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Ontario LIFT Credit

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

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

Ontario Taxation Act, 2007 s. 21.1

The LIFT credit will be in effect for low-income workers residing in Ontario, for the 2019 and subsequent taxation years.  It will provide a provincial income tax reduction of up to $850 for an individual and $1,700 for a couple.

The maximum tax reduction is the lesser of $850 and the individual's employment income (does not include self-employment income) for the year multiplied by the lowest tax rate (currently 5.05%).  Thus, 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.  The amount of the credit is reduced by 10% of individual income greater than $30,000, and family incomes greater than $60,000.  An individual with only employment income will have zero provincial income tax with employment income up to approximately $29,200, and the LIFT credit would be reduced to zero at employment income of approximately $38,550.  Both of these amounts are if the individual has no income other than employment income.  The Ontario Health Premium would still be payable on taxable income greater than $20,000.

The new LIFT credit is included in the 2019/2018 Detailed Canadian Tax and RRSP Savings Calculator.

LIFT Credit Calculation Examples - Single Individuals and Married Couple

Single Individual LIFT Credit

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

    - J has $31,000 of employment income and no other income or deductions
    - K has $29,000 of employment income and $600 other income
    - L has $18,000 of employment income and $600 other income

LIFT Credit examples for 3 different single individuals
    J K L
Employment income A $31,000 $29,000 $18,000
Employment income x lowest tax rate of 5.05% B $1,565.50 $1,464.50 $909.00
Lesser of B and LIFT maximum of $850 C 850.00 850.00 850.00
         
Adjusted individual net income:        
     - Employment income A $31,000.00 $29,000.00 $18,000.00
     - Less deduction for enhanced CPP contribution 0.15% x (A - $3,500)   (41.25) (38.25) (21.75)
     - Add other income   0 600.00 600.00
Adjusted income (in this case also taxable income) D $30,958.75 $29,561.75 $18,578.25
         
Excess over threshold (D - $30,000) (zero if negative) E $958.75 $0 $0
Reduction of LIFT credit 10% x E F (95.88) 0 0
Maximum LIFT credit = lower of C and (E - F) G $754.12 $850.00 $850.00
Provincial income tax before LIFT credit H $934.92 $871.01 $217.68
Less LIFT credit (lesser of G and H) I ($754.12) ($850.00) ($217.68)
Ontario health premium J 300.00 300.00 0
Net provincial income tax payable H - I + J   $480.80 $321.01 nil

Married Couple LIFT Credit

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

    - J has $31,000 of employment income and no other income or deductions
    - K has $29,000 of employment income and $3,000 other income.  Note:  If K had no employment income, K would receive no LIFT credit.

LIFT Credit example for married couple
    J K
Employment income A $31,000 $29,000
Employment income x lowest tax rate of 5.05% B $1,565.50 $1,464.50
Lesser of B and LIFT maximum of $850 C 850.00 850.00
       
Adjusted individual net income:      
     - Employment income A $31,000.00 $29,000.00
     - Less deduction for enhanced CPP contribution 0.15% x (A - $3,500)   (41.25) (38.25)
     - Add other income   0 3,000.00
Adjusted individual income (in this case also taxable income) D $30,958.75 $31,961.75
Adjusted family income (sum of J + K adjusted individual incomes) D2 $62,920.50 $62,920.50
       
Excess over individual threshold (D - $30,000) (zero if negative) E $958.75 $1,961.75
Reduction of LIFT credit 10% x E F (95.88) (196.18)
Maximum LIFT credit using individual income = lower of C and (E - F) G $754.12 $653.82
       
Excess over individual threshold (D2 - $60,000) (zero if negative) E2 $2,920.50 $2,920.50
Reduction of LIFT credit 10% x E2 F2 (292.05) (292.05)
Maximum LIFT credit using family income = lower of C and (E2 - F2) G2 $557.95 $557.95
       
Provincial income tax before LIFT credit H $934.92 $992.21
Less LIFT credit (lesser of G, G2 and H) I ($557.95) ($557.95)
Ontario health premium J 300.00 300.00
Net provincial income tax payable H - I + J   $676.97 $734.26

Other Resources:

Enhanced Canada Pension Plan

Low-income Individuals and Families Tax (LIFT) Credit - on Ontario website



Revised: April 11, 2019

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