Ontario personal income tax is an annual tax collected from individuals who are Ontario residents on the last day of the taxation year or have income earned in Ontario for the taxation year. Ontario personal income tax includes the Ontario Health Premium.
Under a tax collection agreement, the federal government administers Ontario's personal income tax through the Canada Revenue Agency (CRA).
How is the tax calculated?
Ontario personal income tax is calculated separately from your federal income tax and is based on your income tax bracket. There are four Ontario income tax brackets and four corresponding tax rates.
A two-tiered Ontario surtax is also calculated if the amount of Ontario personal income tax you owe exceeds specified amounts.
When and how is the tax remitted?
Source deductions
Your employer deducts personal income tax from your wages and sends the tax to the CRA on a regular basis throughout the year. When you file your tax return, you may already have paid all or part of your tax.
Instalment payments
You may have income that hasn't had enough or any tax withheld. This can happen if you receive rental income, investment income, self-employment income, certain pension income, or income from more than one job. Since your annual tax bill could be very large, you may have to pay your income tax to CRA by instalments (smaller amounts several times during the year).
Payment with return
You may have a balance owing after you complete your income tax return. If so, you will be required to remit this payment to CRA by April 30.
You can make the payment in several ways, including electronically, at your financial institution, and by cheque or money order.
Do I need to file an income tax return?
You must file an income tax return if you have to pay tax for the year or if CRA sent you a request to file a return. Additional reasons are listed on the CRA website.
Even if you don't owe personal income tax, you should file a return. By filing a return, you could qualify for a tax refund, credit, or benefit.
When completing your income tax return, there are three Ontario forms that are of particular interest:
- ON428 Ontario Tax
- ON479 Ontario Credits
- ON-BEN Application for the 2012 Ontario Trillium Benefit and the Ontario Senior Homeowners' Property Tax Grant
After the return has been processed, CRA will mail you a Notice of Assessment showing any changes or corrections made to the return (such as identifying and correcting a math error). If you are entitled to a tax refund, the CRA will issue a refund.
Ontario Tax Credits
A variety of Ontario tax credits may be available to you when you file your income tax return. There are two types of credits: non-refundable tax credits and refundable tax credits.
Non-refundable tax credits
Non-refundable credits help you reduce or eliminate the amount of Ontario personal income tax you owe. Excess non-refundable credits do not create a tax refund.
Most 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 your ON428 Ontario Tax form.
Refundable tax credits
Certain refundable tax credits help reduce or eliminate the amount of Ontario income tax you owe. Excess credits may be paid as a refund after your personal income tax return is assessed — even if you paid no income tax (e.g., the Ontario Children's Activity Tax Credit and the Ontario Political Contribution Tax Credit). You claim these refundable tax credits on your ON479 Ontario Credits form.
Three refundable credits are paid in advance instalments based on information reported on your previous year's income tax return (the Ontario Sales Tax Credit, the Ontario Energy and Property Tax Credit and the Northern Ontario Energy Credit). The credit amounts are based on a number of factors, including the size of your family, where you live, your age and income. Starting in July 2012, the payments of these three credits will be combined and delivered monthly as the Ontario Trillium Benefit.
You must file an income tax return annually to get these tax credits. Apply for the credits on form ON-BEN Application for the 2012 Ontario Trillium Benefit and the Ontario Senior Homeowners' Property Tax Grant.
Additional Ministry of Finance Resources
- Maximum Amounts, Income Ranges and Phase-out Rates Chart
- Ontario Personal Income Tax Rates and Credits Chart
- Ontario Tax Credits and Benefits Payment Schedule
Resources Available on CRA's Website
Learning About Taxes
An online, independent, self-paced learning unit which introduces you to Canada's tax system and teaches you how to prepare a simple income tax and benefit return.
Community Volunteer Income Tax Program (CVITP)
If you are unable to prepare your income tax and benefit return yourself, the CVITP may be able to help you. The CVITP assists eligible taxpayers who have low income, and simple, non-complex tax situations.
All About Your Tax Return
View additional information about the income tax return, including how to get a tax package and how to make changes to your tax return.
