Tax Credits-Canada

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  • The effective marginal income tax rate at low incomes is substantially reduced by personal non-refundable tax credits.
    • These tax credits offset the tax payable on the first $10,382 of earnings for a single person and a further $10,382 in respect of a spouse or dependents.
    • The additional tax credit is reduced by the earnings of the spouse or dependent.
    • Anyone working for a living gets an additional credit of $1,051.
    • Anyone receiving a pension gets an additional credit of $2,000.
    • The tax credit for dependent children under 18 is $2,101.
    • There are further tax credits for seniors and disabled people.
    • Tax credits are at the basic rate, regardless of earnings.

  • The medical expenses credit is for medical costs that are not covered by Provincial Medicare or reimbursed by work-based insurance schemes.
    • The definition of medical expenses is quite broad.
    • The threshold of expenses is the lower of 3% of net income or $2,024.
    • It can be claimed by either spouse, so is most valuable if claimed by the person with the lowest earnings.
    • You do not need to claim for a calender year at a time, but for any 12 month period ending in the tax year.
    • So if you can't claim a medical expense in one year it may be possible to claim it in the following year.

  • There is a generous tax credit for educational courses taken at approved institutions.
    • This is $120 + $20 per month for part time study and $400 + $65 per month full time, plus the tuition fees paid.
    • This can work out to be a tidy refund at the end of the year.
    • Up to $5,000 of the tax credit can be transferred to your spouse or parents in the year you earned it, or carried forward if you do not have enough taxable income to use it.

  • If you start working at a new location, start a new full-time education course, or start a new business and if you move to a residence that is at least 40 km closer to your new work location than your previous residence was, you can deduct many of your moving expenses.
    • However, you can deduct these expenses only if your employer does not reimburse you for them.
    • Please note that this tax break generally is available only for moves that take place within Canada.
    • In most cases it does not apply to moves from the UK to Canada.

  • This list is not complete.

  • This is one of a series of Wiki articles on Taxation.