Tax credits and deductions Canadians can claim to get bigger returns this year
Tax season is upon us, meaning you want to start collecting your documents and figuring out which tax deductions and credits you can claim.
This past year was certainly hard on Canadians, with skyrocketing costs and inflation weighing heavily on the minds and pockets of folks across the country.
So, if you’re looking for a bigger tax refund, you’ll need to lower your taxable income and reduce the taxes you owe to the government as much as possible.
To help you achieve that, Daily Hive spoke with Yannick Lemay, Tax Training Specialist at H&R Block, about tax credits and deductions you can claim for the 2023 tax year.
Before we get into the nitty-gritty, knowing the difference between a tax credit and a deduction is helpful.
Simply put, deductions reduce how much of your income is taxable, while credits lower the tax you owe.
“There are so many credits, so many deductions — more than 400 credits and deductions available to Canadians,” noted Lemay.
He also encourages Canadians to start thinking of filing their taxes as soon as possible. “It’s not too soon, you can already get ahead of things and get your papers ready,” he said.
To help you get through this year’s tax season, here’s what you should keep on your radar.
And remember, April 30, 2024, is the last day to file your taxes without penalties!
RRSP contributions
When you deduct your RRSP contributions, your net income is reduced, and you’re taxed on less money.
Not sure of your current RRSP deduction limit? You can find out here. You can calculate your RRSP tax savings for 2023 using this tool. February 29, 2024, is the last day to make RRSP contributions for the 2023 tax year.
Find out more about RRSP contributions here.
Claiming moving expenses
If you moved over 40 km for a new job or school, you could be eligible to claim moving expenses if you moved to work or to run a business at a new location or you moved to study courses as a full-time student enrolled in a post-secondary program at a university.
Work from home or self-employment
Employees required to work from home may be eligible to deduct home office expenses. The requirement doesn’t have to be part of their employment contract and could be a written or verbal agreement.
Lemay notes that this year, there has been a change to how work-from-home expenses are calculated due to no fixed rate.
Employees can use this calculator to find out their eligible expenses.
Childcare expenses
You can claim expenses like daycares and summer camps and childcare providers like nannies as deductibles. There are requirements as to who can claim these benefits, which you can find out more about here.
Canada Child Benefit
The Canada Child Benefit is a tax-free monthly payment made to eligible families to help with the cost of raising children under the age of 18. The CCB may include the child disability benefit and any related provincial and territorial programs.
To keep getting your CCB, you must file your tax return on time every year, even if your income tax is exempt or you have no income.
Your CCB payment is not taxable. This means you will not receive a slip and don’t have to report it on your tax return.
Homebuyers’ amount
The Homebuyers’ amount is available to first-time or disabled homebuyers to claim a $10,000 non-refundable tax credit. A qualifying home under the credit includes:
- single-family houses
- semi-detached houses
- townhouses
- mobile homes
- condominium units
- apartments in duplexes, triplexes, fourplexes, or apartment buildings
You can claim up to $5,000 for the purchase of a qualifying home in 2021 or earlier if you meet the conditions listed here.
“You might have bought the house a year ago in January 2023, for example. So you still qualify. It’s important not to forget,” noted Lemay.
Tuition Tax Credit
Students are eligible for the tuition tax credit. If you are 16 or older and studying in a higher education institution (not high school), you’re eligible for this credit.
To qualify, the tuition you paid to attend each educational institution must be over $100.
The official tax receipt or form from your educational institution indicates the amount of eligible tuition fees that you paid for that calendar year.
The credit amount is calculated by multiplying the tuition you paid by 15% (the rate of the lowest federal tax bracket).
Multigeneral home renovation tax credit
The multigenerational home renovation tax credit (MHRTC) is a new refundable tax credit that can be claimed on your 2023 Income Tax and Benefit Return.
If you’re eligible, you can claim the credit for particular renovation expenses to create a self-contained secondary unit. The suit must be for a senior or an adult who is eligible for the disability tax credit to live with a qualifying relative.
The tax credit is for 15% of your costs, up to a maximum of $7,500, for each claim you are eligible to make.
Charities
All donations to eligible charities can be deducted from your taxes if you have a donation receipt (which can be requested any time you donate).
This dedication is non-refundable, though, which means it won’t contribute to a higher tax refund. However, it’s a great way to reduce any taxes that you owe. You’re also allowed to claim donations from up to five years back.
Claim medical expenses
Don’t throw away your receipts and prescriptions for dental checkups, insulin pens, or if you’ve had to buy gluten-free products due to celiac disease! You could claim medical expenses like these as non-refundable tax credits.
Canada Workers’ Benefit
The CWB offers financial relief to lower-income workers and their families. You can claim the benefit when filing your annual tax returns. Single taxpayers may receive a maximum amount of $1,428, and families may receive a maximum payment of $2,461. The amount may be reduced depending on your income threshold.
Popular provincial and territorial benefits
In addition to these federal benefits, each province and territory has its own set of provincial tax credits, which can further reduce your tax burden or contribute to a larger tax refund. You can read more about these on the CRA’s website.
Important tax information to know this year
Before filing your taxes, here are a few important notes to keep in mind.
The earliest you can file your taxes online is February 19 via the Canada Revenue Agency’s online system called Netfile.
If you filed on paper last year, the CRA should mail you the 2023 Income tax package by February 19, 2024.
How much your income is taxed is based on the federal tax brackets. Remember, you’re filing your taxes for the previous year, so you’ll need to refer to the federal income tax rates for 2023.
Canada Revenue Agency
Take note that Thursday, February 29, is also the last day for Canadian employers and the CRA to issue employees’ T4s, T4As, and T5s. You should get these forms within a few days of this deadline.
For those who are self-employed, the income tax deadline is June 15, 2024.
With files from Isabelle Docto and contributor Chris Liew.