Ads keep this website free for you.
TaxTips.ca does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Ontario LIFT Credit TaxTips.ca
Canadian Tax and
Financial Information
TaxTips.ca Home

What's New

Links & Resources

Site Map

Need an accounting, tax or financial advisor? Look in our Directory.  Use above search box to easily find your topic!   Stay Connected with TaxTips.ca!

 

Home  ->  Ontario  ->  Personal tax credits -> Ontario Non-Refundable LIFT Credit

Ontario Low-income Individual and Families Tax (LIFT) Credit - Non-Refundable

also known as Low-Income Workers Tax Credit

Ontario Taxation Act, 2007 s. 21.1

The LIFT credit is in effect for low-income workers residing in Ontario, for the 2019 and subsequent taxation years.

The Ontario 2022 Budget provides an Enhancement to the LIFT Credit effective January 1, 2022:
bulletMaximum individual benefit increased from $850 to $875
bulletMaximum benefit for couples increased from $1,700 to $1,750
bulletPhase-out rate reduced from 10% to 5%
bulletIndividual income range for benefit reduction increased
bulletwas $30,000 to $38,500
bulletwill be $32,500 to $50,000
bulletFamily income range over which benefit is reduced increased
bulletwas $60,000 to $68,500
bulletwill be $65,000 to $85,000

The LIFT credit is based on the individual's employment income - self-employment income is not used for this credit.

There is no LIFT credit if there is no employment income, nor is there a LIFT credit if there is no provincial income tax otherwise payable.

An individual with only employment income will have zero provincial income tax with employment income up to approximately $30,490 in 2022.  However, the Ontario Health Premium is payable on taxable income greater than $20,000.

The LIFT credit is reduced to zero at employment income of approximately $50,350 in 2022.

Both of the above amounts are if the individual has no income other than employment income.

2022 LIFT Credit Calculation Examples - Single Individuals and Married Couple

The LIFT credit is included in the Detailed Canadian Tax and RRSP Savings Calculators.  The examples below are for very simple income cases - use the calculator to see your LIFT credit calculation.

Single Individual LIFT Credit for 2022

Let's consider Jessie (J), Kelsey (K) and Laurie (L), all single individuals

    - J has $36,000 of employment income and no other income or deductions
    - K has $31,000 of employment income and no other income or deductions
    - L has $23,000 of employment income and no other income or deductions

LIFT Credit examples for 3 different single individuals
    J K L
Employment income A $36,000 $31,000 $23,000
Employment income x lowest tax rate of 5.05% B $1,818.00 $1,565.50 $1,161.50
Lesser of B and LIFT maximum of $875 C 875.00 875.00 875.00
         
Adjusted individual net income:        
     - Employment income A $36,000 $31,000 $23,000
     - Less deduction for enhanced CPP contribution 0.75% x (A - $3,500)   (243.75) (206.25) (146.25)
Adjusted income (in this case also taxable income) D $35,756.25 $30,793.75 $22,853.75
         
Excess over threshold (D - $32,500 (zero if negative) E $3,256.25 $0 $0
Reduction of LIFT credit 5% x E F 162.81 0 0
Maximum LIFT credit = C - F G $712.19 $875.00 $875.00
Provincial income tax before LIFT credit H $1,133.10 $898.98 $524.39
Less LIFT credit (lesser of G and H) I ($712.19) ($875.00) ($524.39)
Ontario health premium J 300.00 300.00 171.23
Net provincial income tax payable H - I + J   $720.91 $323.98 $171.23

Married Couple LIFT Credit for 2022

Let's consider married couple Jessie (J) and Kelsey (K): 

    - J has $38,000 of employment income and no other income or deductions
    - K has $29,000 of employment income and no other income or deductions.  Note:  If K had no employment income, K would receive no LIFT credit.

LIFT Credit example for married couple
    J K
Employment income A $38,000 $29,000
Employment income x lowest tax rate of 5.05% B $1,919.00 $1,464.50
Lesser of B and LIFT maximum of $875 C $875.00 $875.00
       
Adjusted individual net income:      
     - Employment income A $38,000.00 $29,000.00
     - Less deduction for enhanced CPP contribution 0.75% x (A - $3,500)   (258.75) (191.25)
Adjusted individual income (in this case also taxable income) D $37,741.25 $28,808.75
Adjusted family income (sum of J + K adjusted individual incomes) D2 $66,550.00 $66,550.00
       
Excess over individual threshold (D - $32,500) (zero if negative) E $5,241.25 $0
Reduction of LIFT credit 5% x E F (262.06) 0
Maximum LIFT credit using individual income = C + F G $612.94 $875.00
       
Excess over family threshold (D2 - $65,000) (zero if negative) E2 $1,550.00 $1,550.00
Reduction of LIFT credit 5% x E2 F2 (77.50) (77.50)
Maximum LIFT credit using family income = C + F2 G2 $797.50 $797.50
       
Provincial income tax before LIFT credit H $1,226.75 $805.34
Less LIFT credit (lesser of G, G2 and H) I ($612.94) ($797.50)
Ontario health premium J 404.48 300.00
Net provincial income tax payable H - I + J   $1,018.29 $307.84

Other Resources:

Enhanced Canada Pension Plan

Low-income Workers Tax Credit (known as Low-Income Individuals and Families Tax (LIFT) Credit) - on Ontario website

Revised: October 26, 2023

 

Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved.  See Reproduction of information from TaxTips.ca

Facebook  | Twitter  |  See What’s New, stay connected with TaxTips.ca by RSS or Email
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.