and 99 of the Customs Tariff. These chapters include special classification categories that consider factors such as use of goods (for example, foreign-based containers or trailers used in the international commercial transportation of goods).

Importers will be able to make use of Canada’s duties relief and duty drawback programs (subject to CUSMA) to bypass tariffs or receive a refund of tariffs on previously imported goods which are exported from Canada.

Provincial responses to U.S. measures

Many Canadian provinces are introducing their own responses to U.S. tariffs using measures within their jurisdiction—while some premiers are pushing to lower barriers to interprovincial trade.

Outlined below are measures from the provincial governments of Alberta, British Columbia, Quebec, and Ontario. 

Alberta

Alberta announced it will no longer be purchasing alcohol or video lottery terminals from the U.S., nor will government entities—both provincial and municipal—be making purchases of goods and services from the U.S.

British Columbia

B.C. announced that:

  • Its liquor stores will no longer sell products from Republican-led states,
  • Canadian businesses will have priority in governmental procurement decisions; and,
  • It will introduce legislation to apply tolls to commercial trucks transiting through the province headed to Alaska.

B.C. Premier David Eby also indicated he’s looking to introduce support for affected businesses and individuals but did not provide details.

Ontario

The province-run LCBO has removed U.S. alcohol from its shelves, and U.S. companies will no longer be considered in government procurement and infrastructure contracts. A 25% export tariff on electricity headed to Michigan, New York, and Minnesota will apply as of March 10. Ontario Premier Doug Ford indicated he is considering other measures as well.

Quebec

Quebec’s government asked the province-run SAQ to no longer sell or supply U.S. alcohol. The province will also impose a penalty of 25% on U.S. companies bidding on government contracts without an existing presence in Quebec. Quebec said it will support affected domestic businesses by allowing companies to qualify for up to $50 million in liquidity loans with a maximum term of seven years.

 

[1] Includes crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water and critical minerals

This article was written by Cassandra Knapman and originally appeared on 2025-03-06. Reprinted with permission from RSM Canada LLP.
© 2024 RSM Canada LLP. All rights reserved. https://rsmcanada.com/insights/services/business-tax-insights/us-tariffs-and-canadas-response.html

RSM Canada LLP is a limited liability partnership that provides public accounting services and is the Canadian member firm of RSM International, a global network of independent assurance, tax and consulting firms. RSM Canada Consulting LP is a limited partnership that provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. The member firms of RSM International collaborate to provide services to global clients but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmcanada.com/about for more information regarding RSM Canada and RSM International.

The information contained herein is general in nature and based on authorities that are subject to change. RSM Canada LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM Canada LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

Even with Pause, Trump’s Tariffs and Canada’s Response Establish Volatile New Economic Reality

Posted on by RSM US LLP

After a weekend that saw U.S. President Donald Trump impose steep tariffs on Canadian goods and Prime Minister Justin Trudeau put forward retaliatory measures, the widely feared tariff war appears on hold after meetings between the two leaders on Monday.

Instead of taking effect Tuesday, implementation of tariffs will be paused by 30 days after Canada made additional commitments to invest in border security.

While businesses and consumers may welcome this reprieve, the back-and-forth between the longtime trading partners laid bare Canada’s economic vulnerability amid ongoing political volatility.

The U.S. tariffs set to take effect in 30 days include an additional 25% tariff on nearly all Canadian goods—with a 10% tariff on energy products.

In response, Canada’s retaliatory measures included a 25% tariff on $155 billion worth of goods from the U.S. The first phase would include tariffs on $30 billion in U.S. goods; the second phase would take effect 21 days after.

The U.S. also introduced a 10% tariff on all products from China. While Trump initially announced a 25% tariff on all goods from Mexico, its implementation was delayed for a month after meeting with Mexican President Claudia Sheinbaum.

Canada, Mexico, and China comprise more than 40% of all U.S. imports.

If the tariffs take effect after the pause, they will affect all countries involved—including pushing Canada into a recession, adding inflationary pressures, and leading to job losses. This comes after Canada managed to lower inflation to the Bank of Canada’s target last year without tipping the economy into a recession.

Despite the intercession, Canada should consider re-evaluating its trade relationships. Strategies that could address this include expanding and strengthening trade relations with other countries and removing interprovincial trade barriers to allow more seamless domestic trade.

Although there will be increased costs in the short-to-medium term, diversification to de-risk is a lesson from the COVID-19 pandemic that can prove useful now.

