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