This year, the Ontario government is offering a financial incentive to residents who embrace the staycation and spend their vacation dollars within the province. It is intended to help support the local tourism and hospitality industries by encouraging residents to keep their vacation spending within the province.
Jonathan Carter, CPA, CMA of KATA Accounting Solutions Professional Corporation says the tax credit is well timed.
“Prices are increasing due to inflation and travel by plane is inconvenient these days. Spending our vacation dollars here in the province not only helps the local economy, but this tax benefit will also give us more money in our pockets when we file our taxes in the spring,” he says.
Ontario Staycation Tax Credit Details
Ontario residents are eligible to claim 20% of qualified vacation accommodation expenses from 2022 on their taxes. Qualified accommodations must have a registered GST/HST number and provide you with a detailed receipt that includes the location, date of stay, amount spent on the accommodation (not including food, attractions, etc.), and your name.
There are a number of different types of accommodations that are eligible, including hotels, motels, resorts, lodges, bed and breakfasts, cottages, campgrounds, and vacation rental properties.
“This tax credit is fairly flexible. You can add up multiple trips throughout 2022 until you reach your maximum expense limit of $1000 for individuals or $2000 for families. If you claim the maximum limits, you can expect to see a savings between $200 and $400 on your taxes in the spring,” explains Jonathan. “Just make sure to save your receipts.”
He continues, “Keep in mind that this tax incentive can only be used for leisure trips, not business trips. It also does not include things like room service, spa services, or other incidentals that might appear on your accommodations receipts.”
Staying on Budget While on Vacation
On top of this year’s tax credit, there are a number of other ways to save some money while enjoying everything that Ontario has to offer.
Jonathan recommends making a plan and sticking to it in order to avoid overspending.
“Before you head out on vacation, make sure that you have a realistic budget in place. Include things like accommodations, food, fuel, and activities,” he says. “Also look for areas where you can save. Making your own picnics, using points to book attractions tickets, and using your CAA membership for discounts can all reduce the cost of your trip.”
Surprisingly, Jonathan also suggests using a credit card while travelling to take advantage of discounts on fuel and to accumulate points that you can use for your next trip. “As long as you pay off your credit card each month, you can take advantage of the perks while increasing your credit score,” he explains.
Exploring Your Own Backyard
The Ontario Staycation Tax Credit offers a unique opportunity to save some money while supporting our local economy. You can explore the areas of Ontario that you’ve always wanted to visit or even get to know your local community a little better.
For more information about the Ontario Staycation Tax Credit, contact the helpful team at KATA Accounting Solutions or check out Jonathan’s blog.