6 6 – Tax credits are provided by both the federal and provincial governments in determining tax payable. Under the federal-provincial tax collection agreement, the provinces can top up the federal amounts or add their own credits if they wish, but at a minimum they must offer the same basic credits as those available federally. A deduction reduces taxable income on which tax is calculated. A credit is a direct reduction of tax. Tax credits are classified as refundable tax credits and non-refundable tax credits. Refundable credits are treated the same as withholdings and instalments and are refunded if the amounts exceed the tax payable. Non-refundable credits reduce the tax payable in a year but are not refunded if the credits exceed the tax payable. 6 6.1 Personal Tax Credits – Basic personal amount Age amount available to those over 65. The amount of this credit is dependent on the elder’s income level Spouse/ common law partner amount if a spouse or partner has income under a specified amount Eligible dependant credit Taxpayers may claim the equivalent-to-spouse credit if, at any time during the year, they were single, divorced or separated and supported a qualified relative who lived with and was dependent on them. The equivalent-to-spouse credit is calculated in the same manner as the spousal credit and is based on the following factors: The dependent, other than a child, must be a Canadian resident A dependent child must be either under 18 at any time in the year, or any age if dependent because of mental or physical infirmity The claim may only be made in respect of one other person Where two or more individuals are otherwise entitled to a credit in respect of the same person, only one is able to claim the credit The credit cannot be claimed for an individual on behalf of whom the taxpayer is required to pay a support amount To qualify, the dependent does not need to have lived with or be supported by the taxpayer throughout the entire year Infirm dependant credit is available for those individuals over the age of majority who are dependent on the taxpayer. The credit is adjusted for the net income of the infirm dependant.
6 – 6 Tax credits are provided by both the federal and provincial governments in determining tax payable. Under the federal-provincial tax collection agreement, the provinces can top up the federal amounts or add their own credits if they wish, but at a minimum they must offer the same basic credits as those available federally. A deduction reduces taxable income on which tax is calculated. A credit is a direct reduction of tax. Tax credits are classified as refundable tax credits and non-refundable tax credits. Refundable credits are treated the same as withholdings and instalments and are refunded if the amounts exceed the tax payable. Non-refundable credits reduce the tax payable in a year but are not refunded if the credits exceed the tax payable. 6 – 6.1 Personal Tax Credits Basic personal amount Age amount available to those over 65. The amount of this credit is dependent on the elder’s income level Spouse/ common law partner amount if a spouse or partner has income under a specified amount Eligible dependant credit Taxpayers may claim the equivalent-to-spouse credit if, at any time during the year, they were single, divorced or separated and supported a qualified relative who lived with and was dependent on them. The equivalent-to-spouse credit is calculated in the same manner as the spousal credit and is based on the following factors: The dependent, other than a child, must be a Canadian resident A dependent child must be either under 18 at any time in the year, or any age if dependent because of mental or physical infirmity The claim may only be made in respect of one other person Where two or more individuals are otherwise entitled to a credit in respect of the same person, only one is able to claim the credit The credit cannot be claimed for an individual on behalf of whom the taxpayer is required to pay a support amount To qualify, the dependent does not need to have lived with or be supported by the taxpayer throughout the entire year Infirm dependant credit is available for those individuals over the age of majority who are dependent on the taxpayer. The credit is adjusted for the net income of the infirm dependant.
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