Give Volunteer Firefighters the Credit

A small financial gesture could help with retention and recognition

By Ian DeWaard, Ontario Director

In 2011, the federal government set out to offer a small boost to volunteer firefighters by offering a federal tax credit worth up to $450 per year. While well-intentioned and received with appreciation, what was offered with one hand by the federal government was unintentionally taken away, in part, by the Ontario government.  

CLAC has been advocating to set this right, but first, a bit of context. 

In Ontario, 410 of the province’s 444 municipalities are served by 19,000 volunteer firefighters. More and more often, municipalities struggle to find and keep volunteers. For most municipalities, the cost of onboarding—which includes testing, training, as well as providing them properly fitting bunker gear—can exceed $10,000 for each new recruit. Turnover has a direct and significant impact on tight municipal budgets, especially in small communities.

Volunteers are the lifeblood of most rural and suburban departments and those communities rely heavily on the selfless service of these brave men and women. In exchange for the interrupted holidays and weekends, the hundreds of hours of training, the time spent keeping equipment and emergency vehicles in a constant state of readiness, as well as the wear and tear on their own vehicles, the average volunteer firefighter receives a modest honorarium of $3,000 to $4,000 per year.  

Volunteers don’t sign up to serve because of the paycheque. But the small financial recognition issued by their municipality, town, or village, offers a small but effective incentive and thanks for serving. 

The 2011 federal tax credit provides up to $450 of value, provided the volunteer serves at least 200 hours in that year. Until 2011, volunteers were only eligible for a tax exemption of $1,000 on their volunteer honourarium. The new $450 tax credit is of slightly greater value, but it comes instead of the tax exemption. As a result of foregoing the exemption, a volunteer’s taxable income is effectively increased and that increase is subject to the home province’s tax rate.   

The additional tax revenue collected by the province was an unintended consequence of the federal credit. Most provinces recognized this and so they also introduced provincial tax credits that were equal to or greater than the tax revenue they had inadvertently received. Ontario took no such steps and so volunteers in this province received no real actual benefit from the 2011 tax credit. CLAC has been attempting to bring this oversight to the government’s attention through various submissions, and most recently in a letter to Ontario’s minister of finance (see below).

CLAC believes that Ontario should replicate what other provinces have already offered to their volunteers. Doing so would finally make the federal tax credit a benefit to volunteers. This small and relatively inexpensive measure would enhance the value of the volunteer honourarium, without impacting the already strained municipal tax base in the regions that rely on volunteers. It would also put back into the pockets of volunteers the money that, before 2011, the province did not previously collect. This change would be good public policy and a small but effective gesture to signal respect for volunteers, all wrapped up in a modest provincial tax credit.  

Letter to the Hon. Rod Phillips, Minister of Finance

October 15, 2019 

Dear Minister Phillips, 

CLAC’s union represents over 1,200 volunteer firefighters in Ontario. I’m writing to you today on behalf of our volunteer firefighter members request a meeting to discuss a tax credit proposal. 

The proposal for a tax credit for volunteer firefighters has been adopted by most other provincial and territorial jurisdictions in Canada. Moving forward with a tax credit in Ontario would provide more equitable tax treatment across Canada for volunteer firefighters and provide a necessary incentive to attract and retain members of our fire services across the province.  

Below I have provided some background information and more detail on the tax credit we would like to discuss with you. We look forward the opportunity to introduce ourselves to you and to having a good discussion on this important proposal.  

Context 

The provincial government calculates that there are 19,000 volunteers serving in 410 of 441 fire departments, meaning a full 90 percent of Ontario’s municipalities count on volunteer responders. CLAC is proud to represent 1,200 of these individuals in their volunteer service roles. 

These are heroes in our communities and the viability of this model of protecting our communities is vital. However, all municipalities are struggling to find ways to attract and retain committed and qualified volunteer firefighters. Tax policy in Ontario may offer a support for these efforts. 

The average volunteer firefighter works five years, which amounts to a 20 percent departmental turnover, annually. The cost invested in selection, training, and outfitting volunteers with proper equipment can be significant. This is especially true for less populous rural communities. 

Based on CLAC’s member data, a volunteer receives an average annual honorarium of $4,200. A tax credit similar to what is being offered in other Canadian jurisdictions may help address some of the retention challenges that we are currently facing. 

Federal Tax Credit/Exemption 
In 2011, the federal government introduced the Volunteer Firefighter Tax Credit, which is now referred to as the Volunteer Firefighter Amount. This permits a claimant a credit of 15 percent on up to $3,000 of volunteer firefighting earnings (max. $450). As a prerequisite, the volunteer must demonstrate serving 200 hours of service to claim the credit, and these must be verified by the department that they serve. 

The 2011 federal tax credit was introduced as an alternative to a tax exemption of a $1,000 per year on volunteer earnings. The exemption remains, however, a volunteer cannot claim both the exemption and the credit for the same year. Unless the volunteer is in a combined marginal personal income tax bracket (provincial and federal) of 46 percent or more, or, earns less than $3,000 as their volunteer honorarium, the federal tax credit is the more advantageous option. 

As most will likely prefer the federal credit, a consequence is that the taxes collected by the province on volunteer honorariums are increased by the marginal provincial rate on the $1,000 of earnings that are no longer exempted from personal earnings. 

Tax Relief in Other Jurisdictions
Following on the federal government’s decision in 2011, several jurisdictions began to offer additional provincial/territorial volunteer tax credits, most of which are available when the volunteer is also eligible for the federal credit, or on the same criteria. At least two jurisdictions had already offered relief to volunteers before the 2011 change to the Income Tax Act. 

Recommendation

Ontario should introduce a volunteer firefighter tax credit, available to anyone eligible for the federal credit, calculated on the lowest marginal rate on $3,000 (9.15 x $3,000 = $274.50). 

Such a move would offer support to municipalities in their efforts to attract and retain active volunteers by enhancing the recognition that volunteers receive as honourarium. As well, this would essentially give back provincial tax revenue that the province had not collected prior to 2011 when volunteers would have enjoyed and income exemption. The tax credit would also signal to these brave women and men, who mostly reside in rural and suburban Ontario, the value and significance of their service to their communities. 

We would appreciate an opportunity to discuss this request with you further.

Sincerely, 

Ian DeWaard
Provincial Director