9.3.5 Tax credits 

From: Financial Consumer Agency of Canada

Deductions from income reduce your taxable income. Tax credits are amounts that reduce the tax you pay on your taxable income. The more tax credits that apply to you, the more you can reduce your income tax. The federal and Quebec governments each provide you with tax credits, which you can use to lower your taxes.

Some tax credits are non-refundable—that is, they reduce or cancel your taxes payable. A refundable tax credit is a credit that can be paid to you even if you have no income tax payable.

Example: Miriam has a taxable income of $18,000. The Quebec income tax on her taxable income is $2,700.

  • She has non-refundable tax credits of $2,850. The non-refundable tax credits reduce her taxes payable to zero, but she receives no extra credit for the $70 she has not used.
  • However, she also has refundable tax credits of $600. This amount will be refunded to her when her return is processed, or she may apply to have some credits advanced in instalments.
Miriam has both refundable and non-refundable tax credits.
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