Tax Tip Thursday

Taxes and Summer Fun

It’s finally summer! Everybody’s getting outside and to the cottage, campground, or the beach. It’s all good family fun, but did you know some of your summer activities actually have an impact on your taxes?

Don’t worry — most of them are positive.

First, the Ontario Staycation Credit

As with all things CRA, there are a bunch of rules you have to follow if you’re going to get money from the CRA. But, if you follow them all, you’ll be able to claim this tax credit for accommodation expenses for a leisure stay of less than a month in Ontario, at a short-term accommodation or camping accommodation, such as:

  • hotels,
  • motels,
  • resorts,
  • lodges,
  • bed-and-breakfasts,
  • cottages,
  • campgrounds, and
  • vacation rental properties.

Pretty good, right? The credit only applies to leisure stays between January 1 and December 31, 2022, regardless of the timing of payment for the stays (so you could receive this credit if you paid for your cottage rental early in 2021). The expenses must have been paid by you, your spouse, your common-law partner, or your eligible child, as set out on a detailed receipt provided by a supplier registered for GST/HST.

As long as all other conditions are met, you can claim any of the following:

  • accommodations for a single trip or multiple trips, up to the maximum expense limit of $1,000 as an individual or $2,000 as a family;
  • accommodations booked either directly with the accommodation provider or through an online accommodation platform;
  • the portion of the expense that is  necessary to have access to the accommodation; and
  • the accommodation portion of a tour package expense.

You must keep your detailed receipts for any eligible expenses you claim for the credit. They must include:

  • the location of the accommodation;
  • the amount that can be reasonably considered to be for the accommodation portion of a stay;
  • the amount of any GST/HST paid;
  • the date of the stay; and
  • the name of the payor.

Next, Daycare and Summer Camps

For this one to work, the person with the lower net income must claim the child care expenses unless one of the special situations applies. In most cases, the children also need to be under 16.

The maximum child care expenses that can be claimed per child each year is limited to $8,000 (under 7), $5,000 (7-16), or $11,000 (for disabled children) depending on the circumstances.

The expense must be incurred for the purpose of providing child care services in Canada, for an eligible child of the taxpayer. This includes payments to:

  • an eligible child care provider;
  • a day nursery school or daycare centre;
  • a day camp or day sports school;
  • a boarding school or camp (including a sports school where lodging is involved); and
  • an educational institution for the purpose of providing child care services.

So the good news is that you can probably claim the expenses from your kids’ sports camps or other stay over camps as daycare!

Employee Events

As many already know, the maximum amount you can claim for food, beverages, and entertainment expenses is 50% of the lesser of the following amounts:

  • the amount you incurred for the expenses, and
  • an amount that is reasonable in the circumstances.

BUT, if you provide a free party or other social event to all your employees and the cost is $150 per person or less, it is not considered to be a taxable benefit. Additional costs such as transportation home, taxi fare, and overnight accommodation are not included in the $150 per person amount.

Beware… If the cost of the party is greater than $150 per person, the entire amount, including additional costs, is a taxable benefit.

Hospitality Functions

A hospitality function is where an employer provides a meal or other hospitality services at a work-related function that is not a social event as described above.

Where the purpose of the event is work-related, such as a planning, education, or networking session, they consider the primary beneficiary to be the employer and so the event is not taxable.

Where the purpose of the event is to celebrate the completion of a project or task, or a thanks for a job well done, the benefit is taxable and must be included in the employee’s income.

Trying to claim your trip to Niagara Falls?

We can help. You could save a pretty penny! Give us a call or book an appointment today and we’ll be happy to help you out!

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.