What Is Ontario Tax Credit?
The purpose of the Ontario tax credits system is to help tax payers whose earnings fall in the bracket of "low to moderate incomes." If you are are in this category, you can take advantage of these tax credits to get tax relief since your total tax payable will either be reduced or eliminated. There are a variety of tax credits in Ontario, some of them refundable and others non-refundable. These credits for the province are administered by the Canada Revenue Agency (CRA).
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Who Can Claim Ontario Tax Credits?
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According to the Ontario Tax Credit law, only one spouse is allowed to claim a certain tax credit. For instance, if you and your spouse (or common law partner) lived with each other on December 31, both of you cannot lay a claim to the property and sales tax credits.
If one of the spouses happens to be above the age of 65, he has the right to claim the property and sales tax credits for both of you. In fact, it does not matter who pays the rent or property tax in your household since the credit lies with the person who is 65 years or older.
This tax credit law also does not allow for contributions to be divided between spouses. Even though both you and your spouse can claim the political contribution tax credit, the contribution cannot be split between both you, if there is one official receipt that has been issued.
Refundable Tax Credits
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Regardless of if you pay incomes tax or your salary does not fall in the tax bracket, you are still eligible for the Ontario refundable tax credits. When the total of your tax credits is more than the taxes you owe, the Canada Revenue Agency (CRA) will simply issue you a refund of the difference.
Some refundable tax credits under this law include the Sales Tax Credit, Co-operative Education Tax Credit, Property Tax Credit, Focused Flow-Through Share Tax Credit, Political Contribution Tax Credit and the Apprenticeship Training Tax Credit.
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Non-refundable Tax Credits
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Ontario non-refundable tax credits reduce the amount of tax you owe and they are provincially indexed tax credits. These credits are reserved for tax payers with special personal circumstances, which include being a senior, having a disability, having a spouse who is dependent on you, paying medical expenses and paying tuition and education fees, to name a few.
In addition to these, residents of Ontario may also be eligible to claim tax credits if they buy shares in Labor Sponsored Investment Funds (LSIFs) and Employee Ownership (EO) corporations.
Tax Credits when Moving to and from Ontario
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If you happened to move to Ontario in a certain taxation year, you can claim Ontario tax credits if you lived there on December 31 or were its "factual" resident, and if you filed your income tax return for that year as a resident of Ontario.
However, if you moved out during the taxation year, you cannot take advantage of the Ontario tax credits, unless you moved back on or before December 31 of the same year and filed your income tax return as an Ontario resident.
How to Request for Prior Year Tax Credits
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If you wish to request a prior year Ontario tax credit or you are trying to amend a tax credit previously claimed by you for any year after 1984, you have to follow the instructions that are provided in the federal income tax and benefit package. Alternatively, you can also contact the office of the Canada Revenue Agency nearest you for additional help and resources.
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References
- Photo Credit tax time image by Tom Oliveira from Fotolia.com
