Like many of you I’m sure, I’ve been working on preparing my tax return for the year, and as a resident of Ontario, I’ve been trying to figure out the new Ontario Trillium Benefit. What is the Ontario Trillium Benefit? Well, the Ontario Trillium Benefit is a new program from the Government of Ontario which combines three old tax credits into one, including:

• the Ontario Sales Tax Credit
• the Ontario Energy and Property Tax Credit
• the Northern Ontario Energy Credit

The Ontario government used to pay out their tax credits once a year as part of the tax return process. Then they recently switched to a quarterly system, in which each of the three tax credits were paid out separately on a quarterly basis. Now they are changing things up once again. All three tax credits are being combined into one general tax credit (the Ontario Trillium Benefit), and this will be paid out to recipients on a monthly basis, starting in July 2012.

The move has not been without controversy. Many seniors or low-income tax-filers have complained that the new tax credit leaves them without the money they need. Some are now required to pay money to the government in April only to receive the money back as monthly installments throughout the year. Some Ontario members of Parliament (opposition members, naturally) are outright accusing the Ontario government of managing the books of its citizens when they can barely manage their own books.

The Ontario government is responding by saying that the new program brings the credits in line with other programs such as their child care credit. And apparently, because of all the controversy, there may be an option coming to opt-out of the monthly payments in favour of a lump-sum payment. While I can sympathize with the Government’s decision to move to a monthly payment schedule for budgeting reasons, I’d rather have the lump sum payment so I can invest or use the money on my own terms. A monthly payment essentially means I’m donating the interest I could be earning on the money to the government. Are they going to give me a donation receipt for that? Unlikely.

How To Apply and Who Is Eligible for the Ontario Trillium Benefit

Controversy aside, how does one actually apply for the Ontario Trillium Benefit? You need to fill out a form called ON-BEN and include it with your tax return. Depending on which credits you want to apply for, you have to provide varying amounts of information. The Sales Tax Credit is determine based on your total household income. Depending on whether you are single or living with a spouse, you have to earn under $21,000/$26,250 respectively to earn the entire tax credit. Any income earned above that would serve to reduce the amount of the credit received.

The Ontario Energy and Property Tax Credit is potentially available to anyone who paid rent, property tax or student residence fees in the previous year, and is calculated based on your occupancy cost for the year, as per the amount of rent/property tax paid. Finally, the Northern Ontario Energy Credit is similar to the Ontario Energy and Property Tax Credit and is specifically available to those living in Northern Ontario. Once again, depending on how much income you earned in the previous year, you may not be eligible for a credit. The more you make, the less you get.

Applying for the Ontario Trillium Benefit with UFile

If you live with a spouse, only one of you can claim the Ontario Trillium Benefit. This is where I ran into problems with my tax software – UFile. I have been using UFile for about 4-5 years now and love it. This year, I switched from the packaged software that you can buy in stores to UFile’s online service since they allow me to file my taxes for free as a student if I do them online. I don’t know if the following will equally apply to the packaged software version.

Every time you come across a tax benefit that can be claimed by only one person in a relationship, or shared between spouses, UFile gives you the option to either let the software decide who should claim the benefit or to specify yourself who should claim the benefit. So I thought that the appropriate thing to do would be to split our occupancy costs between myself and my spouse, then for both of us to claim the Ontario Trillium Benefit and tell UFile to decide who should claim the benefit.

What I learned is that this does NOT work! Due to what might be a glitch in the software, or potentially just bad programming, in this situation UFile actually doesn’t include the application for the Ontario Trillium Benefit for either party. And they provide no warning that they will do this. I’m very thankful that I looked through the final version my tax return before submitting – note to readers, always look through your final tax return prepared by a software package before you submit it. Hopefully, you have an idea of what to look for and can see when things are missing.

In order to get the Ontario Trillium Benefit to work in UFile when you are claiming for both parties of a spousal arrangement, you have to put everything in the profile of one of the parties (either you or your spouse), and leave all of it out of the tax profile of the other party. Here are some pictures to help you out. First, you are brought to the Ontario Tax Credits page (click the image below to see it).

Here, you want to click on the ON-BEN – Application for 2012 Ontario Trillium Benefit link. That will take you to the page where you can pick which benefits you want to apply for (click the image below to see this page). Note, to apply for the Ontario Sales Tax Credit portion of the Ontario Trillium Benefit, you need to apply for the federal GST credit in UFile.

Once you have picked the benefits you want, then you can fill out the specific ON-BEN declaration form based on whether you are a home owner, renter or living in a student residence. Note, you cannot split this declaration in UFile between yourself and your spouse. You have to claim the entire declaration yourself. On the page that specifies who should claim the benefit (click on the image below to see that page), you should specify that you are claiming it.

You can try and split the declaration and specify that you will be claiming the tax benefit. What happens is that UFile will add together the full amount for the calculation of the benefits, but it will only list your declaration on the tax return (and not your spouse’s), which is likely to invite a call from the Canada Revenue Agency to ask why your claiming twice the amount you’re declaring.

Who should claim the benefit, you or your spouse? Well, given the way the software works, I would first say that whoever’s name is on the tax receipts should claim the benefit. Otherwise, if both names are on the tax receipt, whoever you want to receive the money should claim the benefit. Beyond that, it doesn’t really matter as the benefit is calculated based on total family income regardless.

I wonder how many people will submit their taxes this year and miss out on the Ontario Trillium Benefit (which could amount to hundreds if not thousands of dollars for some families) because the software is not completing the application properly in some situations and they don’t know to look for it? How many people blindly use tax software and assume that it will work perfectly? While I would like to think that everyone meticulously looks through their tax returns before submitting, I fear that most do not and are happy to trust the program is doing its job.

On that note, I am not a tax specialist, and this should not be construed as tax advice. You should always consult a tax specialist before submitting your taxes if you are uncomfortable with them in any way, shape or form.

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