2024 Fall Economic Statement: Highlights & Takeaways

On October 30, 2024, the Hon. Peter Bethlenfalvy, Ontario’s Minister of Finance, presented the provincial government’s Fall Economic Statement, entitled 2024 Ontario Economic Outlook and Fiscal Review: Building Ontario For You.

The Fall Economic Statement (FES) is an opportunity for the government to revise its economic and fiscal projections relative to the March 2024 budget. In this FES, the government has sent a strong signal that the province could be heading into an election as early as Spring 2025 through an emphasis on its core priorities and pocketbook policies, such as a $200 rebate and a further extension of the gas tax cut.

While the FES includes many previous announcements, it also contains some new initiatives. Additionally, the government refreshed its economic and fiscal projections, revising them favourably for the current year.

Here’s what Ontario CPAs need to know about the Ontario government’s 2024 Fall Economic Statement.

Economic Changes Since the March 2024 Budget

Relative to the March 2024 budget, the government’s economic outlook for this year is more positive, driven in part by significant population growth. Specifically, Ontario’s inflation-adjusted gross domestic product (GDP) is expected to grow by 0.9% in 2024, up from the previous forecast of 0.3%. This improvement, however, is not strong enough to offset Ontario’s decline in real GDP per person this year.

When looking at 2025, the FES expects real GDP to grow 1.7%, which is slower than the 1.9% projected in the March budget.

Risks to Ontario’s economic outlook include geopolitical developments, rising trade tensions globally (i.e., from protectionism and tariffs), and changing immigration levels impacting population growth.

Despite the stronger economic growth expected this year, the unemployment rate is projected to be higher in 2024 at 6.9% versus the 6.7% outlined in the March budget. This is partly due to a softening labour market and the fact that more people are looking for jobs than are available.

Inflation—the rate at which consumer prices are increasing—is expected to be slightly lower in 2024 at 2.5% relative to the March budget’s 2.6%. Going forward, the FES expects further inflation moderation to 2.1% in 2025 before stabilizing at 2.0% in 2026 and beyond.

On housing, the FES revises downward the government’s projection for housing starts relative to the March budget. For 2024, 6,600 fewer starts are expected, declining to 81,300 from 87,900. The projection for housing starts is lower in every year over the planning horizon 2024 to 2027 compared to the March budget, with each year’s number falling well below the government’s own annual targets.

Fiscal Developments

One major takeaway from the FES is that the deficit for the current fiscal year 2024-25 is forecast to be $6.6 billion—a $3.2 billion improvement over the $9.8 billion in the March budget. But digging deeper into these top line numbers tells an interesting story: Overall revenues this year are now $6.9 billion higher than previously budgeted, partly owing to stronger than planned economic growth and higher personal income, corporate income, and sales tax revenues. In addition, interest on debt is slated to fall by $1.2 billion because of declining interest rates. (See Table 1).

Together, these give the government an $8.2 billion upside relative to the March budget. And what will the government do with this windfall? Approximately $3.2 billion will go toward lowering the deficit, meaning less public borrowing, but the remaining $5 billion goes toward new spending. This includes the new $200 taxpayer rebate which costs the treasury $3 billion, an additional $1 billion for health care, $607 million for government employees’ compensation settlement, and an additional $87 million for alcohol modernization in the province.

In looking at the overall breakdown of expenses for the current year, the government plans to increase program expenses in all major categories except for post-secondary education. Year over year, expenses for this sector will decrease by $1 billion. (See Table 2).

For 2025-26, the government is essentially planning for a balanced budget as total revenues and total expenses equalize. But because a $1.5 billion reserve (i.e. buffer) is included, the FES shows a deficit. If the reserve is removed, Ontario could see a return to balance one year before the current 2026-27 plan.

When it comes to the government’s net debt—total liabilities minus financial assets—there is some good news, despite provincial net debt nearing half a trillion this year ($429 billion). Relative to the March budget’s 39.2%, Ontario’s net debt-to-GDP ratio is now lower this year at 37.8% and through to 2026-27, remaining below the government’s self-imposed target of 40%.