This chart shows U.S. imports by country

Dire economic impacts

U.S. tariffs and Canada’s retaliation would lead to a 2% reduction in the Canadian economy, down from a projected growth rate of 1.8% this year.

The measures by both sides could also lift inflation from the current 2% to a 2.7% headline number as Canadian consumers end up bearing some of the increased costs from tariffs.

The depreciation of the Canadian dollar could mitigate the prices of exports for U.S. importers, but this exacerbates the pain for Canadian businesses and consumers.

Industries that are highly integrated across borders, including auto manufacturing and even agriculture, could come to a standstill rapidly if tariffs are implemented.

Job losses should be expected across Canadian industries, from manufacturing to tourism to transportation. Higher prices decrease demand, which means aggregate demand for goods across the U.S. and Canada would drop, leading to fewer jobs.

For Canadian households, this means an increase in prices of multiple consumer goods like groceries, appliances, and especially vehicles.

Prices of perishable goods such as fruits and vegetables are likely to jump quickly if tariffs are enacted, given that they cannot be stockpiled in advance.

Although the price of goods like appliances and cars would take longer to increase, they will inevitably rise if tariffs take effect.

Despite the pause, Canada should consider re-evaluating its trade relationships

In addition to higher prices, expect a smaller selection of available goods should tariffs come into force—especially fewer U.S.-made products in stores.

Businesses that are the most vulnerable to tariffs are those that frequently import and export their goods and are part of a highly integrated supply chain. This burden will be acutely felt in situations where it’s possible that goods will be subject to tariffs each time they cross the border.

Companies that produce goods in one country and sell in another, such as Canadian manufacturers that sell to U.S. consumers, would also take a hit.

Other businesses likely to be strained by tariffs are those with tight margins and without healthy cash reserves. They may be forced to pass on the costs to consumers and might run into cash-flow issues since they must pay the tariffs upfront and might not receive payments until much later.

Canada’s response

Should the U.S. follow through on tariffs after 30 days, Canada’s response would be much more targeted. Its two-wave approach allows businesses to stock up in advance, mitigating the impact on Canadian businesses.

Goods targeted in the first round include orange juice, peanut butter, alcohol, and apparel, which are not top imports from the U.S. into Canada.

Canada has close substitutes produced domestically and also imports products like apparel from countries such as China or Vietnam. This strategy could help mitigate the immediate hit to consumers’ wallets as many are likely to switch to non-U.S. substitutes.

But Canada’s later wave of tariffs includes top imports from the U.S. like passenger vehicles, aerospace products, trucks, and buses. In addition to significant supply chain disruptions, consumers can expect to see auto prices go up substantially.

This chart shows Canada's top imports from the U.S. by product

Before the pause was announced, individual provinces implemented non-tariff responses to the U.S. measures.

Alcohol is one product where there are plenty of domestic options and non-U.S. import substitutes, meaning Canada’s decision is designed to hurt U.S. producers without causing too much pain to local consumers.

Additional insights

The Canadian dollar is expected to slide further to mitigate the impact of tariffs on Canadian exports to the U.S. in the event tariffs take effect. Previously, tariff threats pushed the loonie from 0.72 US before the election to 0.69 US—a level not seen since the early days of the pandemic.

While the depreciation of the Canadian dollar would make imports more expensive for Canadians, the net effect on inflation is far from one-to-one. The economic blow from tariffs would decrease aggregate demand, keeping prices from rising too much.

In the short-to-medium run, most of the increase in prices would be borne by consumers, not exporters.

This chart shows Canadian exports by country

The impact of tariffs extends beyond traded goods between Canada and the U.S. The unemployment rate would spike as jobs are lost, which lowers demand for all goods and services like new cars, dining out, and entertainment. Restaurants, hotels, and other services in border towns will be particularly hard hit.

The effect on each industry and each good depends on whether there are close Canadian substitutes to U.S. imports and how well supply chains can work around tariffs. For example, tariffs and retaliation would devastate auto companies in Canada, the U.S., and Mexico and leave them unable to compete with businesses in Asia or Europe.

The takeaway

Trudeau and Trump may have agreed to a pause, but the threat of a puzzling, lose-lose trade war launched by the Trump administration remains a serious concern.

If U.S. tariffs do take effect and Canada responds in kind, the disruption will slash billions of dollars from Canada’s Gross Domestic Product (GDP) this year and can hurt businesses and households in Canada, Mexico, and the U.S.

