Tax Tip Thursday

So, what’s your pleasure? Planes, trains, or automobiles?

Today, we are talking about travelling. As COVID seems to be releasing its grip on us a little and our government is releasing its grip on the borders, people are itching to travel again. I understand the snowbirds were lined up at the border waiting to escape to the sunny south. Although this tax tip might not be appealing to the snowbirds right now, they might be able to make use of it when it warms up again!

This year, our friends in Ottawa are loosening their/our purse strings a little more to try to get Ontarians to spend their travel dollars here in the province this coming year, rather than elsewhere.

What Does That Mean?

If you travel within our provincial borders, you might be eligible for a 20% income tax credit on eligible accommodation! If you stayed at an eligible place between Jan 1 and Dec 31, 2022, you can claim up to a maximum of $1,000 for an individual or $2,000 for a family, for a maximum credit of $200 or $400 respectively.

Ontario residents will apply for this refundable credit when they file their 2022 personal tax returns, and can benefit even if they do not owe any tax.

What’s Eligible?

An eligible accommodation expense would have to be:

• For a stay of less than a month at an eligible accommodation such as a hotel, motel, resort, lodge, bed-and-breakfast, cottage, or campground in Ontario;
• For a stay between Jan 1 and Dec 31 2022;
• Incurred for leisure;
• Paid by the Ontario tax filer, their spouse/common-law partner, or their eligible child, as set out on a detailed receipt;
• Not be reimbursed by any person (including a friend or employer) to the tax filer, their spouse/common-law partner, or their eligible child;
• Subject to Goods and Services Tax (GST)/Harmonized Sales Tax (HST), as set out on a detailed receipt.

What About Businesses?

And for those with businesses, you will NOT be able to take advantage of these credits.

However, as a business, you can deduct travel expenses you incur to earn business and professional income.

Travel expenses include:

• public transportation fares,
• hotel accommodations, and
• meals.

In most cases, the 50% limit applies to the cost of meals, beverages, and entertainment when you travel.

The 50% limit also applies to the cost of food and beverages served and entertainment enjoyed when you travel on an airplane, train, or bus, when the ticket price does not include such amounts.

So, it looks like I am going to have to visit some of my clients and suppliers in Halifax and Vancouver this summer!

A Little for Everyone

No matter who you are or whether or not you own a business, you could be able to get a tax refund for at least some of your travels next year. So go and see what Ontario has to offer! It’s a big place…

If you’re having trouble finding a place that will be eligible, or if you’re a business owner looking for help claiming travel expenses, look no further. We can help you! Give us a call or book an appointment to get started.

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.