Areas of Interest for CPAs

Beneficial Ownership

Of particular interest to CPAs working in Ontario is the government’s intent to explore requiring private corporations to submit information about their beneficial ownership to a registry. This registry would provide law enforcement and regulatory authorities with the information to “better detect and address instances of tax evasion, money laundering and other financial crimes.”

This registry would also build on recent changes to the Business Corporations Act requiring private corporations to maintain a record of individuals with “significant control.”

Further details about the registry were not made available, but the introduction of a new reporting requirement could have an impact on CPAs operating in the province.

Tax Measures

The FES includes a variety of tax related legislative changes, including the government’s new $200 taxpayer rebate. All eligible adults who have filed their 2023 income tax return by December 31, 2024, will receive this rebate early in 2025, with families receiving an additional $200 for each child under the age of 18 who qualifies for the federal Canada Child Benefit payment.

The FES also proposes to further extend the “temporary” gas and fuel tax rate cuts until June 30, 2025, reducing the gas tax by 5.7 cents per litre and the fuel (diesel) tax by 5.3 cents per litre, respectively. This marks the fourth time the gasoline and fuel tax rate cut has been extended since it was first introduced in the 2022 Ontario Budget. The annual cost of this initiative is approximately $310 million in foregone revenue.

Another tax initiative relates to expanding supports for in vitro fertilization (IVF) with the announcement of a tax credit for the 2025 tax year, covering up to 25% of eligible fertility treatment expenses for Ontario residents (i.e. IVF cycles, fertility drugs, travel and diagnostic testing), up to a maximum of $5,000 per year. The three-year cost is estimated at $115 million.

Additional tax changes include but are not limited to amendments to regulations under the Electricity Act, 1998 to extend existing incentives and a proposal to adjust the Ontario Alternative Minimum Tax (AMT) rate in response to federal changes. For more information on these and other proposed tax changes, please see Schedule 1 (Assessment Act), Schedule 6 (Employer Health Tax Act), and Schedule 16 (Taxation Act) in Bill 216: An Act to Implement Budget Measures and to Enact and Amend Various Statutes.

Changes to the Credit Unions and Caisses Populaires Act, 2020

The FES proposes amendments to the Credit Unions and Caisses Populaires Act, 2020 requiring a credit union to notify the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario when an auditor resigns, is replaced, or removed from office.

Changes to the Canadian Public Accountability Board Act (Ontario), 2006

The FES also proposes amendments to the Canadian Public Accountability Board Act (Ontario), 2006 which would remove restrictions on the disclosure of documents and other information prepared for or received by the Canadian Public Accountability Board (CPAB) in the exercise of its mandate. This exemption enables the CPAB, subject to restrictions on the disclosure of specific types of information, to disclose findings from an inspection to the concerned reporting issuer and participating audit firm and disclose to the public information from the final version of a report setting out the results of an inspection.

Other Initiatives

The FES reinforces the government’s commitment on addressing ongoing gridlock challenges, particularly around the GTA through its priority infrastructure projects, including construction of Highway 413 and the Bradford Bypass and the intention to launch a feasibility study for a new driver and transit tunnel expressway under Highway 401.

The FES also highlights the following:

• $260 million for the Skills Development Fund Training Stream, bringing the total up to $1.4 billion.
• $146 million to launch the next phase of the government’s Life Sciences Strategy.
• $88 million over three years to expand the Ontario Learn and Stay Grant for undergraduates who commit to practice medicine and a recommitment to prioritize seats in medical schools for Ontario residents.
• $150 million over two years to expand the Ontario Fertility Program to support in vitro services (this is on top of the proposed IVF tax credit).
• $100 million into the Invest Ontario Fund.
• $40 million to extend the Advanced Manufacturing and Innovation Competitiveness Stream and expand the Ontario Made program.
• $100 million over the next two years to increase the Ontario Municipal Partnership Fund targeted at small, rural, and northern municipalities.
• $17 million over the next three years to support 100 new Seniors Active Living Centres. ​

Conclusion

In summary, this FES signals to Ontarians that the provincial government is not deviating from its core political strategy, even with an early election potentially on the horizon.