Tax Credits & Deductions
Comprehensive guide to federal and provincial tax credits and deductions available to Canadian taxpayers in 2024.
Credits vs. Deductions: Understanding the Difference
Tax Credits
- • Reduce taxes owed dollar-for-dollar
- • More valuable than deductions
- • Applied after calculating tax owed
- • Non-refundable vs refundable types
- • Federal rate: ~15% minimum value
Example: $1,000 tax credit saves you $1,000 in taxes
Tax Deductions
- • Reduce taxable income
- • Value depends on marginal tax rate
- • Applied before calculating tax owed
- • Higher income = higher value
- • Examples: RRSP, childcare expenses
Example: $1,000 deduction @ 30% rate saves $300 in taxes
Major Federal Tax Credits (2024)
| Credit Type | Maximum Amount | Tax Savings (15%) | Notes |
|---|---|---|---|
| Basic Personal Amount | $15,705 | $2,356 | Automatic for all taxpayers |
| Spouse/Common-law | $15,705 | $2,356 | Reduced by spouse's net income |
| Canada Child Benefit | $7,787 (under 6) | Refundable | Income-tested, monthly payments |
| Age Amount (65+) | $8,790 | $1,319 | Clawed back at higher incomes |
| Canada Pension Plan | $3,867 | $580 | Based on contributions made |
| Employment Insurance | $1,049 | $157 | Based on premiums paid |
Medical & Disability Credits
Medical Expense Tax Credit
Calculation
- • Expenses > 3% of net income or $2,759 (whichever is less)
- • Maximum credit: 15% of eligible expenses
- • Can claim for spouse and dependents
- • 12-month period ending in tax year
Eligible Expenses
- • Prescription medications
- • Dental and vision care
- • Medical devices and equipment
- • Attendant care and nursing home fees
- • Therapy and treatment costs
Disability Tax Credit (DTC)
Federal Amount (2024): $9,428 (~$1,414 tax savings)
Child Supplement: Additional $5,765 for children under 18
Eligibility: Must have Form T2201 approved by CRA
Transferable: Can transfer to spouse, parent, or grandparent
Opens Access To: RDSP, Child Disability Benefit, other programs
Education & Learning Credits
Tuition Tax Credit
- • 15% federal rate on eligible tuition
- • Can carry forward unused amounts
- • Transfer up to $5,000 to spouse/parent
- • Includes professional exam fees
- • Must have official tax receipts
Canada Training Credit
- • Refundable credit up to $250/year
- • Lifetime limit: $5,000
- • For eligible training courses
- • Income between $10,000-$150,000
- • Must be 25-65 years old
Charitable & Political Donations
Charitable Donation Credit
Federal Rates
- • First $200: 15%
- • $200-$200,000: 29%
- • Over $200,000: 33%
- • Can combine spouse's donations
- • Carry forward up to 5 years
Strategies
- • Bundle donations every few years
- • Donate appreciated securities
- • Consider donor-advised funds
- • Time large donations with high-income years
- • Keep all donation receipts
Political Contribution Credit
• First $400: 75% credit (maximum $300)
• $400-$750: 50% credit on excess
• $750-$1,575: 33.33% credit on excess
• Maximum annual credit: $650
• Applies to federal, provincial, and municipal contributions
Major Tax Deductions
| Deduction Type | Limit/Maximum | Key Requirements |
|---|---|---|
| RRSP Contributions | $31,560 or 18% of earned income | Based on previous year's earned income |
| Childcare Expenses | $8,000 (under 7), $5,000 (7-16) | Lower-income spouse claims |
| Employment Expenses | Various limits by type | Form T2200 from employer required |
| Moving Expenses | Unlimited if eligible | 40km closer to work/school |
| Support Payments | Full amount paid | Court order/written agreement required |
| Interest on Investment Loans | Full amount if eligible | Must be for income-producing investments |
Ontario-Specific Credits & Benefits
Ontario Trillium Benefit
- • Combines 3 credits into monthly payments
- • Ontario Energy and Property Tax Credit
- • Northern Ontario Energy Credit
- • Ontario Sales Tax Credit
- • Income-tested, automatic if eligible
Other Ontario Credits
- • Ontario Child Benefit
- • Ontario Senior Homeowners' Property Tax Grant
- • Political contribution credit (provincial)
- • Ontario Focused Flow-Through Share Tax Credit
- • Co-operative Education Tax Credit
Common Mistakes & Pro Tips
Common Mistakes to Avoid
- • Forgetting to claim all eligible medical expenses
- • Not combining spouse's donations for better credit rate
- • Missing employment expense claims when eligible
- • Failing to carry forward tuition credits
- • Not keeping proper receipts and documentation
Optimization Strategies
- • Time charitable donations to maximize the higher rate credit
- • Consider which spouse should claim certain credits
- • Keep detailed records throughout the year
- • Review all available provincial credits
- • Plan timing of expenses across tax years
Maximize Your Tax Credits & Deductions
Ensure you're claiming all eligible credits and deductions. Professional guidance can help you save hundreds or thousands in taxes.
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