8.3.1 Deductions from income

From: Financial Consumer Agency of Canada

You can deduct certain expenses and other adjustments from your total income to get your taxable income. These deductions reduce the amount of income you pay tax on, so they reduce your overall income tax. The more deductions that apply to you, the less your taxable income becomes. Deductions from taxable income are listed on lines 24400 to 25600 of the T1 form below.

Review the deductions listed and make a note of any that you think might apply to you.

Step 3 - Net income and Step 4 - Taxable income of T1 General - Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada
Text version: Step 4 - Taxable income

Step 4 - Taxable income

line 24400 - Canadian Forces personnel and police deductions (box 43 on all T4 slips)

line 24900 - Security options deductions

line 25000 - Other payments deduction (if you reported income on line 14700. See line 25000 in the guide)

line 25100 - Limited partnership losses of other years

line 25200 - Non-capital losses of other years

line 25300 - Net capital losses of other years

line 25400 - Capital gains deductions

line 25500 - Northern residents deductions (Get and complete Form T2222)

line 25600 - Additional deductions (specify)

 

You can deduct income that you deposit into Registered Pension Plans (RPPs) and Registered Retirement Savings Plans (RRSPs), up to a limit that is based on the income you have earned in previous years, the amount previously claimed and an annual ceiling. For details, see the section titled Registered Retirement Savings Plans.

Other key deductions include:

  • annual union, professional and similar dues related to your employment (line 21200)
  • child care expenses for children under 16 years old (line 21400)
  • expenses a person with a disability paid to earn income or go to school (line 21500)
  • some types of losses in a business you own, including capital losses on the sale of shares (line 21700)
  • moving expenses if you had to move more than 40 kilometres to take a job (line 21900)
  • support payments to a spouse, common-law partner or child under a separation agreement or court order (line 22000)
  • interest and fees required for investments (but not for all investments and not for student loans or registered savings plans) (line 22100)
  • half of the money a self-employed person paid into the Canada Pension Plan or Quebec Pension Plan (line 22200).

Normally, you must have receipts for actual expenses or similar documents to claim these deductions, but you don’t have to send them in with your tax return.

These deductions are available only when you meet specific conditions, so check the tax guide to be sure that they apply. For more information, go to Canada Revenue Agency's General income tax and benefit package or get a copy of the guide at your local post office.

Tip

Tax deductions reduce your total income to your Taxable Income, Line 26000 on the T1 tax return. Taxable Income is used to calculate how much you will receive for benefits that are determined by your income, such as the goods and services tax/harmonized sales tax (GST/HST) refund and the Guaranteed Income Supplement. If your Taxable Income is high enough, some benefits are reduced or eliminated entirely—a limit called a clawback.

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