8.3.6 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, 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.

Martin calculates his federal income tax payable.

 

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.

Taxable income:

$39,000.00

Federal income tax:

$5,850.00

Federal personal amount:

$11,809.00

Subtract 15% of personal amount:

$1,771.35

Federal income tax payable:

$4,078.65

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 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.

 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

 

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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