8.3.6 Non-refundable and refundable tax credits
- 8.3.1 Deductions from income
- 8.3.2 Registered retirement savings plans
- 8.3.3 Other registered savings plans
- 8.3.4 Video: Taxes and registered savings plans
- 8.3.5 Tax credits
- 8.3.6 Non-refundable and refundable tax credits
- 8.3.7 What you owe or get back
- 8.3.8 Taxes in your life
- 8.3.9 Summary of key messages
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, but in 2018 the personal amount for federal taxes was $11,809. Each province and territory also sets a personal amount for provincial or territorial taxes.
Each government allows taxpayers to claim a percentage of their non-refundable total tax credits, and reduce their taxes payable by that amount. The federal government allows taxpayers to claim 15 percent of their non-refundable tax credits.
Example: Martin had a taxable income of $39,000 in 2018. The federal income tax he would pay on that income is $5,850. The tax credit for his federal personal amount is $11,809, and he can claim 15 percent of it, or $1,771.35. This tax credit reduces his federal income tax to $4,078.65.
Federal income tax:
Federal personal amount:
Subtract 15% of personal amount:
Federal income tax payable:
Similar calculations are used to calculate Martin's other non-refundable tax credits and tax credits for provincial or territorial income taxes. Because these credits are non-refundable, you don't receive a tax refund if they total an amount larger than the taxes you owe.
In addition, people in certain categories are entitled to additional personal exemptions. For example, on your 2018 federal income tax return:
- if you earned income from a job, you can claim up to $1,195
- if you are over the age of 65, you can claim up to $7,333
- if you have children, you can claim $2,182 for each child under the age of 18
- if you receive a pension, you can claim up to $2,000
- if you have a disability, you can claim up to $8,235
- if you care for a dependent who is infirm, you can claim up to $6,986
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 a note of any that you think apply to you.
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
Non-refundable tax credits 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.
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.
Some provinces also offer refundable tax credits that apply to provincial or territorial income tax.
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