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Staycation Tax Credit, explained

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The staycation tax credit was a tax credit given by the government of Ontario to incentivize citizens to vacation within their own country or province. The purpose was often to boost local tourism, especially at a time when the industry might be struggling, such as during the COVID-19 pandemic. It allowed individuals to claim a portion of the expenses of their vacation, such as accommodation costs, as a tax credit, effectively reducing the total cost of their holiday.

Each province had its own version of a staycation tax credit. For example, Ontario announced a 20% tax credit in 2021 for residents to explore the province, and Manitoba and New Brunswick have offered similar incentives.

In early 2023, the Ontario government decided to end the credit.

“In 2021, our government introduced the temporary Ontario staycation tax credit for the 2022 tax year to help Ontario’s tourism, hospitality and culture sectors recover from the pandemic which required limits on travel and other restrictions,” tourism minister Neil Lumsden told the Toronto Star.

“While the staycation tax credit won’t be reintroduced for the 2023 tax year, tourism activity in Ontario has recently reached its highest level since the onset of the pandemic,” he added. “We are supporting the sector in 2022-23 through several programs and initiatives, including investing $48.1 million for festivals and events and $19.1 million in support for regional tourism organizations. “our tourism sector is an economic powerhouse, and we will continue to work to ensure this valuable sector continues to thrive as we look ahead to 2023.”

Some in the province wanted the tax credit to remain.

“To take away incentives that benefit both the tourism industry, and families needing a bit of help to be able to travel our beautiful province during a time of high inflation, truly makes no sense,” Ontario Green Party Leader Mike Schreiner told the CBC in December of 2022.

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