The Ontario tax system has benefits and credits for its tax-payers, and one of such benefits is the Ontario Trillium Benefit (OTB). OTB is a combination of various tax credits including the Ontario Energy and Property Tax Credit, the Northern Ontario Energy Credit and the Ontario Sales Tax Credit.
At the three levels; federal, provincial and territorial and municipal level, the Canadian government endeavours to provide their citizen with numerous services and programs to aid their living. These services and programs are established using taxes received from residents.
The Canadian taxation system is designed in such a way that it doesn’t overburden its citizens. This taxation system, however, varies per province in Canada. The Canadian government collects taxes and uses them to aid education, free healthcare, roads, highways, and other social benefits.
If you are a tax-payer in Ontario, you will find all you need to know about the OTB in this article.
What is Ontario Trillium Benefit aka OTB?
The Ontario Trillium Benefit (OTB) is the combined payment of the Ontario Energy and Property Tax Credit, the Northern Ontario Energy Credit and the Ontario Sales Tax Credit. It is a program legislated and funded by the Province of Ontario, even though it is administered by the Canada Revenue Agency (CRA).
The OTB is an annual entitlement based on your prior-year income tax and benefit return made in monthly payments. The CRA commenced payment for OTB on the 10th of July, 2020. Also, it is a non-taxable benefit.
If you’re eligible for this benefit, you may occasionally receive a CRA OTB notice from the government.
The OTB has three components mentioned earlier, but you only have to be entitled to one of them to get your OTB payment. To get it, you need to file your income tax and benefit return each year, even if you have no income to report.
In case you forget to apply for one or two of the OTB components when you file your return, you can request a reassessment of the applicable returns. Be careful to avoid filling additional returns.
Components of The OTB
There are currently three components of the OTB; they include:
The Ontario Energy And Property Tax Credit (OEPTC)
The OEPTC is a program designed to help Ontario residents who are low- or average-income earners with the sales tax on energy and property taxes. It has two components; an energy component and a property tax component.
You can apply for the OEPTC if you are eligible for any of the two components using your prior-year income tax and benefit return. To qualify for either of the two parts, you should have lived in Ontario on the 31st of December, 2019. Also, you must have done at least one of the following:
- Paid for or had rented on property tax on your principal residence in Ontario for 2019 paid for you.
- Paid for or had accommodation costs for living in a public or non-profit long-term care home in Ontario for 2019 paid for you.
- Paid for or had home energy costs for your principal residence on a reserve in Ontario for 2019 paid for you.
- You live in an Ontario-based designated university, college or private school residence in 2019.
The Ontario sales tax credit (OSTC)
The OSTC is a tax-free payment designed as a relief fund for Ontario residents who are low- to average-income earners for the sales tax they pay. There is no need to apply for the OSTC. The CRA uses information on your income tax and benefits return to determine if you are eligible.
The OSTC provides a maximum credit of $313 per adult and per child in a family for the 2020 benefit year payments. If you are without kids, it is reduced by 4% of your adjusted net income over $24,115. If you are a single parent or are married or live with a common-law partner, it is reduced by 4% of your adjusted family net income over $30,143.
For the 2019 benefit year payments, the OSTC provides a maximum credit of $308 per adult and per child in a family. If you are without kids, it is reduced by 4% of your adjusted net income over $23,665. If you are a single parent or are married or live with a common-law partner, it is reduced by 4% of your adjusted family net income over $29,581.
The Northern Ontario Energy Credit (NOEC)
The NOEC is a program created to help Northern Ontario residents who are low- to average-income earners with the higher energy costs they face living in the north. You can apply for the NOEC on your prior-year income tax and benefit return.
To be eligible for the NOEC, you should have lived in Ontario on the 31st of December, 2019. and have done at least one of the following:
- Paid for or had rented on property tax on your principal residence in Ontario for 2019 paid for you.
- Paid for or had accommodation costs for living in a public or non-profit long-term care home in Ontario for 2019 paid for you.
- Paid for or had home energy costs for your principal residence on a reserve in Ontario for 2019 paid for you.
- You live in an Ontario-based designated university, college or private school residence in 2019.
How The OTB is Calculated
Canada has a unique tax system that is different from other countries. As a Canadian resident, it is your civic responsibility to pay taxes on your earned global income during the year. Also, you must file your tax return with the government.
Income in this context can be employment income, investment income, commission income, retirement income, etc. You are required to pay taxes on your income both at the federal and provincial/territorial levels.
The CRA calculates the OTB based on the information you provide on your return. If you want to calculate it yourself, you will have to calculate each component’s own using the benefits calculator.
How to Recieve the OTB Payment
Direct deposits receive the OTB payment if you already get your tax refund or other credits and benefits by direct deposit. If that is not the case, you will receive it by cheque. You can also sign up for Direct deposit as it is a better option because it is faster, easier and more secure.
How Much OTB Will You Get?
The amount of OTB you get is the sum of the individual amounts you would get for each of the components. There is a minimum OTB payment of $2. If your annual OTB is $2 or less, you are not entitled to receive compensation. If it is above $2 but less than $10, you will get a payment of $10.
If your annual payment is more than $360, you can decide to wait till the end of the benefit year (June 2021) to receive a lump sum payment instead of the monthly payment.
You have to make this choice on your tax return every year if you want the delayed payment. If you choose to receive your OTB in one amount, the CRA can revoke your choice if:
- You move out of Ontario.
- Go bankrupt
- Death
- You become incarcerated for 90 days or more.
In the event of death or any situations mentioned above, you or your estate will be issued a notice. There is also a deadline in filing to get your OTB in one payment, as you can only make a choice when you initially file your income tax and benefit return for the year.
If you change your mind later about receiving a delayed payment, you can write a letter to your tax centre and inform them that you want monthly payments. A team at the tax center will process your request; usually, it takes about 4 to 8 weeks. Be rest assured you would receive any amount owed up to the date. Afterwards, you will continue to receive monthly payments for the rest of the benefit year.
If your annual payment is $360 or less, you will receive one lump sum payment in the first month of the benefit year, starting by July for the 2021 benefit year. If you owe any debt to the CRA or its partners, your first OTB payment will be used to pay off the debt, and you will receive whatever remains.
Can a Deceased Person Get OTB?
In the event of death, the estate is not eligible for any payment. This is applicable if the deceased died before the 1st of July, 2020.
If the deceased died on the 1st of July, 2020 or later and is eligible for one or all OTB components, the estate may be entitled to one or more OTB payments for the 2020 benefit year. This means that the estate is not to receive any more payments after the month of death.
If, after a month, the estate receives an OTB payment, they must return it to the tax centre that served the deceased before he or she died along with a copy of the death certificate or the date of death if it wasn’t provided earlier.
Conclusion
The OTB is a benefit that compromises three tax credit components, each designed to provide some relief for tax-payers in Ontario. It is a non-taxable benefit and is an excellent initiative by the Province of Ontario.
