To determine if you get money back from a tax credit, we need to look at what tax credits are and how they work.

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Tax credits:

- May be refundable or non-refundable

- Tax credits are amounts that reduce the tax you pay on your taxable income.

- The more tax credits that apply to you, the more you can reduce your income tax.

- The federal, provincial and territorial governments each provide tax credits, which you can use to lower your taxes.

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Refundable tax credits:

- Refundable tax credits are credits that will be paid to you if you are eligible.

- If you qualify for a refundable credit and the amount of the credit is larger than the tax you owe, you will receive a refund for the difference.

- Often the federal or provincial government pays them to you in a series of payments throughout the year to assist with living expenses.

- Federal refundable tax credits include:

• the goods and services tax/harmonized sales tax (GST/HST) credit
• the Canada Workers Benefit (CWB)

- Some provinces also offer refundable tax credits that apply to provincial or territorial income tax.

- For example, if you owe $800 in taxes and qualify for a $1,000 refundable credit, you would receive a $200 refund.

- Typically, individuals  file a tax return detailing their income, deductions, credits before April 30 of the following year to figure out the actual tax they owed.

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Non-refundable tax credits:

- A non-refundable tax credit can only reduce any taxes owing.

- For example, if you had a $1,500 actual tax credit, but only owed $1,000 in taxes, it would reduce your tax bill to $0 .

Some common non-refundable tax credits you might be familiar with include:

• Basic personal amount
• Age amount
• Spousal/common-law partner amount
• Medical expenses
• Charitable donations

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- Eligibility requirements of these types of credits are based on your personal and family situation (e.g. your household income, number of family members that live with you, marital status, etc.).

- While these credits don’t result in a tax refund, you can transfer the unused portion of certain non-refundable credits to your spouse or common-law partner.

- Some of the non-refundable credits that you can transfer to your spouse include the age amount, disability amount, tuition, education and textbook amounts. Remember, these amounts can only be transferred if they aren’t needed to reduce your own tax payable.

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Example:

Tyler’s tax owing for 2016 is $250; fortunately, he’s eligible to claim $600 in non-refundable tax credits on his return. While these credits will reduce his amount owing to zero, the remaining credit amount ($600 - $250 = $350) won’t be added to his refund amount.

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A tax credit can and can't get you money back. Reflect on your personal situation and the above info to determine if tax credits can result in money back to you (e.g. refund).

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