Ask an Accountant: Non – refundable tax credits

Francesca Giroux, CPA
For the Lakeside Leader

Non-refundable tax credits can be claimed on your personal income tax return to reduce your federal tax. However, if the sum of these credits is greater than your federal tax, you will not get a refund for the difference. This is especially important for couples, who ideally should prepare their returns together to determine which individual should claim certain credits. For example, if one spouse has achieved their maximum refund (all tax paid is being refunded) and is still claiming credits of an amount greater than their federal tax, the other spouse should consider claiming the excess credits.
Non-refundable tax credits are worth the same on each return (i.e. 15 per cent of the credit amount), so the higher income spouse does not necessarily have to claim the credit in a situation where only one spouse is eligible to claim. For example, credits such first-time home buyer’s amount, charitable donations, and medical expenses should only be claimed on the return of one spouse. If one spouse is in a refund position and the other owes you can move some of the tax credits to the spouse that owes without affecting the total tax owing or refundable. That being said, the spouse with the lower net income should claim medical expenses as the amount of the credit that can be claimed is the total medical expenses less the lesser of $2,268 and three per cent of net income. Charitable donations and tuition credits are the only non-refundable tax credits that can be carried forward.
All individuals can claim the basic personal amount; and spousal amount if they supported a spouse during the year that has a net income lower than $11,635. Employed individuals (other than self-employed) can claim the Canada Employment amount of $1,178. Individuals who paid Employment Insurance (EI) and Canada Pension Plan (CPP) premiums will also receive a credit for the amount paid. If CPP or EI was overpaid during the year it will be refunded on your tax return.
For more information regarding non-refundable tax credits such as the credit for interest paid on your student loans, tuition, education and textbook amounts, public transit amounts, medical expenses and donations and gifts, contact your CPA.
Please e-mail your questions to frankie@nashgirouxllp.ca
Information provided is of a general nature. As each individual or company’s situation is unique, you may wish to consult with your CPA for information specific to your own needs.

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