What follows is a list of the most important Ontario Government credits and benefits likely to be relevant to clients of the CVITP.
Here is a brief explanation of some of the terms used above:
– Refundable: A credit that is paid to the recipient whether or not they pay income tax; where the client does not have to pay any tax at all, the full amount of a Refundable Credit is paid to the client; where the client has income tax to pay but less than the Refundable Credit, the client receives the net difference; where the client has more income tax to pay than the Refundable Credit, this is used to reduce the amount of tax the client owes.
– Non-refundable: A credit that is applied against the income tax payable to reduce the amount of income tax owed by the recipient but is not itself paid to the recipient; in some cases, the credit will exceed the amount of income tax, thereby reducing the income tax owed by the client to zero.
– Income-tested: The credit or benefit is only paid to the recipient if their income is low; generally, as the client’s income rises, the amount paid to the client is reduced.
General information on the various credits and benefits can be found below. For more detailed information, look at the links provided in the text.
1. Ontario Sales Tax Credit
Ontario Sales Tax Credit: The OSTC is to help individuals and families with low and modest incomes offset all or part of the provincial sales tax they pay. This is one of the three credits that make up the Ontario Trillium Benefit (OTB), which must be applied for when completing the annual income tax and benefit return by filling out the form ON-BEN in the tax software. Combined with the two other credits, the OTB is tax-free benefit paid out either in monthly installments starting in July or in one lump sum, depending on the size of the benefit. It is not necessary to apply for the OSTC when preparing a return as the Canada Revenue Agency (CRA) will automatically determine whether the client is entitled to this credit.
2. Ontario Energy and Property Tax Credit
Ontario Energy and Property Tax Credit: The OEPTC is to help individuals and families with low and modest incomes with their property taxes and home energy costs. This is for both homeowners and tenants. This is one of the three credits that make up the Ontario Trillium Benefit (OTB). It must be applied for when filling out the form ON-BEN in the tax software; one of the declarations must also be filled out. Combined with the two other credits, the OTB is tax-free benefit paid out either in monthly installments starting in July or in one lump sum, depending on the size of the benefit.
3. Northern Ontario Energy Credit
Northern Ontario Energy Credit: The NOEC is to help individuals and families with low and modest incomes living in Northern Ontario with the higher home energy costs they face. This is one of the three credits that make up the Ontario Trillium Benefit (OTB). It must be applied for when filling out the form ON-BEN in the tax software; one of the declarations must also be filled out. Combined with the two other credits, the OTB is tax-free benefit paid out either in monthly installments starting in July or in one lump sum, depending on the size of the benefit.
4. Ontario Child Benefit
Ontario Child Benefit: This is a tax-free monthly payment designed to help low to moderate income families – whether they are working or not – with the cost of raising children under 18 years of age. It is administered by the CRA on behalf of the Ontario government. The process of applying for it is, like the Canada Child Benefit, independent of the income tax and benefit return. Families who have applied for and receive the Canadian Child Benefit are automatically considered for the Ontario Child Benefit. The amount paid is based on the number and ages of the children and is income-tested. If an estimate of the Canada Child Benefit is requested when preparing the return, the tax software will also produce the estimate for the Ontario Child Benefit on the same page. It is paid out in combination with the Canada Child Benefit; to maintain the payments, parents must be current in filing their income tax and benefit returns.
5. Guaranteed Annual Income System
Guaranteed Annual Income System: The GAINS is a monthly, tax-free benefit paid to low-income seniors (65 years and older). To be eligible, a senior must be receiving the Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). The GAINS payment tops up the OAS and GIS, to ensure that seniors receiving both the OAS and GIS are guaranteed a minimum level of income as defined by the province. The amount varies depending on the amount of income the senior receives from other sources. Seniors who already receive the OAS and GIS do not need to apply as they will automatically be considered for the GAINS. To maintain the payments, seniors must be current in filing their income tax and benefit return.
6. Low-Income Workers Tax Credit
Low-Income Workers Tax Credit: Formerly known as the Low-Income Individuals and Families Tax Credit or LIFT, this is a non-refundable tax credit that can be used by low-income workers (i.e. employment income is required) to reduce or eliminate the amount of Ontario income tax they owe. The tax reduction is calculated and claimed automatically when the individual files an income tax and benefit return. (The software uses Schedule ON428-A to calculate the credit and then enters the amount on line 62410 of the form ON428.)
7. Ontario Child Care Tax Credit
Ontario Child Care Tax Credit: To obtain this refundable credit, the individual must file an income tax and benefit return and claim the Child Care Expense Deduction. The Deduction provides for a credit that can be used by individuals to reduce the amount of federal and provincial income tax owed. The Child Care Tax Credit is calculated as a percentage of the Child Care Expense Deduction. When completing the annual income tax and benefit return, the Schedule ON479-A is used to calculate the credit and then the amount is entered on line 1 of the form ON479.
8. Ontario Senior Homeowners’ Property Tax Credit
Ontario Senior Homeowners’ Property Tax Grant: This is a tax-free lump sum payment to help Ontario homeowners 64 years of age or older and of low and moderate incomes with their property taxes. It must be applied for when completing the annual income tax and benefit return using the form ON-BEN in the tax software. This benefit is paid 4-6 weeks after the notice of assessment has been issued.
9. Medical Expenses
Medical Expenses: This is a non-refundable tax credit which helps individuals with eligible medical expenses (including those for their spouse or common-law partner and eligible dependants) reduce the amount of income tax they may have to pay. The eligible expenses are the same as for the federal portion of the return but with a few exceptions. The medical expenses must total more than either 3% of the net income or $2,395, whichever is less.
10. Charitable Donations
Charitable Donations: This is a non-refundable tax credit which helps individuals with donations to registered charities reduce the amount of income tax they may have to pay. When the volunteer inserts the relevant information in the tax software, the amount of the credit is calculated automatically and appears on line 58969 of the form ON428.
11. Ontario Seniors Public Transit Tax Credit
Ontario Seniors Public Transit Tax Credit: This is a refundable credit to help seniors (65 years and older) with their public transit costs. This credit is claimed when completing the annual income tax and benefit return by filling out the form ON479 in the tax software. The amount paid is based on the individual’s expenses for using public transit; therefore, receipts for public transit expenses must be kept.
12. Ontario Tax Reduction
Ontario Tax Reduction: This is a non-refundable credit which helps to lower or eliminate the amount of income tax paid. The amount of the reduction depends on a number of factors including the number of dependants, marital status, amount of tax payable and where the individual lived at the beginning and end of the tax year. It is calculated and claimed automatically when filing an annual income tax and benefit return. (The software fills the appropriate section in the form ON428.)
13. Provincial Political Contributions
Provincial Political Contributions: This is a refundable credit which provides tax relief for individuals contributing to a candidate in an Ontario provincial election, or to a registered Ontario political party, registered constituency association or registered leadership contestant. When the volunteer inserts the relevant information in form ON479 in the tax software, the amount of the credit is calculated automatically.