Program, set to apply next year, will benefit residents who stay at an eligible accommodation within the province
In a bid to encourage Ontarians to keep their holiday spending within the province and help struggling local businesses, the Ontario government has unveiled a new “staycation” tax credit.
The credit, which was announced as part of the Ford government’s Fall Economic Statement, would entitle Ontarians to a 20% personal income tax credit on stays booked at any eligible accommodation between January 1 and December 31, 2022.
The refundable credit, which is capped to a maximum credit of $200 for an individual or $400 for a family, respectively, is applicable on 2022 personal tax returns. Ontario taxpayers may also claim the benefit even if they owe no tax.
As reported by CTV News, the credit will apply to stays that last shorter than a month at an eligible accommodation, which must be paid for by the Ontario tax filer, their spouse or common-law partner, or their eligible child, as documented on a detailed receipt. Eligible accommodations include hotels, motels, resorts, lodges, bed-and-breakfasts, cottages, or campgrounds.
The tax credit will also be subject to GST or HST, as set out on a detailed receipt.
By offering the credit, the Ontario government hopes to support tourism and hospitality businesses on a long journey to post-pandemic recovery. It’s also estimated that the credit would generate $270 million that would support over one-and-a-half million families and nudge Ontarians to explore the province.
But not everyone is thrilled with the idea. Commenting on the program last week, Ontario NDP Leader Andrea Horwath said she believes a full $1,000 refund on expenses on a vacation in the province would have been more helpful.
“[T]hat's really not going to help families a great deal,” Horwath told CTV News. “That's why our $1,000 tax credit idea might be helpful to some families who normally would have taken that vacation right now.”
The credit could also have a negative knock-on effect on the outbound travel industry, which includes many agents and tour operators who have doubtlessly been looking forward to next year as an opportunity for their businesses to pick up after more than a year and a half of being hamstrung by restrictions on international travel.
