Ontario's 2020 Budget Announced
 Positive Impact to the Hospitality Industry
On November 5, 2020, Ontario's Minister of Finance, Hon. Rod Phillips, released the 2020 Ontario Provincial Budget.

ORHMA's advocacy over the past few months has been impactful and we applaud the Minister and the Ontario Government for listening to our concerns and taking our advocacy into consideration in supporting Ontario's Hotels and Restaurants. 2020 has been a tough year with a long and painful road ahead for recovery. The Budget tabled today sets the tone for success for those in the hospitality industry who face high expenditures and includes initiatives that are much needed.

On behalf of Ontario's hospitality industry, ORHMA thanks the Ford government for taking action in response to our concerns.
HIGHLIGHTS:
Business Education Tax (BET)- Positive Impact to Property Tax

The government will lower high Business Education Tax (BET) rates that currently are as high as 1.25% to 0.88% for a vast majority of businesses, while offering a $5,000 reduction in small business tax relief. 94% of businesses in Ontario will see a reduction in their property taxes, by standardizing the Business Education Tax. What businesses pay depends on their location and currently averaging a rate of 0.98%. This tax reduction was directed specifically for businesses in the hospitality sector and was a top priority in ORHMA’s Relief Plan submitted to government. These reductions will result in $450M in annual savings to the business community starting in January of 2021. 

There will also be options for allowing municipalities to match deductions. Further property tax reductions for small businesses are announced and this is also good news. It will be up to each municipality to define the size of small business.
 
ORHMA and the Greater Toronto Hotel Association (GTHA) have worked on this important issue and we are pleased to see these positive outcomes.
Hydro Costs

Beginning January 1, 2021, the renewable energy contracts that significantly make up the Global Adjustment Cost of a hydro invoice will be paid by the Provincial Government, not the business.

Hotels and Restaurants will see healthy monthly savings, expected at approximaetely 14-16% for an average business. All hospitality operations have been hit hard with the Global Adjustment costs over the years and paying such an expenses during these critcal times have been tough.
Employer Health Tax (EHT)

Prior to the COVID-19 crisis, eligible employers in Ontario were paying a health tax over the first $490,000 of payroll. During the COVID-19 pandemic, the Provincial Government made a temporary EHT threshold exemption, increasing it to $1 million for the year 2020 during this crisis.

Today’s Budget has announced that the $1 million threshold exemption will be made permanent. In ORHMA’s advocacy, we drove the message that many small business employers have been under the set exemption due to ongoing minimum wage increases therefore were not eligible to pay the EHT. Since 2004 minimum wage has increased by 96% yet the EHT exemption amount has not changed, forcing small businesses to incur significant payments to the EHT. The government estimates that 90% of businesses will not pay any EHT with this threshold.
Tourism Expense Rebate

Committing to provide Ontario residents with support of up to 20% of eligible Ontario tourism expenses encouraging Ontarians to safely discover Ontario in 2021, which has been designated as year of the Ontario staycation.
Beverage Alcohol with Delivery & Take-Out

As expected, the government has announced that the sale of beverage alcohol with delivery and
take-out orders will be made permanent.
Additional Highlights:

  • Connecting workers in the tourism and hospitality sector and others most affected by the pandemic to training and jobs with an investment of $180.5 million over 3 years, including a skilled trades strategy, an additional $100 million of dedicated investments through Employment Ontario for skills training, a redesigned Second Career program and $59.5 million to acquire in-demand skills
 
  • The government is freezing beer tax and mark-up rates until March 1, 2022 and is proposing to retroactively cancel the increase in wine basic tax rates legislated to occur on June 1, 2020. The government issued an order under the Financial Administration Act during the state of emergency that prevents that increase from being applied between June 1, 2020 and December 31, 2020. The government is also directing the LCBO to not proceed with the scheduled wine mark-up.

  • Providing a six-month interest- and penalty-free period to make payments for most provincially administered taxes, providing $7.5 billion in relief to help 100,000 Ontario businesses

  • The Workplace Safety and Insurance Board is allowing a six-month deferral of premium payments, providing up to $1.9 billion in financial relief to employers

  • Investing $100 million over two years for the Community Building Fund to support community tourism, cultural and sport organizations that are experiencing significant financial pressures due to the pandemic
We are currently analyzing the impact of the BET and hydro cost savings to understand what that means in savings to various locations and properties. We will continue to keep you informed on what this means for you directly especially during these difficult times. We remain at your service at (905) 361-0268 or (800) 668-8906 or by email at info@orhma.com
Ontario Restaurant Hotel & Motel Association (ORHMA)
2600 Skymark Ave, Suite 8-201
Mississauga, ON L4W 5B2
info@orhma.com | www.orhma.com