Changes to Ontario credits reduce tax refund
As more people in Ontario file their tax returns, they are discovering there were changes made to the provincial credits that could reduce or even eliminate refunds. The Ontario Energy & Property Tax Credit, Ontario Sales Tax Credit, and Northern Ontario Energy Credit will be paid in monthly instalments starting in July 2012, instead of being part of the tax refund.
Though many Ontarians knew about the HST introduction, they did not realize the other changes the new harmonized sales tax would bring. The government also changed the way it administered the Ontario Property & Energy Credit (sometimes called the rent credit), the Ontario Sales Tax Credit, and the Northern Ontario Energy Credit. Instead of paying these credits as part of the tax refund when people filed a return, the government decided to pay the credits in monthly instalments, starting in July 2012. Now called the Ontario Trillium Benefit, the monthly instalments include all three credits. Not that receiving a cheque from the government every month is a bad thing, but when you were expecting it as your tax refund you may not be pleased with this change.
The Ontario credits are refundable. This means you do not need to have income during the year in order to receive them. So in some cases, the credits will create the entire refund. And for many lower-income filers, the only tax refund they receive is Ontario tax credits. For a person paying rent in Ontario, the rent and sales tax credits may have meant $300 to $400. For lower-income seniors, the credits were higher and could have totalled $600 to $800.
The good news is the Ontario Trillium Benefit is more generous. If you qualify for the full amount of the Ontario Sales Tax portion, for example, it is $273 per person, up from $100 two years ago. The benefit is calculated based on your income, so the more money you earn, the less you will receive. Once you get over the shock of not getting a tax refund, the Ontario government has provided a calculator at www.rev.gov.on.ca/en/taxcredits/CalculatorQuestions.asp to figure out what you can expect to receive over the next year.
But remember, you have to file a tax return by April 30 to receive the first Ontario Trillium Benefit on time. Not filing will mean federal benefits like the Canada Child Tax Benefit, GST/HST and Guaranteed Income Supplement will stop as well.
If you earned less than $20,000, you can file for free using our online tax program. Or you can use one of the Canada Revenue Agency’s free community tax clinics; visit www.cra-arc.gc.ca/tx/ndvdls/vlntr/clncs/on-eng.html for more information.
