Property and Sales Tax Credits

Bulletin 6303
Published: September 2008
Content last reviewed: January 2011
ISBN: 978-1-4249-7314-9 (Print), 978-1-4249-7316-3 (PDF), 978-1-4249-7315-6 (HTML)

Publication Archived

Notice to the reader: Starting in 2010, the Ontario Property Tax Credit was replaced by the Ontario Energy and Property Tax Credit.

Effective January 1, 2011 this publication was archived and kept for historical purposes. Use caution when you refer to it, since it reflects the law in force at the time it was released and may no longer apply.

This publication is provided as a guide only. It is not intended as a substitute for the Income Tax Act (Ontario) and Regulations.

Purpose

The refundable property tax credit provides assistance for people with low to moderate incomes who own or rent a principal residence in Ontario.

The refundable sales tax credit provides sales tax assistance for people with low to moderate incomes.

Ontario refundable tax credits can be received even if you pay no income tax.

Amount of credit

Property tax credit amount

  • The basic property tax credit for individuals under age 65 is $250.
  • The basic property tax credit for individuals age 65 or older is $625.

You cannot claim a property tax credit for more than one Ontario residence, such as a house and a cottage, for the same period. However, you can claim more than one principal residence if you have lived in more than one at different times in the year, and your total period of principal residence occupancy does not exceed 12 months.

If you rent out part or all of your principal residence, you can claim a property tax credit only for the part of the residence in which you live and for the time you actually lived in the residence.

Sales tax credit amount

Only one sales tax credit may be claimed for each person.

  • The basic sales tax credit is $100.
  • The additional credit for your spouse or common-law partner is $100.

The credit for each dependent child under age 19 on December 31 is $50. Only one person can claim a sales tax credit for a dependent child. In cases of separation or divorce, the credit must be claimed by the primary caregiver (generally the recipient of the Canada Child Tax Benefit).

Maximum amount of property and sales tax credits

Property and sales tax credits are income tested when you complete Form ON479, Ontario Credits. Ontario increased the income threshold at which senior couples' tax credit amounts begin to be reduced to $24,300 for 2008. This annual adjustment ensures that senior couples receiving the guaranteed minimum level of income from Ontario and the federal government continue to receive the full benefit of these two credits.

For individuals age 65 or older, the combined maximum amount of property and sales tax credits you can receive is $1,125.

For individuals under age 65, the combined maximum amount of property and sales tax credits you can receive in one taxation year is $1,000.

Eligibility requirements

Basic requirements

You can claim the property tax credit if all of the following conditions apply:

  • you were a resident of Ontario on December 31
  • rent or property tax on a principal residence was paid by or for you in the year
  • you were 16 or older on December 31.

You can claim the sales tax credit if all of the following conditions apply:

  • you were a resident of Ontario on December 31
  • you were 16 or older on December 31
  • no one else claimed an Ontario sales tax credit for you.

You cannot claim a sales tax credit if you were in prison or a similar institution on December 31, and you were there for a period of more than six months during the tax year.

Under age 19

Individuals aged 16 to 18 not claimed as dependants, or dependent children aged 16 to 18 not living with you on December 31 of the taxation year, may claim their own property and sales tax credits, if otherwise eligible. However, individuals cannot claim a property tax credit if they lived with someone who received a Canada Child Tax Benefit payment for them in the tax year.

Spouses and common-law partners

If you lived with your spouse or common-law partner on December 31, only one of you can claim the property tax credit for both of you. If one spouse or common-law partner is 65 or older, that spouse or common-law partner has to claim the credit for both of you.

If you marry, or meet the definition of common-law partnership in the taxation year, the occupancy cost for each person before is combined with the occupancy cost after marriage or common-law partnership, and one spouse or common-law partner must file for both.

Separation during the year

If you and your spouse or common-law partner were separated or divorced on December 31, each of you can claim a property and sales tax credit.

Involuntary separation

Although you may have shown your marital status on your tax return as married or living common-law, if you and your spouse or common-law partner occupied separate principal residences in Ontario for part or all of the year for medical, educational, or business reasons, we will consider you to be involuntarily separated during that period for purposes of the property and sales tax credits.

As a result, each of you may apply for a property tax credit by including the following in your tax credit claim:

  • a share of the property tax or rent for the part of the year when you lived together
  • your own property tax or rent paid after the separation.

For the period before separation, the property tax or rent paid may be divided any way you choose. However, the total amount of rent or property tax claimed, when combined, may not be more than the actual rent or property tax paid for the residence before separation.

Each spouse or common-law partner may claim a sales tax credit. However, only one person may claim the sales tax credit for a dependent child.

Death in the year

You cannot claim the property or sales tax credits on the final return for a person who died in the tax year.

If your spouse or common-law partner died in the tax year, you can claim the property tax credit and sales tax credit on your return but you cannot claim an additional sales tax credit for your deceased spouse or common-law partner.

How to claim your property and sales tax credits

Form ON479

Calculate your claim on Form ON479, Ontario Credits included with the federal income tax and benefit package.

Receipts

You do not have to include property tax or rent receipts with the Ontario tax credits form. Keep all receipts in case the Canada Revenue Agency asks to see them. Receipts should state the year, the total amount of rent paid, and the name and address of the landlord.

