Staycation Tax Credit: Ontarians Get Reimbursement for Vacation Costs

Beth Graddon

Ontario residents reconsidering international travel plans this year due to the pandemic now have even more incentive to explore destinations closer to home – specifically within the province – thanks to the newly introduced refundable Staycation Tax Credit. The tax credit reimburses 20% of eligible accommodation costs, up to a maximum dollar amount.  It’s a tax incentive other provinces may want to pick up on to spur on home-based tourism. Here are the details:

The Ontario Staycation Tax Credit reimburses a portion of the cost of eligible accommodation expenses related to personal travel within Ontario between January 1 and December 31, 2022. Individuals can claim up to $1,000 in eligible expenses, which leads to a reimbursement of $200, while families can claim $2,000 and receive a $400 return. These claims can be made on the 2022 tax return.

Eligible accommodation includes

• Hotels
• motels
• resorts
• lodges
• bed-and-breakfasts
• cottage
• and campgrounds.

Not eligible are time shares, boats and trains.  

All eligible businesses to which accommodation costs are paid must be registered for and charge HST, and issue detailed receipts. That means that AirBNB claims won’t qualify unless proper receipting is available.  It goes without saying that Ontarians claiming these tax credits will need to hang onto these receipts in case of a CRA audit, and this is a big tip tax professionals won’t want to miss discussing with clients this tax season.

In addition, residents claiming this tax credit must be able to demonstrate that they personally paid for and received no reimbursement for the costs; including from family members and employers. In fact, Knowledge Bureau President Evelyn Jacks warns  “The tax credit doesn’t apply to business travel. You must be able to show proof that the trip has not been reimbursed by you, or by anyone, even a family member or employer.”

It’s time to start planning your staycation, Ontarians, but do so in an audit-proof way to be sure there are no tax surprises down the line.

Additional educational resources: Canada’s Leading Advanced Tax Update course as featured in the January 19 Virtual CE Summit is now available online.  This blended learning opportunity is like having your own tax PVR! Take a comprehensive online course with outstanding expert presentations from Canada’s leading tax minds for only $695 (save $200)  when you register by March 15.