Common tax deductions and credits for individuals

As tax season is in full swing, let’s take a look at the most common tax deductions and credits in Canada for individuals

A tax deduction offsets your taxable income, whereas a tax credit offsets your tax payable.

Tax credits are either refundable or non-refundable. A refundable tax credit will both decrease your tax payable and trigger a refund if applicable.

A non-refundable tax credit will only decrease your tax payable.

Tax deductions:

  • RRSP contributions: the most famous and used tax deduction. Any amount you contribute to a registered plan lowers your taxable income. If you earned $ 50 000 and contributed $ 5 000 to your RRSP, your taxable income is $ 45 000.
  • Daycare expenses: you can claim up to $ 8 000/year for children under 7 and $ 5 000/year for children up to 16.
  • Moving expenses: to claim this deduction, you need to have moved at least 40 kms away.
  • Union or professional dues
  • Support payments to children and/or former spouse
  • Carrying charges such as deposit box rental and fees paid to Financial advisors
  • Split-pension amount

Tax credits:

  • Spouse or common-law partner amount: if your spouse/partner is not working and you are supporting her/him.
  • Amount for eligible dependent: for single people supporting their children or other blood-relatives.
  • Adoption expenses
  • Caregiver amount: if you are supporting a parent with a disability
  • Caregiver amount for children:if you are supporting a child under 18 with a disability
  • Interest paid on federal and provincial student loans
  • Tuition fees and textbooks
  • Medical expenses: need to be a minimum of $ 2 208 for 2015
  • Donations to registered charities and political parties
  • Public transit amount: for monthly passes only
  • Children’s fitness and art credits: up to $ 500/children
  • First-time home-buyer amount: $ 750

There are many more credits, depending on your personal situation as well as your province of residence.

For example, in British-Columbia, you can claim additional credits if you are a coach, an apprentice or if you work in mining or logging.

In order to obtain the deductions and credits, you need to report them on your tax return. If you don’t, you won’t get them. Each year, thousands of tax dollars remain with the government because people are not aware of the deductions and credits they can claim. Educate yourself!

And remember, a tax refund is not windfall money. It is an interest-free loan to the government!

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