Occupancy cost

Determining occupancy cost

Your occupancy cost only covers the period in the tax year that you lived in your principal residence in Ontario. A principal residence can be a house, apartment, condominium, hotel or motel room, mobile home, or rooming house.

Exceptions:

  1. A principal residence does not include a residence that does not pay full municipal and school taxes, or full grants instead of taxes.
  2. Nursing homes, hospitals, charitable institutions, group homes or similar institutions do not normally qualify as principal residences unless the institutions pay full municipal and school taxes or a full grant instead of taxes. See heading Residents of institutions below.

Homeowners

If you are a homeowner, occupancy cost is the property tax paid in Ontario on your principal residence in the taxation year including:

  • tax charged for municipal and school purposes
  • tax charged for local improvements to real property (if you paid a local improvement fee in one lump sum during the year or over a number of years, the amount paid in each year can be included in the calculation of your property tax)
  • tax charged under the Provincial Land Tax Act or the Local Roads Boards Act
  • licence fees charged by municipalities and fees charged by school boards for mobile homes.

Property tax does not include:

  • 'user charges' billed by a municipality (e.g. water)
  • 'common expenses' incurred by condominium owners
  • mortgage principal and interest
  • property tax interest and/or penalty charges
  • the portion of local improvement payments financed by government agencies (you may claim your actual payment for the local improvement)
  • property tax for the portion of a residence used for a business.

Renter

If you rented, occupancy cost is 20 per cent of the rent paid in Ontario in the taxation year including:

  • a deposit for the last month's rent (in the year you use the deposit)
  • property tax paid as part of your rent
  • imputed rent.

Rent does not include:

  • utility charges such as water, electricity, parking, janitorial and recreational facilities which are separately itemized. Note: If these charges are not separately itemized but included in your lease agreement, you may consider the full amount as rent
  • charges for board (e.g. meals, cleaning and laundry)
  • amounts paid to relatives or friends as repayment of household expenses, unless these amounts are reported as rental income on their returns.

Imputed rent arrangements

Imputed rent is the value of services that you or your spouse or common-law partner provide to a landlord instead of paying rent. For example, if you are a farm labourer, domestic, apartment superintendent or a member of the clergy, you may have imputed rent. You may use the imputed rent to calculate occupancy cost for the property tax credit. You must also include the imputed rent as income when filing your income tax return.

Shared residence

If you share a principal residence with one or more persons (other than your spouse or common-law partner), your occupancy cost is based on your share of the rent or property tax you paid for the year.

Unregistered condominium

If you occupy a new unregistered condominium unit as your principal residence, special rules apply. From the date you occupy the unit until it is registered in your name, you would claim the interim cost of the condominium as rent. Once the unit is registered, calculate the property tax credit as an owner by prorating property taxes from the date of registration to December 31.

Mobile or modular home on leased land

If you own your home but lease the land on which the home is situated, you may claim a property tax credit. Assuming that property tax, a municipal licence fee and/or a school board fee was paid, you may claim the occupancy cost either as rent or as property tax. Use the method most beneficial to you.

For example:

  • use 20 per cent of the total rent paid, including any tax or fee as part of that rent
  • use the property tax, municipal licence fee and/or school board fee for the home and lot.

Property tax is the actual tax on the home and lot. It is calculated by multiplying the assessed value by the local mill rate, and is not necessarily the amount considered 'tax' in the rental agreement.

University and college residences

You can claim $25 as your occupancy cost for the part of the year you lived in a designated university, college, or private school residence.

A residence is designated if it is part of a recognized educational institution and exempt from paying either municipal and school taxes, or a full grant instead of taxes.

You may clarify the status by contacting the residence administrator or the Ministry of Finance which maintains a list of university and college residences.

Residents of institutions

If you live in a nursing home, charitable institution, home for the aged or a similar institution which pays full municipal and school taxes, or a grant instead of taxes, you may claim a property tax credit. You must deduct from your occupancy cost any accommodation subsidy from a government agency.

The rent portion of your nursing home payment must not include amounts for items (i.e. meals, housekeeping, laundering or other services) other than the occupancy. If a cost breakdown is not available, an amount of up to 75 per cent of your total nursing home payments may be claimed as rent.

If your spouse or common-law partner continues to reside in the family residence, that individual could claim his/her own property tax credit under the involuntary separation option.

Co-operative housing

Residents of co-operative housing units who do not have ownership interest, may claim a property tax credit based on rental payments only.

If you live and have an ownership interest in a co-operative, you may claim a property tax credit based on the property tax you paid to the municipality, or the property tax set by the co-operative for the unit you occupy.

Life lease arrangements

Residents who have paid a lump sum for the 'right to occupy' for life or a stipulated period are not registered on title as owners of their unit, therefore they are more like tenants than owners.

As a life lease resident, calculate your occupancy cost as rent using the following calculation: divide the cost of the lease (lump sum) by the length of the lease (i.e. number of years - if not specified in the agreement, use 20 years as 'equivalent to life') and add the yearly municipal tax based on your unit as part of your rent. The resulting rental amount will be multiplied by the usual 20 per cent when determining your occupancy cost on Form ON479, Ontario Credits.

Do not include common expenses or utility charges as part of your rental amount.

Municipal tax bills

Questions about your municipal tax bills should be directed to your local municipal office.

 
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