Ontario personal income tax is an annual tax collected from individuals who are Ontario residents on the last day of the tax year or have income earned in Ontario for the tax year. Ontario personal income tax includes the Ontario Health Premium. The Canada Revenue Agency administers Ontario’s personal income tax system.
Calculating the tax
Ontario personal income tax is calculated separately from your federal income tax. There are five Ontario income tax brackets and five corresponding tax rates.
A two-tiered Ontario surtax is also calculated if the amount of Ontario personal income tax you owe exceeds certain amounts.
Filing an income tax return
You must file an income tax and benefit return if you have to pay tax for the year or if the Canada Revenue Agency sent you a request to file a return.
Even if you don't owe personal income tax, you can file a return. By filing a return, you could qualify for a tax refund, credits, or benefits.
When completing your return, you may need to complete and include three Ontario forms: ON428, ON479 and ON-BEN.
After the return has been processed, the Canada Revenue Agency will mail you a notice of assessment. If you are entitled to a tax refund, the Canada Revenue Agency will issue a refund.
Ontario Tax Credits
A variety of Ontario Tax Credits may be available to you when you file your return. There are two types of credits: non-refundable and refundable.
Non-refundable tax credits
Non-refundable tax credits help reduce or eliminate the amount of Ontario personal income tax you owe in certain circumstances (e.g., if you have a disability or support an eligible dependant). These credits are used to reduce your Ontario personal income tax, but if you owe no tax they are not refunded.
Many Ontario non-refundable tax credits are similar to federal non-refundable tax credits, although the amounts may differ (e.g., adoption tax credit, disability tax credit, and caregiver tax credit). The rules for claiming these credits are the same as the rules for the federal tax credits. You claim the non-refundable tax credits on form ON428.
Refundable tax credits
You can claim refundable tax credits regardless of the amount of Ontario income tax you owe. Credits claimed on form ON479 (e.g., the Ontario children's activity tax credit, the Ontario political contribution tax credit and the Healthy Homes Renovation Tax Credit) may reduce the amount of income tax you owe or be paid as a refund when your return is assessed.
Other refundable credits are paid separately after your tax return is assessed.
Three refundable tax credits (the Ontario Sales Tax Credit, the Ontario Energy and Property Tax Credit and the Northern Ontario Energy Credit) are combined into a single payment called the Ontario Trillium Benefit. These credits are intended to provide relief to people with low- to moderate-incomes for their sales and property taxes or higher energy costs in Northern Ontario.
Senior homeowners may also be eligible for the Ontario Seniors Homeowners’ Property Tax Grant that helps low- to moderate-income seniors with their property taxes.
You claim the Ontario Trillium Benefit and the Ontario Senior Homeowners' Property Tax Grant on Form ON-BEN.
Paying the tax
Your employer deducts personal income tax from your wages and sends the tax to the Canada Revenue Agency on a regular basis throughout the year. When you file your return, you may already have paid all or part of your tax.
You may have income that hasn't had enough or any tax withheld from it. This can happen if you receive rental income, investment income, self-employment income, certain pension income, or income from more than one job. If your annual tax bill is much larger than the tax you pay through source deductions, you may have to pay income tax to the Canada Revenue Agency by instalments (smaller amounts several times during the year).
Payment with return
If you have a balance owing after completing your return you will need to pay the tax you owe to the Canada Revenue Agency by April 30.
You can make the payment in several ways, including electronically, at your financial institution, and by cheque or money order.
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Do you need help completing your return?
If you are unable to prepare your return yourself, the Community Volunteer Income Tax Program may be able to help you.