Summary:

• The Staycation Tax Credit is a non-refundable tax credit introduced in the 2021 federal budget to encourage Canadians to take vacations within Canada.
• The credit is worth up to $1,000 per person or up to $2,000 per household, and is available for eligible expenses incurred for vacations taken in Canada between March 2021 and December 2022.
• To be eligible, you must be a Canadian resident who is at least 18 years old, have incurred eligible expenses related to a vacation in Canada that is at least three nights long, and have incurred the expenses after February 18, 2021.
• Not all expenses are eligible for the credit, such as transportation, alcoholic beverages, and cannabis products.
• You can claim the credit on your 2021 or 2022 tax return by keeping receipts and other documentation to support your claim.

More Information

The COVID-19 pandemic has disrupted travel plans for Canadians, but the federal government has introduced a new tax credit to encourage them to take a staycation. The Staycation Tax Credit is a non-refundable tax credit that was introduced in the 2021 federal budget to support the tourism industry and encourage Canadians to take vacations within Canada. In this blog post, we’ll explore what the Staycation Tax Credit is, who is eligible for it, what expenses are eligible, and how to claim the credit.

What is the Staycation Tax Credit?

The Staycation Tax Credit is a non-refundable tax credit that provides a break for Canadians who have had to cancel their travel plans due to the COVID-19 pandemic. The credit is worth up to $1,000 per person or up to $2,000 per household, and is available for eligible expenses incurred for vacations taken in Canada between March 2021 and December 2022.

Who is eligible for the credit?

To be eligible for the Staycation Tax Credit, you must be a Canadian resident who is at least 18 years old. You must have paid for eligible expenses related to a vacation taken in Canada, such as accommodation, food, and non-alcoholic beverages, and admission fees to tourist attractions. The vacation must be at least three nights long, and you must have incurred the expenses after February 18, 2021. If you have more than one vacation in the eligibility period, you can only claim the credit for one vacation.

What expenses are eligible?

Not all expenses are eligible for the Staycation Tax Credit. Eligible expenses include accommodation, food, and non-alcoholic beverages, admission fees to tourist attractions, and venue rentals for private events. However, expenses for transportation, alcoholic beverages, and cannabis products are not eligible.

How to claim the credit?

To claim the Staycation Tax Credit, you will need to keep receipts and other documentation to support your claim. You will then be able to claim the credit on your 2021 or 2022 tax return. You can claim the credit for yourself or for your spouse or common-law partner, but not for your children or other dependents. If you claim the credit for yourself and your spouse or common-law partner, you must share the credit between you.

Conclusion

The Staycation Tax Credit is a welcome relief for many Canadians who have had to cancel their travel plans due to the COVID-19 pandemic. By encouraging Canadians to take vacations within Canada, the credit may help to stimulate the economy and create jobs in the tourism sector. If you are eligible for the credit, be sure to keep track of your eligible expenses so that you can claim the credit on your tax return. More information can be found at https://www.ontario.ca/page/ontario-staycation-tax-credit

If you have questions about the Staycation Tax Credit or need help claiming the credit on your tax return, don’t hesitate to reach out to a qualified tax professional.

MG&Co. Chartered Professional Accountants is here to help you navigate the complexities of Canadian tax law and maximize your tax benefits. Contact us today to learn more.