After two years in lockdowns, red zones and face masks, the Ontario government will be providing a “Staycation” Tax Credit for 2022. The aim of the tax credit is to encourage Ontario residents to explore the province and boost the tourism and hospitality sectors financially from the pandemic. This can be viewed as a less risky alternative to travelling outside of Canada. The tax credit is estimated to provide $270 million in support to 1.85 million Ontario families.

Ontario residents as of December 31, 2022 are eligible to claim the tax credit. One individual per family is eligible to claim the credit. Of the eligible accommodation expenses, 20% ($200 for an individual or $400 as a family) can be claimed on your personal income tax return. Eligible expenses of up to $1,000 as an individual or $2,000 if you have a spouse, common-law partner or eligible children can be claimed.

Eligible accommodation expenses are for leisure stays of less than one month in Ontario. This does not apply for business travel. These include accommodations such as hotels, motels, resorts, lodges, bed-and-breakfast establishments, cottages, and campgrounds. To claim the credit, Ontarians must keep detailed receipts of any eligible expenses incurred. The receipts should include the following:

  • The location of the accommodation;
  • The amount that can reasonably be considered to be for the accommodation portion of a stay;
  • The GST/HST paid;
  • The date of the stay; and
  • The name of the payor.

But how does this impact businesses?

While businesses are not eligible to claim the tax credit, there are some positives that business owners should note. One of the major points of this is it will create jobs and bring in money for the province and the business’ bottom lines. From the pandemic, many lost their jobs and have been finding it difficult to find other employment. With people not being able to work, this significantly impacted the amount of disposable income consumers were willing to spend. With more traffic from tourism being brought into towns, business owners can start to hire more staff to keep up with the increased demand. These staff members will also be paid at the higher minimum wage effective January 1, 2022.

Moreover, from increased tourism, there will be more funds flowing into the economy. With increased demand, this can lead to a business having a larger net income than it would otherwise. But how do you entice a tourist to enter your business over another competitor? Below are some easy and effective options that you could consider:

  • Offer them a discount – you could potentially partner with one of the local hotels to have a coupon for your business in the welcome package.
  • Reassure your customers – make sure customers feel welcome and safe in your environment when in public spaces to reduce the fear of spreading the virus.
  • Try something new or link it to existing ideas and initiatives – this could be something as simple as a new marketing technique or exploring a new produce line.

Sources:
https://www.ontario.ca/page/ontario-staycation-tax-credit
https://www.bbc.co.uk/bitesize/guides/zqk7hyc/revision/3