Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Can two individuals claim a portion of the property tax amount for purposes of the Ontario energy and property tax credit where they each pay a portion of the property taxes on the principal residence?
Position: Depends on the facts, but likely not in this situation.
Reasons: An individual cannot include municipal taxes paid to determine occupancy costs if the individual is neither a beneficial owner nor an individual who pays rent, however, the beneficial owner of the residence for whom the payments were made may be able to include those amounts to determine his or her occupancy costs.
XXXXXXXXXX
2013-051580
N. Shea-Farrow
April 30, 2014
Re: Ontario Energy and Property Tax
We are writing in response to your email of December 12, 2013, asking whether both you and your son can claim a portion of the property tax amount for purposes of the Ontario energy and property tax credit (OEPTC). You explained that you and your son lived in a home that was a principal residence for both of you, that each of you paid a portion of the property taxes for XXXXXXXXXX on the residence, and that your son does not pay rent to you. We have assumed, based on the information provided, that neither you nor your son has a qualifying spouse or common-law partner and that you are not a senior.
Our Comments
This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.
The amount of an eligible individual's property tax amount for the OEPTC, which is part of the Ontario Trillium Benefit, is calculated using a formula that includes the individual's occupancy cost. Generally, the occupancy cost for a single individual includes municipal taxes paid for the year by, or on behalf of, an individual in respect of the designated principal residence (the "residence") where the individual beneficially owned the residence. Paragraphs 2.79 to 2.82 of Income Tax Folio, S1-F3-C2, Principal Residence, available on the Canada Revenue Agency's (CRA) website, provides general information on determining beneficial ownership.
An individual who does not beneficially own the residence can include the portion of the municipal taxes that he or she paid in respect of the residence to determine occupancy cost but, according to subsection 98(5) of the Taxation Act, 2007 (Ontario), only if the owner of the residence has included that amount in income for income tax purposes. The Guide 5006-PC, Information for Residents of Ontario, that is available on the CRA's website, states that,
"Your property tax and rent cannot include amounts such as:
- payments to relatives or friends who are not reporting the payments as rental income on their returns;
"
You have also asked about the ability to allocate the property taxes if you are sharing a residence. If two or more individuals own or rent a particular residence, then the individuals can share the municipal taxes or rent paid in a certain manner. Generally, the total occupancy costs relating to the residence is allocated according to the beneficial ownership each of the owners have in the residence or, in the case of individuals who rent, the portion of the rent that was paid by, or on behalf of, each of the individuals in respect of their occupation of the residence for the year.
In our view, it appears that your son is paying municipal taxes on your behalf and he is neither a beneficial owner of the residence nor does he pay rent in respect of the residence that you include in your income. Therefore, he cannot include the amounts he paid to determine his occupancy cost. However, if you do not include the amount of the municipal tax paid by your son in your income as rental income, you can include the amount of municipal taxes paid by you and by your son to determine your occupancy costs to calculate the property tax amount for the purposes of the OEPTC, providing all other conditions are met.
We trust our comments will be of assistance.
Yours truly,
Pamela Burnley, CPA, CA
Manager
Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2014
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2014