Information Notice 1-08, March 2008

• On March 25, 2008, a number of proposed measures relating to the Income Tax Act and the Taxation Act, 2007 were announced in the 2008 Ontario Budget.
• The proposals must be passed by the Legislature and receive Royal Assent to become law. This notice provides general information and is not a substitute for the legislation.

Senior Homeowners' Property Tax Grant

New Property Tax Grant for Seniors

The Ontario Budget announced the government's commitment to helping low- and moderate-income senior homeowners offset their property taxes. In addition to the current property tax credit, the government proposes to provide a new property tax grant to seniors with low and moderate incomes who own their own homes. This new grant would be available in early 2009 to help seniors pay their 2009 municipal and education property taxes. Grants would be provided in each year thereafter.

In 2009, eligible senior homeowners would be able to obtain a new grant of up to $250. The maximum grant would be increased to $500 for 2010 and subsequent years. Senior homeowners would apply for the grant when filing their 2008 and subsequent income tax returns.

Eligible single seniors with $500 or more in property taxes and income of up to $35,000 a year would receive the maximum grant. Eligible single seniors with income between $35,000 and $50,000 would receive a proportionately smaller grant. Eligible senior couples with $500 or more in property taxes and income of up to $45,000 a year would receive the maximum grant. Eligible senior couples with income between $45,000 and $60,000 would receive a proportionately smaller grant.

The following charts outline typical grant amounts and existing property tax credits at various income levels, with the proposed Senior Homeowners' Property Tax Grant.

Proposed Senior Homeowners' Property Tax Grant
Typical Grant Amounts and Existing Property Tax Credits ($)

Single Seniors Paying $2,000 in Property Taxes
Income	2009			2010 and Subsequent Years
	New Seniors' Property Tax Grant	Existing Property Tax Credit1	Total Tax Relief	New Seniors' Property Tax Grant	Existing Property Tax Credit1	Total Tax Relief
$20,000	250	825	1,075	500	825	1,325
$25,000	250	718	968	500	718	1,218
$30,000	250	540	790	500	540	1,040
$35,000	250	361	611	500	361	861
$40,000	167	183	350	334	183	517
$45,000	84	4	88	167	4	171
$50,000	0	0	0	0	0	0

Senior Couples Paying $2,000 in Property Taxes
Income	2009			2010 and Subsequent Years
	New Seniors' Property Tax Grant	Existing Property Tax Credit1	Total Tax Relief	New Seniors' Property Tax Grant	Existing Property Tax Credit1	Total Tax Relief
$25,000	250	803	1,053	500	803	1,303
$30,000	250	642	892	500	642	1,142
$35,000	250	481	731	500	481	981
$40,000	250	320	570	500	320	820
$45,000	250	159	409	500	159	659
$50,000	167	0	167	334	0	334
$55,000	84	0	84	167	0	167
$60,000	0	0	0	0	0	0
1 Calculated as a share of property and sales tax credits proportionate to eligible property tax, using an estimate of the proposed increase to the 2008 senior couples' income threshold.

Ontario Property and Sales Tax Credits for Seniors

Income Threshold Increase

Ontario Property and Sales Tax Credits for seniors provide property and sales tax assistance to seniors with modest incomes. The government has increased the income threshold at which senior couples' benefits begin to be reduced to $22,250 for 2005, $23,090 for 2006 and $23,820 for 2007.

The Government of Ontario wants seniors who receive the minimum level of income guaranteed by the government from Old Age Security (OAS), Guaranteed Income Supplement (GIS) and Ontario Guaranteed Annual Income System (GAINS) to get the full benefit of the Ontario Property and Sales Tax Credits. Because this level of income is rising, the Province proposes to further increase the senior couples' income threshold for these credits beginning in 2008. The new threshold would be determined when the federal government finalizes OAS and GIS amounts for 2008.

Tax-Free Savings Account

New Savings Incentive

The 2008 federal budget proposed a new savings vehicle, a Tax-Free Savings Account (TFSA), which would allow Ontarians to earn tax-free investment income.

Beginning in 2009, Ontarians would be able to contribute up to $5,000 annually to a TFSA. Contributions would not be tax deductible but capital gains and investment income earned within the TFSA and withdrawals from the TFSA would be tax-free. Withdrawals and unused room would be carried over for future contributions. A TFSA would be able to hold the same qualified investments as a Registered Retirement Savings Plan, such as bonds, stocks, mutual funds and Guaranteed Investment Certificates.

This new savings incentive would automatically be adopted for Ontario personal income tax purposes when the federal legislation receives Royal Assent.

Concordance with the Income Tax Act (Canada)

Paralleling Proposed Federal Tax Measures

A number of other proposals announced by the federal government in its 2008 budget would be automatically adopted once federal legislative and regulatory changes have been approved. These include:

• changes to the Registered Education Savings Plan (RESP) program, beginning in the 2008 taxation year, that would extend the maximum contribution period and the maximum lifespan of an RESP, as well as the contribution age limit for a family plan, by 10 years
• an increase in the maximum Northern Residents Deduction for the 2008 taxation year and beyond
• an expansion of the list of expenses eligible for the Medical Expense Tax Credit, effective for the 2008 and subsequent taxation years, and clarification that expenses incurred after February 26, 2008, for drugs and medications that may be purchased without a prescription, are ineligible for this credit
• an extension of the existing capital gains exemption for donations of publicly traded securities, in certain circumstances, to capital gains realized on the exchange of specified unlisted securities for publicly traded securities, where the publicly traded securities are then donated, after February 25, 2008, to registered charities or other qualified donees
• rule changes to the regime for the capital gains exemption for donations of publicly listed securities to private charitable foundations
• changes to the tax treatment of dividends that would, beginning in 2010, reduce the gross-up factor applicable to eligible dividends received by Ontario individuals. Ontario proposes to maintain its plan to increase the tax credit rate on grossed-up eligible dividends from 7.0 per cent in 2008 to 7.4 per cent in 2009 and 7.7 per cent in 2010 and subsequent years.

Implementing the Tax Measures Announced in Ontario's 2007 Economic Outlook and Fiscal Review

Labour- Sponsored Investment Fund

In the 2007 Economic Outlook and Fiscal Review, the government proposed several tax measures. The amendments to implement those measures are now included in the 2008 Budget Bill.

Included in those measures is the proposal to extend the phase-out of the Labour-Sponsored Investment Fund tax credit by one year and increase the maximum eligible investment to $7,500.

For More Information

Telephone enquiries

Please contact the ministry between 8:30 a.m. and 5:00 p.m. toll-free from anywhere in Canada.

• 1 866 ONT-TAXS (1 866 668-8297)
• Teletypewriter (TTY) 1 800 263-7776 (Ontario)

Internet enquiries

This publication and various other English and French bulletins published by the Ministry of Revenue may be obtained online at www.ontario.ca/revenue.

© Queen's Printer for Ontario, 2008

ISBN 978-1-4249-6363-8