8.3.6 Non-refundable and refundable tax credits 

From: Financial Consumer Agency of Canada

New tax filing and payment due dates

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 2019 the personal amount for federal taxes was $12,069. 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.

Martin calculates his federal income tax payable.

 

Example: Martin had a taxable income of $39,000 in 2019. The federal income tax he would pay on that income is $5,850. The tax credit for his federal personal amount is $12,069, and he can claim 15 percent of it, or $1,810.35. This tax credit reduces his federal income tax to $4,039.65.

Taxable income:

$39,000.00

Federal income tax:

$5,850.00

Federal personal amount:

$12,069.00

Subtract 15% of personal amount:

$1,810.35

Federal income tax payable:

$4,039.65

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 2019 federal income tax return:

  • if you earned income from a job, you can claim up to $1,222
  • if you are over the age of 65, you can claim up to $7,494
  • if you have children, you can claim $2,230 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 $8,416
  • if you care for a dependent who is infirm, you can claim up to $7,140

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.

 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 30000 - Basic personal amount

Line 30100 - Age amount

Line 30300 - Spouse or common-law partner amount

Line 30400 - Amount for an eligible dependant

Line 30450 - Amount for infirm dependants age 18 or older

Line 30800 - Canada Pension Plan (CPP) or Québec Pension Plan (QPP) contributions through employment

Line 31000 - CPP or QPP contributions on self-employment and other earnings

Line 31200 - Employment insurance premiums through employment

Line 31300 - Adoption expenses

Line 31400 - Pension income amount

Line 31600 - Disability amount for self

Line 31800 - Disability amount transferred from a dependant

Line 31900 - Interest paid on your student loans

Line 32300 - Your tuition, education, and textbook amounts

Line 32400 - Tuition, education, and textbook amounts transferred from a student

Line 32600 - Amounts transferred from your spouse or common-law partner

Line 34900 - Donations and gifts

Line 35000 - Total federal non-refeundable tax credit 

 

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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