What follows is a list of the most important Federal Government credits and benefits likely to be relevant to clients of the CVITP.
Here is a brief explanation of some of the terms used above:
– Refundable: A credit that is paid to the recipient whether or not they pay income tax; where the client does not have to pay any tax at all, the full amount of a Refundable Credit is paid to the client; where the client has income tax to pay but less than the Refundable Credit, the client receives the net difference; where the client has more income tax to pay than the Refundable Credit, this is used to reduce the amount of tax the client owes.
– Non-refundable: A credit that is applied against the income tax to reduce the amount of income tax owed by the recipient but is not itself paid to the recipient; in some cases, the credit will exceed the amount of income tax, thereby reducing the income tax owed by the client to zero.
– Income-tested: The credit or benefit is only paid to the recipient if their income is low; generally, as the client’s income rises, the amount paid to the client is reduced.
– Application required: A separate application is required to obtain this benefit or credit; the return is used to maintain the benefit or use the credit.
General information on the various credits and benefits can be found below. For more detailed information, look at the links provided in the text.
1. Climate Action Incentive
Climate Action Incentive (otherwise known as the “Carbon Tax Credit”): This is tax-free lump sum payment to all residents of Alberta, Manitoba, New Brunswick, Ontario and Saskatchewan who submit an income tax and benefit return. For provinces and territories that have voluntarily adopted the federal carbon pollution pricing system, the proceeds from carbon pollution pricing under the federal system are returned directly to the governments of these jurisdictions. British Columbia and Northwest Territories provide rebates to their residents through the income tax and benefit system. (British Columbia’s comes in quarterly installments and is income-tested.) Newfoundland and Labrador, Nova Scotia, Nunavut, Prince Edward Island, Quebec and Yukon do not provide rebates on carbon pollution pricing to their residents.
2. GST/HST Credit
GST/HST Credit: This is a tax-free quarterly payment. It is to help individuals and families with low and modest incomes offset all or part of the goods and services tax or harmonized sales tax they pay. It may also include payments from some provinces and territories.
3. Canada Child Benefit
Canada Child Benefit: This is a tax-free monthly payment to eligible families to help with the cost of raising children under 18 years of age. Families must apply for the benefit. The amount paid per child depends on the age of the child. It may also include payments from some provinces and territories. While it is not taxable, the amount paid will also vary based on the income reported by the parents for the previous tax year. To maintain the payments, parents must be current in filing their income tax and benefit returns.
4. Guaranteed Income Supplement
Guaranteed Income Supplement: This is a tax-free monthly payment made to seniors (65 years and older) who live in Canada and receive Old Age Security. Seniors must apply for this benefit. The amount paid varies depending on the amount of income the client received from other sources; in the case of a couple, the spouse or common-law partner’s income will also be a factor in determining the amount paid to the client. To maintain the payments, seniors must be current in filing their income tax and benefit returns. If a recipient is outside of Canada for more than six consecutive months, they are not entitled to receive the benefit.
5. Canada Workers Benefit
Canada Workers Benefit: This is a refundable tax credit which provides tax relief for eligible low-income individuals who receive employment income. The application is done automatically (using Schedule 6) when the tax software is completed by the volunteer. The amount paid depends on a number of factors including the client’s marital status, the province or territory in which they reside, their working income, their net income, eligible dependents and eligibility for the disability supplement. The amount paid to the client is gradually reduced if the client’s income is above a threshold amount.
6. Disability Tax Credit
Disability Tax Credit: This is a non-refundable tax credit that helps persons with disabilities or their supporting persons to reduce the amount of income tax they may have to pay. To benefit from this tax credit, one must first apply to get approval from the CRA. Once the CRA has approved the application, the individual can claim this tax credit in their income tax and benefit return. If the client has a dependant who is eligible for this credit, the client may be able to claim part or all of the disability amount ($8,416 in the 2019 tax year). There is also a supplementary amount (up to $4,909 in the 2019 tax year) which can be claimed for persons under 18 years of age who qualify for this credit.
7. Child Disability Benefit
Child Disability Benefit: This is a tax-free monthly payment made to families who care for a child under age 18 with a severe and prolonged impairment in physical or mental functions. Families do not need to apply; if the family is already getting the Canada Child Benefit for the child who is eligible for the Disability Tax Credit, this benefit will be provided automatically. The amount paid depends on the amount of income the parent(s) received from other sources. To maintain payments, parents must continue to remain eligible for the Canada Child Benefit and the child must remain eligible for the Disability Tax Credit. Parents must also be current in filing their income tax and return benefits.
8. Medical Expenses
Medical Expenses: This is a non-refundable tax credit which helps individuals with eligible medical expenses (including those for their spouse or common-law partner and eligible dependants) reduce the amount of income tax they may have to pay. The maximum amount a client can claim is $2,352 (in the 2019 tax year) or 3% of their net income; similar amounts can be claimed for dependants with eligible medical expenses.
9. Charitable Donations
Charitable Donations: This is a non-refundable tax credit which helps individuals with donations to registered charities reduce the amount of income tax they may have to pay. When the volunteer inserts the relevant information in the tax software, the amount of the credit is calculated automatically (using Schedule 9).
10. Federal Political Contributions
Federal Political Contributions: This is a refundable tax credit which provides tax relief for individuals contributing to a registered federal political party or candidate for election to the House of Commons. When the volunteer inserts the relevant information in the tax software, the amount of the credit is calculated automatically.