As the tax season rolls around, it’s time to brush up on your knowledge of personal tax credits in Canada. At Taxvisors, we understand the importance of maximizing your tax savings, and that’s why we’ve put together a list of essential tax credits that every Canadian should be aware of.
While very effort is made to keep this list current and updated, remember that tax laws and regulations can change, so it’s essential to consult with a tax professional to ensure you’re taking full advantage of the available tax credits.
These credits can help reduce your tax burden and put more money back into your pocket. Let’s dive in!
The BPA is a non-refundable tax credit that every Canadian taxpayer can claim. The BPA for 2023 is set at $13,808, which can help reduce your federal tax payable. The BPA is indexed annually to account for inflation.
If your net income on your return is $155,625 or less, BPA for 2023 is $14,398. If your net income is $221,708 or more, it will be $12,719.
The CWB is a refundable tax credit for working individuals and families that fall within the defined criteria of low-income. If eligible, yYou can claim this credit if you are a Canadian resident over the age of 19 or have a spouse or common-law partner, or are a parent living with your child.
The amount you can claim varies depending on your income, marital status, and province/territory of residence.
The DTC is a non-refundable tax credit for individuals with a severe and prolonged impairment in physical or mental functions.
To be eligible, you must have a valid Disability Tax Credit Certificate (Form T2201) completed and approved by the CRA. The amount you can claim depends on the severity of the disability and the year in question. For example, in 2021, the federal DTC amount was $8,662.
The METC is a non-refundable tax credit for eligible medical expenses not covered by provincial health insurance. You can claim the lesser amount of 3% of your net income or $2,397 in 2023 for medical expenses incurred for yourself, your spouse, or your dependent children.
Eligible medical expenses include prescription medications, dental services, and medical equipment.
You can claim a non-refundable tax credit for donations made to registered charities or other qualified donation recipients.
The tax credit calculation is tiered: you receive a 15% federal tax credit for the first $200 of donations, and a 29% credit for donations exceeding $200. You can carry forward unclaimed donations for up to five years.
- Spousal Amount Tax Credit
If you support a spouse or common-law partner with a lower income, you may be eligible for the spousal amount tax credit. The maximum claim for 2023 is $13,808, which is reduced by your spouse’s net income.
Example: If your spouse’s net income is $5,000, you can claim $8,808 ($13,808 – $5,000) as a spousal amount tax credit.
The age amount tax credit is a non-refundable tax credit for individuals aged 65 or older as of December 31, 2022, and their net income is less than $92,480. The maximum claim for 2023 is $7,898 which is reduced if your net income exceeds $38,893.
The tax credit is eliminated when your net income reaches $92,480 in 2023.
The pension income tax credit is a non-refundable tax credit for eligible pension income. You can claim up to $2,000 in pension income, which includes payments from employer pension plans, annuities, and Registered Retirement Income Funds (RRIFs).
This tax credit does not apply to Old Age Security (OAS) or Canada Pension Plan (CPP) payments.
- Canada Pension Plan (CPP) and Employment Insurance (EI) Contributions
Contributions to the Canada Pension Plan (CPP) and Employment Insurance (EI) are mandatory for Canadian employees. However, these contributions can also provide tax benefits.
Both CPP contributions and EI premiums are tax-deductible, which means that they can reduce your taxable income.
To find out the amounts that you can get based on your specific financial contributions and premiums, you can check out the CRA calculators here, and here.
The tuition tax credit is a non-refundable tax credit for eligible tuition fees paid for post-secondary education. You can claim the full amount of tuition fees paid, but you must have an official tax receipt or form T2202, Tuition and Enrolment Certificate.
Unused tuition tax credits have the flexibility to be carried forward indefinitely or, alternatively, transferred to a spouse, common-law partner, parent, or grandparent. However, it’s important to note that the maximum transferable amount is capped at $5,000.
- First-Time Home Buyer Tax Credit
The first-time home buyer tax credit is a non-refundable tax credit available to first-time homebuyers. You can claim $5,000 on the purchase of a qualifying home if you or your spouse have not owned a home in the previous four years.
The child care expense deduction allows parents to claim child care expenses for children under 16 years of age. Eligible expenses include daycare, day camps, and after-school programs.
The maximum amount you can claim varies based on the age of the child and your income, with a maximum of $8,000 for children under 7, $5,000 for children aged 7 to 16, and $11,000 for children with disabilities.
The Canada Training Credit serves as a refundable tax credit specifically aimed at assisting working Canadians in financing their training and skills development endeavors. Eligible individuals accumulate $250 per year, up to a lifetime limit of $5,000. You can claim up to 50% of eligible tuition and fees, as long as the total doesn’t exceed your Canada Training Credit limit.
- Adoption Expense Tax Credit
The adoption expense tax credit is a non-refundable tax credit for eligible adoption expenses. You can claim up to $16,563 in adoption expenses for each adopted child in 2023.
Eligible expenses include adoption agency fees, legal and administrative costs, and travel expenses related to the adoption process.
The HTAC is a non-refundable tax credit for eligible renovations or alterations made to improve the accessibility of a home for a person with disabilities. Eligible expenses include wheelchair ramps, walk-in bathtubs, and grab bars.
You can claim up to $20,000 in eligible expenses per year, resulting in a maximum tax credit of $3,000 ($20,000 x 15%).
- Climate Action Incentive
The Climate Action Incentive is a refundable tax credit that is available to residents of certain provinces that have implemented the federal carbon pricing system. The credit is designed to offset the additional costs associated with the carbon pricing system and encourage Canadians to adopt cleaner, more energy-efficient practices.
For example, in 2022, residents of Ontario would be eligible for a Climate Action Incentive of up to $244 for a family of four. The credit is based on the number of adults and children in the household, and the amount varies by province.
The Climate Action Incentive is a refundable tax credit, which means that even if you have no tax liability, you can still receive the credit. This can be particularly beneficial for low-income families who may be more affected by the increased costs associated with the carbon pricing system.
To summarize, understanding and claiming these personal tax credits can help you maximize your tax savings and minimize your tax payable. That’s more money in your pocket!
At Taxvisors, we’re here to help you navigate the complex world of Canadian taxes. Reach out to us for personal tax advice tailored to your unique financial situation, and take control of your financial future.