Ontario Trillium Benefit notice: What does it mean?

PerfectWave via Shutterstock.com

The Ontario Trillium Benefit (OTB) is a tax-free benefit paid monthly or annually to eligible Ontario residents. It combines three provincial tax credits, specifically, the Ontario Sales Tax Credit, Ontario Energy and Property Tax Credit, and Northern Ontario Energy Credit.

An OTB notice is sent to taxpayers by Canada Revenue Agency (CRA) and explains your benefit amount and any changes to your eligibility. When you receive a notice, it does not mean that something is wrong, but your benefit does change from year to year, and sometimes, benefits are repayable if they were overpaid due to a change in your situation. 

What determines your OTB entitlement?

Entitlement is generally based on information on your tax return. Benefits are payable for the July to June period based on your tax filing for the previous year. 

In particular:

• Your income, and if applicable, your spouse or common-law partner’s income
• Your marital status
• Your age
• Where you live in Ontario
• Your rent, property tax, or other eligible housing expenses

Not everyone who pays rent or property tax is entitled to the OTB. The benefit is generally intended for Ontario residents with low and moderate incomes.

If your tax return is reassessed, your OTB entitlement may also be recalculated.

What to do when you receive an OTB notice

You should read your notice carefully. Check the amount you are entitled to receive and if CRA is advising you of a change or requesting additional information that you need to send.

If anything related to your income, marital status, or housing information seems incorrect, the calculation may also be wrong. 

Most notices simply confirm your entitlement and no action is required. It is not necessary to keep the notice for your tax filing either, as the OTB is a tax-free benefit. 

Although payments are generally paid monthly, smaller annual entitlements of $500 or less are now generally paid as a single payment. Taxpayers with larger entitlements can also choose to receive one payment at the end of the benefit year instead of monthly.

Why should you file your tax return

One reason it can be worthwhile for young Ontarians to file a tax return, even if they have little or no income, is to establish eligibility for tax credits and benefits.

You can generally become eligible for the Ontario Energy and Property Tax Credit at age 18, so you may want to file a tax return the year you turn 17 if you have qualifying housing expenses. You can generally qualify for the Ontario Sales Tax Credit starting at age 19, even if you live with your parents and do not pay rent or property tax. Different eligibility rules can apply to people who are married or common-law or who have children.

So, even if you do not have income to report or tax to pay, filing is the gateway to benefits. Similar provincial or territorial programs may apply in other parts of Canada as well.

Read more Ask a Planner columns:

• How can I leave more money to my children?
• How a spousal RRSP can save couples tax
• What do rising bond yields mean for Canadians?
• The ripple effect of RRIF withdrawals