We’re happy to share with you more takeaways from the recent Onrario 2025 Budget Update, which includes new and enhanced programs designed to boost your business’s competitiveness and resilience in the face of ongoing economic uncertainty.
We can see that the government is prioritizing investments to help businesses secure financing, cut costs, and pivot toward stronger domestic supply chains and high-growth sectors.
1. Enhanced Tax Credits for Investment
The Ontario Made Manufacturing Investment Tax Credit (OMMITC) is being temporarily enhanced and expanded to encourage capital investment:
- Increased Rate: The refundable tax credit rate for qualifying Canadian-controlled private corporations (CCPCs) is proposed to increase from 10% to 15%.
- Expanded Eligibility: A new 15% non-refundable version of the credit will be introduced for corporations that are not CCPCs (including public or foreign-controlled corporations).
- M&E Flexibility: The eligibility rules are being amended to allow machinery and equipment (M&E) expenditures to qualify if incurred in the taxation year immediately preceding the year the asset becomes “available for use,” providing greater flexibility for complex investments.
- Timing: These changes apply to eligible investments made on or after May 15, 2025, and before 2030.
The government is also proposing a new refundable corporate income tax credit – Ontario Shortline Railway Investment Tax Credit (OSRITC), a 50% refundable tax credit is proposed for qualifying shortline railways for eligible track maintenance and rehabilitation, capped at $8,500 per track mile per year.
CHECK ELIGIBILITY
2. New and Extended Funding Programs
The government is allocating significant funds to strategic sectors and for trade diversification:
- Protect Ontario Financing Program (POFP): This first phase of the Protecting Ontario Account provides liquidity support to Ontario-based businesses in the steel, aluminum, copper, and auto sectors that are directly impacted by tariffs. The program will also focus on supporting businesses in transition towards high-growth industries like AI, defence, advanced manufacturing, life sciences, and critical minerals.
- Ontario Together Trade Fund (OTTF): An additional funding has been injected into the OTTF to help small and medium-sized enterprises (SMEs) pivot production and diversify into new markets.
- Critical Minerals Processing Fund (CMPF): This program is committed to accelerating the province’s critical mineral processing capacity, supporting existing facilities and the construction of new ones.
- Automotive Modernization (O-AMP): Additional funding is allocated to continue helping auto parts suppliers and SMEs upgrade equipment and adopt new technologies to enhance competitiveness.
- Hydrogen Innovation Fund: A new $30 million round of funding will support the integration and broader use of low-carbon hydrogen.
CHECK ELIGIBILITY
3. Streamlining Processes for Faster Growth
The government is also cutting red tape to make it easier to build and invest:
- One Project, One Process (Mining): A new framework has been launched to streamline government approvals for advanced exploration and mine development projects, aiming to reduce review times by at least 50%.
- Special Economic Zones (SEZs): Consultations are underway on criteria to designate SEZs, which would provide expedited approvals for strategically important projects to the economy and security.
- WSIB Cost Reductions: Further premium rate reductions are expected to save Ontario employers money starting in 2026.
Need to know how these updates impact your current strategy or how to apply for the new programs? Now is the time to start planning how to leverage these benefits and manage the new requirements.
