Navigating tax credits
You may be able to save by understanding expenses for this year and next
When Mary Fraser-Hamilton sits down to file her 2021 income tax return, the teacher and mother of three will notice the Ontario portion has several credits aimed at families, seniors and workers.
She will likely apply for the Ontario Child Care Tax Credit — her children are aged 10, eight and six — which gives a tax break to families who earn less than $150,000 a year.
Eligible families can claim up to 75 per cent of eligible child-care expenses.
And for the 2021 tax year, there is an automatic top-up of 20 per cent, increasing support from $1,250 to $1,500 on average.
But with numerous schools and after-school programs closed due to COVID-19 outbreaks, FraserHamilton’s kids spent much of the year learning at home. She doesn’t expect the credit to help her significantly.
“Our child-care costs were lower because of massive school closures,” she said. “I’ll apply for it, but I don’t anticipate noticing a difference.”
She would prefer to see the provincial government provide more funding for child care.
“Instead of niche tax credits,
Ford needs to sign a deal with the federal government to secure affordable child care for every Ontario family.”
Until that happens, Evelyn Jacks, a tax expert and president of financial education institute Knowledge Bureau, said the benefits are worthwhile, but people must file their tax returns to “take advantage of these supports even if they have no taxable income to report.”
“There’s lots of great eligible expenses here,” Jacks said. “You have the opportunity to use some credit next year as well. Just keep your expense receipts.”
‘‘ With that money you’re getting back, it’s important to know you can invest it in an RESP or TFSA.
EVELYN JACKS TAX EXPERT
Other notable tax credits for Ontario residents include:
The Low-Income Workers Tax Credit, gives up to $850 each year in personal income tax relief to lowincome Ontario workers.
Jacks says this credit can be complicated for families because one must consider their individual net income and family net income to qualify. She suggests using tax software or asking a tax professional to calculate it.
The Ontario Jobs Training Tax Credit gives up to $2,000 in relief for 50 per cent of the cost for upgrading skills and career shifts. This tax credit can also be used in the 2022 tax year.
“This is a good credit. It helps people change careers if they’re looking to do that,” said Sami Ghaith, owner of SDG Accountant. It’s also straightforward to claim it, he said.
The Seniors’ Home Safety Tax Credit goes toward making seniors’ homes safer and more accessible. The credit is worth 25 per cent of up to $10,000 in eligible expenses to a maximum credit of $2,500. This credit has also been extended to the 2022 tax year. Eligible expenses include accessibility and safety improvements like handrails in corridors, wheel-in showers, and wheelchair ramps or lifts.
The Ontario Seniors’ Public Transit Tax Credit allows Ontario residents 65 and older to claim up to $3,000 in eligible public transit expenses and receive up to $450 each year.
The Ontario Energy and Property Tax Credit helps low to moderate income earners with property taxes and sales tax on energy costs.
The Northern Ontario Energy Credit
helps northern Ontarians with higher home energy costs.
The newest tax credit, the Ontario Staycation Tax Credit, is for the 2022 tax season.
It allows Ontario residents to claim 20 per cent of local accommodation expenses in 2022 up to $1,000 for an individual and get back $200; or $2,000 for a couple or family and get back $400. So save those receipts.
Ghaith says it can be a challenging for nonta x professionals to claim these credits. For the average Canadian, it can be difficult or not possible to find these credits on non-professional software, he said.
While most of the credits, like the jobs training, senior home and transit credits and lowincome credit, can be claimed on your personal income tax and benefit return, others like the child care tax credit and energy and property tax credit require special forms.
But Jacks said more than 90 per cent of Canadians file their tax returns electronically, meaning people are “pretty computer savvy.”
She added that investing in the proper tax software will make the process easier and, if it’s affordable, a tax specialist can explain the credits available and provide guidance on how to leverage those savings.
“With that money you’re getting back, it’s important to know you can invest it in an RESP or TFSA,” Jacks said. “Paying a little extra for that kind of advice can help set up your family’s future.”