If tariffs turn out to be long-lasting, they will present another complete disruption to the Canadian economy and supply chains—a second in five years following the pandemic.

The scenario in which economic damage is minimized is one in which a trade agreement is negotiated, putting an end to tariffs. The longer tariffs and retaliation continue, the more fractured and uncompetitive the three countries’ economies become—and the more economic pain consumers would feel from higher prices, fewer goods available and fewer jobs.

This article was written by Tu Nguyen and originally appeared on 2025-02-03. Reprinted with permission from RSM Canada LLP.
© 2024 RSM Canada LLP. All rights reserved. https://realeconomy.rsmus.com/trump-tariffs-canada-response

RSM Canada LLP is a limited liability partnership that provides public accounting services and is the Canadian member firm of RSM International, a global network of independent assurance, tax and consulting firms. RSM Canada Consulting LP is a limited partnership that provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. The member firms of RSM International collaborate to provide services to global clients but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmcanada.com/about for more information regarding RSM Canada and RSM International.

Business Receipts: What is Sufficient?

Posted on by dflanagan

In a recent Tax Tip, CRA stated that an acceptable receipt for income tax purposes must contain all of the following:

  • the date of the purchase;
  • the name and address of the seller;
  • the name and address of the buyer;
  • the full description of the goods or services purchased; and
  • the vendor’s business number if the vendor is a GST/HST registrant.

Credit card statements are not generally acceptable unless they contain all the above information.

To avoid disputes when claiming deductions, ensure that receipts contain all the required information.

How Does GST/HST Apply to Airbnb/Short-term Rentals?

Posted on by Edixon

The popularity of Airbnb, short-term rental pools for cottages and vacation properties continues to grow.  One aspect of venturing into the short-term rental game is how GST/HST applies.  The volume of rental income and the length of the rentals is the determining factor on whether you will need to charge GST/HST.

Essentially, long term-rentals are exempt from GST/HST, while short-term rentals are subject to the tax.

What is considered a short-term rental?

A short-term rental is generally one where the period of occupancy is less than one month and the consideration for the supply is more than $20 a day.

Am I considered a small supplier?

If you are supplying short-term rentals, you will need to determine if you are considered a small supplier for GST/HST purposes.  A small supplier is one whose worldwide annual GST/HST taxable supplies, (including zero-rated supplies and including the sales of any associated parties) are less than $30,000, or less than $50,000 for public service bodies (colleges, non-profit organizations, charities, hospitals).

One of the most common oversights we see is forgetting to include any other associated business revenue into the small supplier test.

Should I voluntarily register for GST/HST?

If you are under the $30,000 of taxable supplies for your associated group, you can elect to voluntarily register for GST/HST.  The benefits of this would be to enable the claim of any GST/HST paid on expenses related to your short-term rental income.  It may also permit you to recover some or all of the GST/HST you may have paid on the unit.

But be aware – if you choose to register, you will be required to collect and remit the GST/HST on your short-term rental income.

There are many factors to consider when venturing into this market; especially if you will be using a portion of your principal residence.

SURCHARGE TO ACCEPT PAYMENT VIA CREDIT CARD: GST/HST?

Posted on by Edixon

As of October 2022, merchants could charge an additional fee for accepting payment via credit card. In a March 28, 2023, Technical Interpretation, CRA opined that the additional fee would be a separate exempt supply of a financial service and, therefore, not subject to GST/HST if all of the following conditions are met:

  • the fee is charged to the cardholder solely for the acceptance of the use of the credit card as a payment method and is not charged if another payment method is used;
  • the fee is imposed by (and is thus the revenue of) the merchant who provides to the cardholder the property or service that is purchased with the use of the credit card and not by a person who acts as a billing agent or payment service provider in facilitating the payment;
  • the fee is subject to the relevant credit card network rules relating to surcharging, including rules regarding the calculation and level of the surcharge; and • the fee is shown and charged separately to the cardholder.

ACTION ITEM: If charging an additional fee to accept credit cards, ensure you satisfy the above conditions to ensure the fee is not subject to GST/HST.

Operating Costs: Ways Companies Can Reduce the Expenses

Posted on by Edixon

Organizations can fulfill their needs and position themselves for success while keeping operating expenses low by outsourcing non-core functions such as information technology, human resources, and financial accounting.

In this article from RSM Canada, they explore some of the ways that companies can reduce operating expenses while still capturing market growth.

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