October 8th, 2010
Last week, the Ontario government introduced $70 million in energy and property tax relief for Ontario Seniors. The tax rebates, announced by Premier McGuinty, will benefit over 740,000 seniors across the province. CARP has consistently called on the the Ontario government over the past year to provide relief for home energy costs for Ontarians who have been hit particularly hard by the combination of the new Harmonized Sales Tax, Time of Use Meters, rising home energy costs, and rising property taxes. Even before the implementation of the HST, energy costs for most Ontarians rose by 12 percent. Add the additional 8 percent resulting from the HST, and many Ontarians are paying between 15 and 20 percent more for energy than they were one year ago.
These tax rebates directly address CARP’s repeated calls for additional help for lower and fixed-income seniors. In submissions to government, CARP supported its call for relief with the results of member polling – 69% of over 3,700 respondents did not think the one time only rebates and generalized tax relief were enough to offset the added burden of the HST and 86% did not believe that business would pass through their savings. In subsequent polling, CARP members indicated they prioritized relief for home energy costs.
Indeed, older Ontarians, especially those with low and fixed incomes, have faced escalating home energy costs and those who find it necessary to spend a considerable amount of time in their homes have been the most affected. The additional $70 million dollars in energy and property tax credits announced last week will go a long way to mitigating these increased home energy costs. CARP Vice President of Advocacy, Susan Eng commended the McGuinty government for recognizing the needs of older Ontarians:
“CARP members will be pleased that the Ontario government has responded to their call for relief from mounting home energy costs –which were made worse by the new HST and Smart Meter rates. This targeted relief for lower income seniors and moving to include a higher income threshold will be welcome news and directs the relief where it is needed most.”
Expanding Tax Thresholds
The key change introduced is an increase to the income thresholds at which the energy and property tax credit begin to be phased out for seniors. It is increasing from $20,000 for singles and $25,000 for couples to $25,000 and $30,000 respectively. The phase out rate, which is gradual reduction of a tax credit as a taxpayer approaches the income threshold to qualify for the credit, had already been reduced from 4% to 2% in the 2009 budget.
These two changes combine to grant a greater number of older Ontarians with a fully refundable tax credit. The changes provide greater assistance to lower income seniors than they received previously and begin to cover more older Ontarians with moderate income. These changes represent $70 million of additional tax relief and will provide an additional benefit to over 740,000 seniors. Ontarians over 65 will be able to apply for the Ontario Energy and Property Tax Credit starting with their 2010 tax returns and stand to receive the tax credit after they file their tax returns. For subsequent years, the tax credit will be paid quarterly, like the new Ontario Sales Tax Credit.
To see the Government of Ontario’s Announcement and Backgrounder, click here
To see CARP’s reaction to the tax cuts, click here