Make sure you claim the Ontario Trillium Benefit
By Peter Coles | Jan-27-2014 | Blog, General Tax
This will be the third tax-filing season that taxpayers have had the opportunity to apply for the Ontario Trillium Benefit. However, we suspect not everyone is claiming the full amount to which they’re entitled. Here is what you should know to make sure you are not short-changing yourself.
Although the Ontario Trillium Benefit is applied for on the tax return, it is paid separately, like the GST/HST Credit. It consists of three components: the Ontario Sales Tax Credit, the Ontario Energy & Property Tax Credit and the Northern Ontario Energy Credit. The Ontario Sales Tax Credit and the Ontario Energy & Property Tax Credit evolved out of the refundable credits which used to be included in the tax refund. The Northern Ontario Energy Credit was introduced in 2010 to compensate for the higher home heating costs in Northern Ontario.
Ontario Sales Tax Credit: This credit used to be targeted exclusively at lower-income taxpayers. However, with the introduction of the HST, its parameters were significantly expanded. The maximum annual entitlement is now $281 per family member. It is reduced by 4 per cent of your family net income greater than $21,625 if you are single with no children, or $27,031 if you are a single parent, married or living in a common-law relationship. Whether you get anything will therefore depend on the size of your family unit. For example, if you are a married couple with two children or a single parent with three children, your benefit will not be completely eliminated until you have family net income of $56,255 or more. However, the addition of another child would increase this threshold to $63,561.
In contrast to the other two components, which are claimed on Form ON-BEN, the OSTC is claimed by answering “yes” to the question “Are you applying for the GST/HST credit or the Ontario sales tax credit?” on page 1 of the T1 return. If you are using tax software, it should do this for you by default. However, if you are paper-filing, make sure you answer appropriately if the credit applies to you, otherwise you will not get it.
Ontario Energy & Property Tax Credit: The Ontario Energy & Property Tax Credit is based primarily on how much rent or property tax you pay. There is also a flat $216 to help with energy costs. The threshold and rate at which the credit is reduced depends not only on your marital status but also on whether you are a senior, so you really have to crunch some numbers to figure out whether you are going to get anything. However, a single parent with net income of $40,000 and paying rent of $1,200 per month would receive an annual entitlement of $299. A senior couple with net income of $50,000 and paying property taxes of $2,000 would get $525.
Note that students who live in a student residence are limited to a claim of $25 for their occupancy cost, which will sharply reduce their entitlement. There are also special rules for claiming the energy component if you are a resident of a public long-term care home or your principal residence is located on a reserve. Although you will not receive anything based on your rent, you will still be eligible for the energy component.
If you want to apply for the OETC you must check Box 6118 on Form ON-BEN and enter your rental or property tax information on the back of the form.
Northern Ontario Energy Credit: The Northern Ontario Energy Credit is designed to compensate for the higher home-heating costs incurred by residents of Northern Ontario. The maximum annual entitlement is $141 for single taxpayers and $216 for couples and single parents. For single taxpayers, the credit is reduced by 1 per cent of adjusted net income greater than $37,843 and is therefore completely eliminated only when net income exceeds $51,943. For couples and single parents, it is reduced by 1 per cent of adjusted net income greater than $48,655 and is therefore eliminated only when net income exceeds $70,255.
In order to be eligible for this credit, you must have paid rent or property taxes on a principal residence in Northern Ontario or had accommodation costs in a public long-term care home in Northern Ontario. “Northern Ontario,” for this purpose, is everything north of Muskoka. If your principle residence was on a reserve in Northern Ontario, you will qualify as long as you incurred home-energy costs.
If you want to apply for the Northern Ontario Energy Credit, you must check Box 6119 on Form ON-BEN.
Delivery of the Ontario Trillium Benefit: If the combined benefit is $360 or less, you will get it in one lump sum in July 2014. Otherwise it will be paid in monthly instalments from July 2014 to June 2015. Beginning this year, you also have the option of waiting until June 2015 and getting it paid at once at that time. The government introduced this option after complaints from taxpayers who liked the old system, when it was included in the tax refund. It is hard to imagine why anyone would want to receive it later rather than sooner, regardless of whether it is paid in a lump sum. However, if that is what you prefer, check new Box 6109 on your ON-BEN.
This is one benefit that requires a lot of math from you, your tax professional or your software, and that may be why it’s not widely used, but the tax dollars you save make it worth a little extra work.