Save money with refundable and non-refundable tax credits

Save money the next time you file your tax return with this simple guide, including the inside scoop on deductions, and refundable and non-refundable tax credits.

Save money with refundable and non-refundable tax credits

Did you know there are a number of things you can do minimize your taxes? Tax credits can help you save money on your next tax return.

“Non-taxable” returns

Already, about one-third of all Canadians who file taxes have “non-taxable” returns.

  • That means they already have more credits than they need to cover their entire taxable income—so when tax time comes, they don’t owe any money.

That’s why it is important to know what refundable and non-refundable tax credits are, and if you are eligible for them based on your family status, where you live, your age and your income.

What is a refundable tax credit?

Refundable tax credits help reduce or eliminate the amount of tax you owe.

  • The government will give you money for any refundable tax credits you qualify for, whether you owe tax or not.
  • That means you can have zero income and pay zero taxes and still receive refundable tax credits if you file a tax return.

Examples of refundable tax credits:

  • Children’s Fitness Tax Credit: Families can claim a 15 per cent tax credit on an amount up to $1,000 for the cost of registering a child in eligible physical activity programs.
  • GST Credit: You are eligible to receive a GST credit if you are at least 19 years old, a resident of Canada, and earn below a certain income level (this amount fluctuates yearly).
  • Working Income Tax Benefit: This credit is designed to help low-income people afford the costs of working. If your net income is below the minimum amount set by your province or territory, you’ll receive a tax credit.

What is a non-refundable tax credit?

Non-refundable tax credits also helps you reduce or eliminate the amount of income tax you owe.

  • The big difference between a refundable and non-refundable tax credit is that with a non-refundable tax credit you will not get extra money back.
  • You can only use a non-refundable tax credit against tax that you would otherwise owe.

Examples of non-refundable tax credits:

  • Family Caregiver Tax Credit: It’s a 15 per cent tax credit on an amount of $2,000 that provides tax relief to caregivers with dependent relatives. This includes sick spouses, common-law partners and minor children.
  • Medical Expense Tax Credit: You can claim up to $10,000 on any eligible medical and disability-related costs incurred by caregivers.
  • First-Time Home Buyers Tax Credit: If you have purchased a home for the first time, you can claim a $5,000 tax credit.
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