9.3.6 Non-refundable and refundable tax credits 

From: Financial Consumer Agency of Canada

Non-refundable tax credits

All taxpayers can claim a basic non-refundable tax credit for their income tax, known as the personal amount. It is adjusted annually to allow for inflation and other factors. In 2018, the personal amount for federal taxes was $11,809 and the personal amount for Quebec taxes was $15,012.

The amounts allowed, for example the basic personal amount, transform into tax credits at the rate of 15% for the federal authorities and Quebec. These tax credits help reduce the taxes payable.

Martin calculates his federal income tax payable.

 

Example: Martin had a taxable income of $39,000 in 2018. The Quebec income tax he would pay on that income is $5,850. The Québec personal amount is $15,012, that becomes a tax credit of 15 percent, or $2,251.80. This tax credit reduces his Quebec income tax to $3,598.20.

Taxable income:

$39,000.00

Quebec income tax:

$5,850.00

Quebec personal amount:

$15,012.00

Subtract 15% of personal amount:

$2,251.80

Quebec income tax payable:

$3,598.20

Similar calculations are used to calculate Martin's other non-refundable tax credits. Because these credits are non-refundable, he won't receive a tax refund if they total an amount larger than the taxes he owes.

In addition, people in certain categories are entitled to additional personal exemptions. For example, on your 2018 income tax returns:

  • If you are over the age of 65, you can claim up to $7,333 on the T1 return and up to $3,158 on the Quebec TP-1.D-V return.
  • If you have children, you can claim $2,182 for each child under the age of 18 on the T1 return.
  • If you receive a pension, you can claim up to $2,000 on the T1 return and up to $2,185 on the TP-1.D-V return.
  • If you have a disability, you can claim up to $8,235 on the T1 return and up to $3,334 on the TP-1.D-V return.
  • If you earned income from a job, you can claim up to $1,195 on the federal T1 return and up to $1,130 on the TP-1.D-V return.
  • If you paid union or professional dues, you can claim them on the TP-1.D-V return. (They are treated as a deduction from income on the T1 return.)
  • If you care for a dependent who is infirm, you can claim up to $6,986 on the T1 return. There is no similar credit on the TP-1.D-V return.

Some of these exemptions can be transferred to another taxpayer. For example, a dependent student can transfer the education amount to a parent, who can use it to reduce his or her own income.

Schedule 1 of the T1 tax return lists the non-refundable federal income tax credits (see illustration). Review the non-refundable tax credits listed in the illustration and make note of any that you think apply to you.

Step A - Federal non-refundable tax credits of T1 General - Schedule 1 for Non-Residents and Deemed Residents of Canada
Text version: Step A - Federal non-refundable tax credits

Step A - Federal non-refendable tax credit

Line 300 - Basic personal amount

Line 301 - Age amount

Line 303 - Spouse or common-law partner amount

Line 305 - Amount for an eligible dependant

Line 306 - Amount for infirm dependants age 18 or older

Line 308 - Canada Pension Plan (CPP) or Québec Pension Plan (QPP) contributions through employment

Line 310 - CPP or QPP contributions on self-employment and other earnings

Line 312 - Employment insurance premiums through employment

Line 313 - Adoption expenses

Line 314 - Pension income amount

Line 315 - Caregiver amount

Line 316 - Disability amount for self

Line 317 - Employment insurance premiums on self-employment and other eligible earnings

Line 318 - Disability amount transferred from a dependant

Line 319 - Interest paid on your student loans

Line 323 - Your tuition, education, and textbook amounts

Line 324 - Tuition, education, and textbook amounts transferred from a student

Line 326 - Amounts transferred from your spouse or common-law partner

Line 330 - Eligible medical expenses you can claim on your return

Line 331 - Eligible medical expenses you can claim on your return

Line 349 - Donations and gifts

Line 350 - Total federal non-refeundable tax credit 

Line 362 - Volunteer firefighters' amount

Line 363 - Canada employment amount

Line 364 - Public transit amount

Line 367 - Family caregiver amount for children under 18 years of age

Line 369 - Home buyers' amount

Line 370 - Children's arts amount

Line 375 - Provincial parental insurance plan (PPIP) premiums paid

Line 376 - PPIP premiums payable on employment income

Line 378 - PPIP premiums payable on self-employment income

Line 395 - Search and rescue volunteers' amount

 

 

Page 3 of the Quebec TP-1.D-V return and Schedules A to T list the non-refundable Quebec income tax credits (see illustration). Review the non-refundable tax credits listed in the illustration and make note of any that you think apply to you.

Federal non-refundable tax credits section of the TP-1.D-V - Quebec
Text version: Québec's Non-refundable tax credits

Revenu Québec's Non-refundable tax credits

Line 350 - Basic personal amount

Line 361 - Age amount, amount for a person living alone and amount for retirement income. Complete Schedule B.

Line 367 - Amount for dependants and amount transferred by a child 18 or over enrolled in post-secondary studies. Complete Schedule A.

Line 376 - Amount for a severe and prolonged impairment in mental or physical functions (see the guide)

Line 378 - Expenses for medical services not available in your area

Line 381 - Medical expenses. Complete Schedule B.

Line 385 - Interest paid on a student loan. Complete Schedule M. Amount claimed

Line 390 - Tax credit for volunteer firefighters and search and rescue volunteers (see the guide)(Specify: 390.1)

Line 391 - Tax credit for workers 64 or older (see the guide)

Line 392 - Tax credit for recent graduates working in remote resource regions. Complete form TP-776.1.ND-V.

Line 395 - Tax credits for donations and gifts (see the guide)(Amount from line 1 of Work Chart 395 Line 393)

Line 397 - Tax credit for union, professional or other dues (Line 397.1 × 10%)

Line 398 - Tax credit for tuition or examination fees. Complete Schedule T.

Line 398.1 - Tax credit for tuition or examination fees transferred by a child (see the guide)

 

Non-refundable tax credits are available only when you meet specific conditions, so check the tax guide to be sure that they apply.

Refundable tax credits

Refundable tax credits are credits that will be paid to you if you are eligible. Often the federal or provincial government pays them to you in a series of payments through the year to assist with living expenses.

Federal refundable tax credits include:

  • the goods and services tax/harmonized sales tax (GST/HST) credit
  • the Working Income Tax Credit.

Quebec refundable tax credits include:

  • the Solidarity Tax Credit (combining tax credits for the Quebec sales tax, the property tax refund and the credit for individuals living in northern villages)
  • the Work Premium, Supplement to the Work Premium and Adapted Work Premium
  • tax credits for adoption, caregiver and childcare expenses for children under 16 years of age
  • a tax credit for home support of seniors aged 70 or over
  • a tax credit for certain medical expenses.
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