Completing your tax return can sometimes feel a little overwhelming. There are so many forms to fill, you may find yourself wondering if you’ve covered all of the available tax credits and deductions. Have you left anything out?
Approximately 18 million Canadians receive a tax refund each year, with an average of $1,895 per person.1 While it’s not free money (it was yours to begin with — the government was just holding onto it for a while), it can be exciting to receive nonetheless. To help you maximize your tax return, we’ve highlighted six key tax credits and deductions to be aware of as you prepare to file.
Don’t know the difference between a deduction and a credit? No worries. Tax deductions reduce your taxable income, while tax credits reduce the amount of tax you pay on your taxable income. To learn more about taxes and how to build a tax strategy, visit the TD Direct Investing Tax Centre.
Home buyers’ amount
Who is eligible: First time home buyers (as defined under the Income Tax Act in Canada)
How much you can claim: Up to $5,000 of the purchase price, with potential tax savings up to $750
If you purchased your first home in 2021 (congratulations, by the way!), you may be eligible for the home buyers’ amount. Your purchase will be eligible provided you (or your spouse or common law partner) acquired the home in the relevant tax year and did not live in another home you owned in any of the four preceding years. Bear in mind: If the home was a joint-purchase, only one of you will be able to claim the home buyers’ amount.
Digital news subscription tax credit
Who is eligible: Anyone who paid a subscription fee to a recognized Canadian journalism organization in 2021
How much you can claim: Up to $500
Calling all news junkies — this one’s for you. The digital news subscription tax credit was introduced to encourage citizens to support Canadian journalism. To qualify for the credit, the subscription must be in your name and provide access to predominantly written digital content. You can claim this type of expense on Line 31350 of your T1 tax form. A complete list of eligible news organizations can be found on the CRA’s website.
Canada Training Credit
Who is eligible: Anyone who was between 26 and 66 years old at the end of the year, and took a post-secondary course or paid to sit a licensing examination in 2021
How much you can claim: 50% of eligible tuition and fees paid, up to the Canada Training Credit Limit shown on your latest notice of assessment (whichever is less)
If you took a course at a Canadian post-secondary institution in 2021, you may qualify for the Canada training credit. You may also qualify for this tax credit if you sat an occupational examination, provided it was required to obtain a professional status or license recognized by provincial or federal statute. Tuition and examination fees are considered eligible if they were not paid for or reimbursed by your employer or a government training program.
Federal political contributions
Who is eligible: Canadians who donated to a federal political party or candidate in a federal election
How much you can claim: The maximum available credit is $650, provided you donated $1,275 or more
You may be aware that you can claim a tax credit for charitable contributions, but did you know you can also claim a credit for donations made to a political party or candidate in a federal election? The claim can be registered on Line 40900 of your tax return. Like other tax incentives, contributions are subject to certain limitations and thresholds. It’s also important to note that if you received (or expect to receive) any advantage for contributing to a political organization, the amount you can claim for tax purposes may be affected. For instance, if you attended a political convention in 2021, the registration fees could be counted as a political contribution, but any meals or lodging provided would count as an advantage. Visit the CRA’s website for more details.
Work from home expenses
Who is eligible: Employees who worked from home more than 50% of the time for at least four consecutive weeks in 2021
How much you can claim: $500 using the “flat rate method”
In 2020, the federal government introduced the home office expense tax deduction for those who worked from home due to the COVID-19 pandemic. This program was renewed for the 2021 tax year. Employees can claim $500 using the “flat rate method,” without needing any verification from an employer, or claim the actual amount paid using the “detailed method.” Individuals may decide to use the detailed method if their home office expenses were higher than $500 and they have the receipts to prove it. Details pertaining to the flat rate calculation method versus the detailed calculation method, including a list of eligible expenses, can be found on the CRA’s website.
Who is eligible: Anyone who experienced a capital loss in 2021
How much you can claim: Any capital loss you incurred during the 2021 calendar year
If you experienced a capital loss in 2021, you may be able to deduct that loss against your 2021 capital gains. A capital loss occurs when you sell a capital property for less than its adjusted cost base, generally the original purchase price subject to certain adjustments. When your capital losses exceed your capital gains for the year, the excess can be carried back and deducted against the past three years capital gains or carried forward indefinitely. A variety of asset types can be considered capital property for tax purposes, depending on the circumstances, but some of the most common include equity investments, debt securities and real estate. Tax-loss selling is a strategy many investors use to offset their capital gains before year-end, but there are non-tax issues to consider with such transactions and it can get a little complicated. If you have questions, it may be helpful to speak to a tax professional.
For more information about tax credits or deductions, including those listed here, visit the CRA’s website. If you’re looking for more information on how to build a tax strategy that suits your needs, it may also be helpful to visit the TD Direct Investing Tax Centre.
- https://www.canada.ca/en/revenue-agency/news/2022/02/ontario-tax-filing-season-starts-today.html ↩