In the comments section of yesterday’s post, Returns Reaper reminded other readers that Ontario residents have an additional reason to make a RRSP contribution this year. Ontario residents may be able to reduce their net income below the threshold for receiving the Ontario Sales Tax Transition Benefit by making a RRSP contribution. Also, recall that families with children may be able to boost their CCTB payments by making a RRSP contribution in any year. The RRSP deadline is March 1, 2010. This post was originally published on April 15, 2009.
To help consumers cope with harmonization of Ontario’s Provincial Sales Tax with the Federal GST, the Ontario budget proposed that a one-time Sales Tax Transition Benefit be paid to eligible Ontario taxpayers aged 18 and over. The Benefit is worth a maximum of $300 for single individuals and $1,000 for couples or single parents and will be paid in three instalments (two in 2010 and one in 2011). To qualify for the maximum benefit the recipient’s previous year’s adjusted family net income should be less than $80,000 for single individuals and $160,000 for families.
If you read about the Transition Benefit in the mainstream media, you might be under the mistaken impression that the cut-off is based on Total Income (Line 150 in your tax return). But the budget clearly mentions that the Transition Benefit, like other income-tested benefits, is based on adjusted net income. “Adjusted net income” refers to the Net Income in line 236 of your return (and, for families, add the line from the spouse’s return) “adjusted” to exclude Universal Child Care Benefit (UCCB) payments.
If your (or your family’s) total income is above the cut-off, you may want to consider making enough RRSP contributions in 2009 and 2010 to bring your net income below the threshold. Other deductions such as Child care expenses and carrying charges and interest expenses will also lower your net income.
