PRISON

Summary:

GST/HST credit, carbon rebate, Trillium:

A person is ineligible to receive a monthly payment for the GST/HST credit, carbon rebate, or Trillium benefit if they were in prison for at least 90 consecutive days that includes the first day of the payment month.

CWB:

A person is ineligible to receive the Canada Workers Benefit (CWB) for a tax year if they were in prison for 90 days or more at any time in the tax year.

OSHPTG and LIFT:

A person is ineligible to receive the The Ontario Senior Homeowners’s Property Tax Grant (OSHPTG) or to claim the Ontario non-refundable Low-income Individuals and Families Tax Credit (LIFT) if an individual was in prison for a period that includes December 31 of the previous taxation year and the first 179 days in the taxation year.

Eligibility for GST/HST credit, carbon rebate, and Trillium benefits:

Each of these programs has payment months:

• GST/HST credit:  July, October, January and April.
• Carbon rebate: April, July, October and January.
• Trillium benefit: just July, or else each month from July to June.

The rule for all these payments is the same:

A person is ineligible to receive a credit/rebate/benefit for a payment month if they were in prison for at least 90 consecutive days that includes the first day of the payment month (counting days in prison both before and after the 1st of the month).

If someone has been incarcerated for multiple years with no income, filing tax returns for certain years may provide no benefit. To decide which returns should be filed, it’s necessary to know the dates of incarceration, and to understand the base tax years used to calculate payments.

For the GST/HST payments in July and October, the base tax year is  the prior year. For the January and April payments, the base tax year is 2 years prior. For example:

Example Session at Tax Clinic:        

• Client attends clinic in 2025
• Client advises they were in prison from mid-February 2020 to mid-November 2024.
• Client hasn’t filed returns for many years.

Tax clinic’s Assessment and Steps:

• The client is not entitled to GST/HST credits, carbon rebates, or Trillium benefits for the payment months of March 2020 to November 2024, because they were incarcerated for at least 90 consecutive days including the first day of each payment month.
• Eligibility resumes beginning with December 2024. The first GST/HST and carbon rebate payments after release will be those scheduled for January 2025.
• The GST/HST and carbon payments for January 2025 are based on the 2023 tax year. Therefore the client should file returns for 2023 (and 2024), even though they were in prison for all or part of those years.
• The last GST/HST and carbon payments the client was eligible for prior to entering prison were the January 2020 payments. These payments are based on the 2018 tax year. If not already filed, the client should file tax returns for 2018 and earlier.
• Summary: File tax returns for 2015 to 2018, 2023, and 2024.

        UFile steps:

• For the 2024 tax return, in the Prison section, select: In prison during the year for 90 days or more. Ufile will generate estimates for the GST/HST credit and Trillium for 2025 and 2026 payment months, but not for the carbon rebate. This omission of carbon rebate payments is a UFile error, as there is no reason not to include those estimates.
• For the 2023 tax return, in the Prison section, select: In prison on December 31, 2023 for more than one year. UFile will not generate estimates for the GST/HST credit, carbon rebate, or Trillium. However, the client is entitled to monthly payments commencing December 2024. UFile cannot be relied upon to estimate benefits.

Canada Workers Benefit:

A person is ineligible to receive the Canada Workers Benefit for a tax year if they were in prison for 90 days or more at any time in the tax year.  There is no express stipulation in the Income Tax Act that the 90 days must be consecutive, but the CRA may interpret the Act that way.

Ontario Senior Homeowners’ Property Tax Grant and LIFT Non-Refundable Credit and :

The OSHPTG and LIFT non-refundable credit for low-income employed Ontario residents cannot be claimed if an individual was in prison for a period that includes December 31 of the previous taxation year and the first 179 days in the taxation year.

Informing the CRA about imprisonment:

• The Income Tax Act requires individuals to notify the CRA if they are ineligible to receive a payment.^[1]
• There is no designated CRA form for reporting prison stays. Also there is no specific guidance on CRA’s website for reporting prison stays.
• It seems federal prison institutions or Correctional Service Canada may inform the CRA about incarceration.^[2]
• UFile has a section to input some information about prison stays. This provides information about time in prison during the tax year only.
• Beginning and end dates of imprisonment are not entered into UFile.
• Prison information entered into UFile is used by UFile to perform certain calculations and estimate benefits, but the prison information is not transmitted to the CRA upon efiling.

References:

• GST/HST Credit - ITA, s.122.5:

• Section 122.5(2)(b) states that a person is not eligible in relation to a month specified for a taxation year if the person “is confined to a prison or similar institution for a period of at least 90 days that includes the first day of the specified month”.
• Section 122.5(4) states that “the months specified for a taxation year are July and October of the immediately following taxation year and January and April of the second immediately following taxation year”.
• Charter challenges alleging discrimination have been made, but failed. See for example, Bradley v. R. (2009 Tax Court).
• CRA guide RC4210 - GST/HST Credit

• Carbon Rebate - ITA, s.122.8:

• Section 122.8(2)(b) states that a person is not eligible in relation to a month specified for a taxation year if the person “is confined to a prison or similar institution for a period of at least 90 days that includes the first day of the specified month”.
• Section 122.5(4.2) states that “the months specified for a taxation year are April, July and October of the immediately following taxation year and January of the second immediately following taxation year.”.

• Ontario Trillium Benefit - Ontario Taxation Act, 2007, Part IV.1, sections 103.2 to 103.17

• The Act or regulations don’t exclude from eligibility individuals with prison times.
• Ontario’s website for the Trillium benefit doesn’t reference prison time. Canada’s website for the Trillium benefit doesn’t reference prison time. The ON-BEN form doesn’t reference prison time.
• However at least two government websites (webpage 1 and webpage 2) state ineligibility for OEPTC if an individual was in prison for a period of 90 days or more that includes the first day of the payment month.
• In addition UFile, on the page where prison stays are entered, states: “The items you cannot claim on the Ontario return: ON-BEN - Ontario Trillium Benefit, if you are confined to a prison or similar institution for a period of 90 days or more that includes the first day of the payment month.”
• Overall, there is uncertainty regarding the effect of prison time on Trillium benefits. It appears that the ineligibility is applied by the CRA as a matter of administrative policy.

• Canada Workers Benefit

• ITA, s.122.7(1): “Ineligible individual for a taxation year means an individual..(c) who was confined to a prison or similar institution for a period of at least 90 days during the taxation year.”

• Ontario Senior Homeowners’ Property Tax Grant

• Ontario Taxation Act, 2007, Part V.1, s.104.1(2)6: “An individual is an eligible senior..if..the individual was not confined to a prison or similar institution for a period that includes December 31 of the previous taxation year and the first 179 days in the taxation year.”
• See also CRA website - OSHPT Questions and Answers

• Ontario LIFT Non-refundable Credit

• Ontario Taxation Act, 2007,. s.21.1(2): “An individual is not eligible..if..the individual was confined to a prison or similar institution for a period that includes December 31 of the previous taxation year and the first 179 days in the taxation year.”