8.3.5 Tax credits

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, provincial and territorial governments each provide 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 federal income tax on her taxable income is $2,700.

Miriam has both refundable and non-refundable tax credits.

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