Many Canadians are experiencing strains caused by the increased cost of living and inflation. Claiming tax credits can help offset the financial burden by putting extra money back in your pocket.
Every dollar you can save on taxes is an extra dollar that can be used to cover your bills and pay for vital expenses.
Below, I’ll share some of the top credits and deductions that you may be able to claim on your income tax return to help you save money.
Top government tax credits and deductions for this tax season
Some tax credits are offered by default and are automatically applied based on the information you provide in your tax returns. A good example of this is the GST/HST tax credit, which is automatically applied based on your household income.
However, you must manually apply for other tax credits (such as the Canada Child Benefit or home office tax credit) when filing your returns.
1. The caregiver tax credit
If you’re caring for a spouse or family member suffering from a mental or physical impairment, you may be able to claim certain expenses with the Canada caregiver credit. This credit must be claimed manually, and to be eligible, you must be able to prove that you’re a caregiver for:
- Either your or your spouse’s child or grandchild
- Either your or your spouse’s parents, grandparents, siblings, aunt, uncle, niece, or nephew
The dependent must also have lived in Canada for the year you claimed the credit. Depending on the dependent in question, you could claim between $2,350 and $7,525.
2. Home office tax credit (even if you’re an employee)
Working from home is more common than ever, but it also comes with expenses, such as:
- Increased power usage
- Increased internet data usage
- Creating a dedicated office space in your home
Many of these additional expenses can be claimed as a tax credit. You can even claim certain office supplies. Here’s a full list of what you can claim.
3. Moving expenses tax deduction
Moving to another province or city can come with a host of expenses, such as:
- Moving truck rental
- Fuel
- Renting storage units
- Paying movers
Both employees and self-employed workers can qualify for this tax credit. There are a few stipulations to apply for this credit, but the majority of moving expenses can be deducted from your income tax return.
Note that this isn’t a tax credit that you have to apply for but a tax expense deduction you can use to reduce your income when filing your taxes.
4. Capital loss tax deduction
The stock markets performed poorly in 2022, and many Canadians lost money on their investments. The good news is that you can claim these losses against your other capital gains for the year.
Although the capital loss tax credit can’t be used to deduct your income tax liability directly, it can reduce your capital gains tax liability.
If you’ve reduced your capital gains tax liability to $0, you can save the unused capital loss tax credit and apply it to future years (or up to three years prior).
To apply a capital loss to a previous year:
- You need to file an amendment to your tax return for the year in which you incurred the capital loss.
- You can only apply the capital loss to a year in which you had capital gains.
- The capital loss will reduce the amount of capital gains you had in that year, potentially resulting in a lower tax liability.
- To apply a capital loss to a future year:
- You don’t need to take any action in the year you incur the capital loss.
- You can use the capital loss to offset capital gains in future years until the capital loss is fully used up.
- You must claim the capital loss in the year you want to use it to offset capital gains.
For example, if you sold an asset such as a stock in 2022 and had a capital loss of $10,000, and you also sold a property and had a capital gain of $4,000, you can apply $4,000 of the capital loss to reduce the capital gain to $0. Then you can use the remaining $6,000 capital loss and apply it to prior or future years’ capital gains.
5. GST/HST tax credit
The GST/HST sales tax credit is automatically paid to eligible Canadians on a quarterly basis (every three months). Eligibility for this credit is based on your income reported the previous tax year and is reassessed on an annual basis.
6. Canada child benefit (CCB)
The CCB is a monthly payment issued by the CRA to parents or guardians of children under 18 years old to help with the costs of raising children. The amount you’ll receive depends on your reported income, your living situation, and the number of dependent children you’re caring for.
The federal CCB payment may also be combined with provincial child tax credits as well, which can increase the amount you’re eligible to receive.
This benefit must be applied for manually through birth registration, your CRA My Account, or by mail.
Can you transfer tax credits to your spouse or partner?
Bonus tip here: if you’ve already used tax credits to reduce your income tax liability to $0, then you might be able to transfer a certain amount of your unused tax credits to your spouse or common-law partner to help them reduce their taxes.
This can be done using the «Schedule 2 – Transfer of Amounts from Your Spouse or Common-Law Partner» form. It’s important to note that not all tax credits can be split, and some restrictions apply.
Government credits often go unclaimed
Canadians can file their income tax returns by paper or online using NETFILE-certified tax software. Some of these programs may help by suggesting tax credits that you may be eligible for, which can be very helpful.
The reality is that many tax credits go unclaimed, and over $1.4 billion worth of Canadian tax refunds still remained uncashed as of August 2022.
If you’re unsure which tax credits you may be eligible for, it may be a good idea to consider hiring an accountant to help you file. While your accountant may charge money upfront, the amount that they could help you save may be far more.Before you do your taxes, take note of these tax credits and deductions you may not have known about