All that you want to know about Ontario Staycation Tax Credit

If you are an Ontario resident then you need to pay special attention to this article. In this article we’ll be discussing about Ontario Staycation Tax Credit – a temporary personal income program which encourages Ontario residents to travel locally.

Staycation tax credits or incentives are measures taken by governments to encourage residents to spend their vacation time and money within their own region or country, thereby supporting local businesses and tourism. These credits are designed to stimulate the local economy and promote domestic tourism.

What is Ontario Staycation Tax Credit?

The Ontario Staycation Tax Credit is a temporary measure with a dual purpose: The financial crisis was created by the COVID – 19 pandemic that has had negative impacts on the recovery of the tourism and hospitality sectors. Also, it has encouraged many families in Ontario to consider exploring their home province.

Credit on eligible lodging expenditures of Ontario residents. The expenditure can be included in the tax declaration, regardless of whether it is for a hotel retreat or a cottage trip, and even in any other camping exploration. Credit structure allows one to recoup up to twenty percent of total eligible expenses and maximum amount per individual is $ 1000 while it is $ 2000 in each case for husband, wife or children accompanying on vacation. As such, one may be repaid not more than $200 and a family gets up to $400 repayment.

The government gives them this kind to boost domestic tourism and help those sectors whose development has been hindered by the coronavirus pandemic. For a resident, claiming this loan does the economics and furthers the objective of the strong community.

How does Ontario Staycation Tax Credit work?

Residents in Ontario are entitled to reimbursed costs for staycation tax credit during such eligible period. On the other hand, these expenses are specifically considered by each individual, where an individual may claim up to 20 per cent of this amount, capped at $1,000 while a family enjoys more tax relief allowance of $2,000. Eligible individual may be refunded a maximum of $200, whereas an eligible family can claim as much as $400.

The major strength in this credit is its flexibility. it has proven to be helpful in a wide spectrum. It covers various cases of traveling where accommodation expenses can be claimed on one occasion or several trips within Ontario. Therefore, if you want to take a case as an example in this context, let us assume that you leased a holiday home once whereas you preferred staying in a hotel during another stay, all these costs may be included in a tax claim.

So, if you plan, as we count years towards tax season in the future (2024), be sure that your travel receipt of 2023 is ready and organized. This record will be very important in filing your tax returns and could ensure that you get the credit you deserve for staying as a tourist within Canada as well as the benefits you’re entitled to from your eligible accommodation’s costs.

Eligibility

You qualify to seek the credit if you maintain residency in Ontario as of December 31, 2022.

The sole individual within a family unit is allowed to claim the credit in the particular tax year. You need to know that eligible expenses you may incur for yourself and your dependents like, for example, expenses for eligible partner and/or eligible child could also be included into this claim. Nevertheless, one should note that although the eligible child may qualify for such incentives, he does not have the right to take up the credit alone.

If there is no spouse and no dependents, you have a right to claim your eligible expenses on your own. This aspect makes it possible to consider people with no dependents and take into account their own qualified expenses.

Eligible expenses

You are eligible to declare accommodation costs for short-term holiday stays in Ontario lasting less than a month. This encompasses various lodging options such as –

• Hotels
• Motels
• Resorts or lodges
• Bed-and-breakfast establishments
• Cottages
• Campgrounds (including those in Ontario Parks and camping resorts)
• Vacation rental properties (like Airbnb, VRBO, HomeAway, etc.)
• The accommodation component of expenses associated with tour packages

The eligibility of the tax credit is tied to leisure stays occurring between January 1, 2022, and December 31, 2022, irrespective of when the payments for these stays were made.

To be eligible, the expenses for accommodation should be covered by you, your spouse or common-law partner, or your eligible child. Additionally, the receipts must be detailed and issued by a supplier registered for the Goods and Services Tax (GST)/Harmonized Sales Tax (HST).

Assuming all other criteria are met, you can claim the following expenses –

• Accommodation for a single trip or multiple trips, subject to the maximum expense limit of $1,000 as an individual or $2,000 as a family.
• Accommodations secured either directly with the accommodation provider or through an online accommodation platform.
• The portion of the expense deemed necessary to gain access to the accommodation.
• The accommodation component of a tour package expense.

Keeping comprehensive receipts for eligible expenses claimed for the credit is crucial. These receipts must contain details like the accommodation's location, the amount related to the accommodation portion of the stay, any GST/HST paid, the date of the stay, and the name of the payor.

Ineligible expenses

Short term includes temporary arrangements like time-share agreements and stay on a boat or train or another self-propelled vehicle. The tax credit is not applicable to –

• Costs associated with travel excluding other than short term or camping accommodation like for cars, gasoline, flights, shopping, parking and admissions to local attractions and places of interests.
• Reimbursement of accommodation expenses made to you, your spouse, common-law partner or eligible child by any person other than an employer.
• Costs related to education including other schooling activities and those costs that are incurred during business hours as well. They cannot even claim medical expense tax credit because they are also not included.

How to claim Ontario Staycation Tax Credit?

You have the option to apply for the credit when completing your individual Income Tax and Benefit Return for the year 2022.

The Ontario Staycation Tax Credit operates as a refundable personal income tax credit. This distinctive feature implies that, if you meet the eligibility criteria, you can receive the tax credit even if you don't have an income tax liability for the year 2022. In essence, it serves as a financial benefit that can be refunded to you irrespective of your overall tax obligations.