New tax breaks announced for low-income workers, seniors in Ontario budget

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Ontario budget 2022: Bethlenfalvy outlines cuts to gas tax, changes to LIFT tax credit
Ontario budget 2022: Bethlenfalvy outlines cuts to gas tax, changes to LIFT tax credit – Apr 28, 2022

The Ontario budget released Thursday includes changes to a tax credit aimed at lower-income workers and a new tax break to help seniors age at home.

The Progressive Conservative government said it is proposing changes to the Low-income Individuals and Families (LIFT) Credit and creating an Ontario Seniors Care at Home Tax Credit, both taking effect this year.

The measures are contingent on the budget passing after the June 2 election, as the legislature is set to adjourn immediately after its introduced, effectively turning it into the PC Party platform.

The maximum benefit for the non-refundable LIFT credit would rise to $875, up from $850, while the income range over which the benefit is reduced would rise.

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For individuals, they would be able to claim at least some of the LIFT credit if they have a net income up to $50,000 (up from $38,500), while for families their net income could be up to $82,500 (up from $68,500).

The benefit would start to be reduced at a rate of five per cent of net employment income (down from 10 per cent) starting at $32,500 for individuals, which is up from $30,000.

For families, it would start to be reduced at $65,000, up from $60,000.

The government said around 700,000 more people would be able to benefit from the change, with most new recipients having incomes between $38,500 and $50,000. In total, around 1.7 million low-income workers are expected to qualify for LIFT.

For example, a worker earning $40,000 could not qualify under the current LIFT requirements, but would get around a $515 credit with the proposed change.

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It’s expected to result in $400 million in lost revenue in 2022-23 and then $320 million in both 2023-24 and 2024-25.

The LIFT credit was first introduced in 2018 as the Ford government looked to temper some of the anger over the previous cancellation of a minimum wage increase that would have given low-income earners $15 an hour.

The PCs are also proposing a new refundable tax credit to help seniors with medical expenses.

“Eligible recipients of the new Ontario Seniors Care at Home Tax Credit would receive up to 25 per cent of their claimable medical expenses up to $6,000, for a maximum credit of $1,500,” the budget notes.

It’s aimed at low- and moderate-income seniors aging at home.

To qualify, a person has to turn 70 years old within the year or have a spouse or common-law partner who turned that age.

The amount would be reduced by five per cent of a family or individual net income over $35,000 and would be fully phased out by $65,000 at most, the budget notes.

The government said the credit could be claimed in addition to the non-refundable federal and Ontario medical expense credits for the same expenses.

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“The proposed credit would be refundable, supporting low‐ to moderate‐income senior families, even if they do not owe any personal income tax,” the budget states.

The government said around 200,000 senior families would qualify.

It would cost the province $140 million in 2022-23, $120 million in 2023-24, and $125 million in 2024-25.

Total tax revenue is still projected to increase over the coming years.

— With files from Colin D’Mello

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