Four Credits and Advantages for Low- and Middle- Income Earners

Reap the benefits by filing outstanding tax returns

When money is tight, you can have your hands full just getting to the end of the month. But that shouldn’t keep you from filing a tax return. On the contrary, low income years can be the best returns to file, with advantages and special refunds that aren’t available to people with higher incomes.

Throughout the year, if your employer withholds tax from your paycheques, their estimates may be off causing them to hold back a little too much. When you file your taxes your real tax bill is calculated, and any excess that has been withheld is refunded to you. This is what people usually mean when they talk about tax refunds, and clearly only people whose employers withhold tax are eligible for that.

By contrast, credits and advantages described here come in addition to the standard tax refund, and they’re mostly available to low- and middle- income earners.

Note: All figures based on 2009-2010 estimates. Credits typically increase slightly each year.

Ontario Property Tax Credit

This credit is intended to refund some of the property tax paid by low-income earners. Don’t be fooled by the name– renters can be eligible too. That’s because part of their rent is deemed to be a contribution to the property tax bill of the building they live in. The more rent you pay, the more you get back.

Who is eligible: Low-income earners who pay property tax or rent in Ontario
Maximum credit for an individual earning $20,000: $360*
Maximum credit for a family of four with an income of $40,000: $514**

* Based on rent of $500/mo.
** Based on rent of $1,100/mo.

GST/HST credit*

This credit is intended to refund to low- and middle-income earners the GST or HST they spend on necessities. Each year’s credit depends on the previous year’s tax return. If you don’t file, they don’t send the money.

If you haven’t filed in a few years you could have hundreds of dollars’ worth of GST credits on hold with the government – all of which will be released to you as soon as you file those returns.

In Ontario, returns for the years 2009 and earlier will be eligible for two amounts, the GST Credit and a Provincial Sales Tax credit. For years after the changeover to the HST (2010 and later), Ontarians will receive an HST credit and an Ontario Sales Tax Credit. The calculations below are based on the new credits.

Who is eligible: Low- and middle- income earners
Maximum credit for an individual earning $20,000:  $641
Maximum credit for a family of four earning $40,000: $627

*This is not to be confused with GST refunds, which are only available to small business owners who ar registered to charge the GST on their goods or services.

Student Loans/Grants

If your child is heading to college or university, chances are he or she could use a boost in the form of a student loan or a grant. The amounts given to students depend on their parents’ income. The lower the income, the higher the grant.

The granting agencies require proof of the parents’ income, which usually means a tax return or notice of assessment. If you haven’t filed a return, the lack of proof of income could mean that your child doesn’t get as much of a grant or loan as he/she is actually entitled to.

Working Income Tax Benefit (WITB)

This credit is intended to help working low-income people.

Who is eligible: Low- income earners (earning $6,700-16,667) who worked for at least 39 weeks in the year
Maximum credit for an individual earning $20,000:  $925*
Maximum credit for a family of four earning $40,000: $1,680*

*These amounts vary for residents of Alberta, British Columbia, Nunavut, and Quebec.