03/26/2025
๐๐ฉ๐ญ๐ข๐ฆ๐ข๐ณ๐ข๐ง๐ ๐ฒ๐จ๐ฎ๐ซ ๐ญ๐๐ฑ ๐ซ๐๐๐ฎ๐ง๐ ๐ฌ๐๐ก๐๐๐ฎ๐ฅ๐
For many Canadians, spring goes hand-in-hand with tax refunds.
In 2024, the federal government paid out an average of $2,293 in tax refunds to eligible individuals. Here are the deductions and credits you can claim on your tax return, plus a few ideas for how to use your refund, if you get one.
๐. ๐๐๐๐ฎ๐๐ญ๐ข๐จ๐ง๐ฌ
Tax deductions are amounts that lower your taxable income, making it appear as if you earned less money during the year. When you lower your income, you can sometimes move to a lower tax bracket, which then lowers your average tax rate.
๐๐๐๐ ๐๐ง๐ ๐
๐๐๐ ๐๐จ๐ง๐ญ๐ซ๐ข๐๐ฎ๐ญ๐ข๐จ๐ง๐ฌ
Money paid into a registered retirement savings plan or a first home savings account is tax deductible. But be careful, if you withdraw money from your RRSP or FHSA (for anything other than the purchase of a first home), it will count as a source of income for the current year.
๐๐จ๐ฏ๐ข๐ง๐ ๐๐ฑ๐ฉ๐๐ง๐ฌ๐๐ฌ
If you were required to move to be at least 40 km closer to your school or work, you are entitled to deduct your moving expenses.
๐๐ก๐ข๐ฅ๐๐๐๐ซ๐ ๐๐ฑ๐ฉ๐๐ง๐ฌ๐๐ฌ
If you are required to make childcare arrangements to go to work, operate a business or go to school, childcare costs can be deducted from your income.
๐๐๐ง๐ฌ๐ข๐จ๐ง ๐ข๐ง๐๐จ๐ฆ๐ ๐ฌ๐ฉ๐ฅ๐ข๐ญ๐ญ๐ข๐ง๐
Another way to lower your income to transfer a portion of your eligible pension income to your spouse if your spouseโs income is lower than yours. This transfer may drop you into a lower tax bracket.
๐. ๐๐๐ฑ ๐๐ซ๐๐๐ข๐ญ๐ฌ
Credits directly reduce the amount of tax you owe. Some are refundable (you receive money even if you have no tax to pay), while others are non-refundable (they reduce or cancel the tax you would have paid, without exceeding that amount).
Certain non-refundable tax credits can be transferred between spouses, parents or grandparents, or carried over to subsequent years if the income tax owing is not high enough to use the entire credit.
๐๐๐๐ข๐๐๐ฅ ๐๐ฑ๐ฉ๐๐ง๐ฌ๐๐ฌ
Eligible health care expenses (prescription drugs, dental care, eyeglasses, etc.) may entitle you to a tax credit, as well as contributions to a drug insurance plan. However, the amounts reimbursed by your insurance are not deductible. Subtract those from your amounts declared and save your receipts.
๐๐ก๐๐ซ๐ข๐ญ๐๐๐ฅ๐ ๐๐จ๐ง๐๐ญ๐ข๐จ๐ง๐ฌ
Generosity can pay off! The donations you make in a year entitle you to a tax credit.
๐๐ฎ๐ข๐ญ๐ข๐จ๐ง ๐๐๐๐ฌ
Post-secondary students may receive a tax credit for their tuition fees. Schools produce a tuition fee statement right before tax season to help students prepare their income tax return.
๐๐จ๐ฎ๐ฌ๐ ๐ฉ๐ฎ๐ซ๐๐ก๐๐ฌ๐ ๐๐จ๐ฌ๐ญ๐ฌ
Did you buy a house last year? To help first-time buyers access the real estate market, the federal and provincial (Quebec) government offers them a tax credit of up to $1,500.
๐๐จ๐ฌ๐ฌ๐ข๐๐ฅ๐ ๐ญ๐๐ฑ ๐๐๐๐ฎ๐๐ญ๐ข๐จ๐ง๐ฌ ๐๐ฎ๐ ๐ญ๐จ ๐ญ๐๐ฅ๐๐ฐ๐จ๐ซ๐ค
If you worked from home some of your work-related expenses can be deducted on your tax return.
๐. ๐๐๐ค๐ ๐ข๐ญ ๐ก๐๐ฉ๐ฉ๐๐ง: ๐ฐ๐ก๐๐ญ ๐ญ๐จ ๐๐จ ๐ฐ๐ข๐ญ๐ก ๐ฒ๐จ๐ฎ๐ซ ๐ญ๐๐ฑ ๐ซ๐๐๐ฎ๐ง๐
Once your deductions and credits have been applied, you may receive a refund. You probably have lots of ideas for how to use it, but there are some things you can do that will help it pay off even more:
- Invest in plans that offer tax deductions like an RRSP or FHSA.
- Put it into a tax-free savings account (TFSA) to reduce your financial worries: your money will be accessible at any time so youโll be able to deal with the unexpected.
- Pay off your bad debts (credit cards, for example) and feel better about your finances.
- Consider a Registered Education Savings Plan (RESP) for your loved ones' education and maximize government grants of up to 30%.
- Protect your savings and your life goals by taking out disability or critical illness insurance.
But donโt forget to spoil yourself a little! Itโs all about balance.
๐๐ก๐ ๐ฆ๐ฎ๐๐ก-๐๐ง๐ญ๐ข๐๐ข๐ฉ๐๐ญ๐๐ ๐ญ๐๐ฑ ๐ซ๐๐๐ฎ๐ง๐
Once you have received as big of a refund as you can, use this money intelligently. Itโs not a gift, but rather, a refund of the portion of your income you overpaid during the year. Deposit this money in your TFSA, your RRSP or your FHSA, invest it or use it to pay a loan or debt.
Schedule an appointment with me , who can guide you and help you make the most of your money.
Visit the Canada Revenue Agency website to see a detailed list of deductions and tax credits.
๐๐ฆ๐ฉ๐จ๐ซ๐ญ๐๐ง๐ญ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง
Once you complete your income tax return, keep the receipts, documents and forms used for your calculations. If you are audited, you may be asked for up to seven yearsโ worth of supporting documents.
๐๐๐ฉ๐ฉ๐ฒ ๐ญ๐๐ฑ ๐ฌ๐๐๐ฌ๐จ๐ง!
