It’s that time of year again. It’s time to file your taxes.
As you begin to prepare for the 2023 tax season, take a moment to consider your tax refund. It is, after all, the most exciting part of this whole ordeal, and it could mean a significant chunk of change finds its way back into your pocket. Over 18 million Canadians received a tax refund in 2022, with the average cheque made out for a cool $2,092. That’s enough for a short holiday, a month or two of groceries, a new computer or even — table-top drum roll please — a boost to your investment portfolio. Your tax refund is yours to spend however you’d like.
To help ensure your tax refund is as big as it can be, check out our list of this year’s credits and deductions you won’t want to miss.
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.
Tax credits in Canada
First-Time Home Buyers’ Tax Credit
If you purchased your first home in 2022 (congratulations, by the way!), you may be eligible for the First-Time Home Buyers’ Tax Credit. Prior to 2022, you could only claim up to $5,000 of the purchase price, but this amount was raised to $10,000 for 2022. Your purchase is 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, a couple can share the tax credit but the total credit can’t exceed the $10,000.
Who is eligible: First-time home buyers (as defined under the Income Tax Act in Canada)
How much you can claim: Up to $10,000 of the purchase price, with potential tax savings of up to $1,500
Digital News Subscription Tax Credit
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. If more than one person is named as the subscriber — such as a couple — they can share the credit. 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.
Who is eligible: Anyone who paid a subscription fee to a recognized Canadian journalism organization in 2022
How much you can claim: Up to $500
Canada Training Credit
If you completed a course at a Canadian post-secondary institution in 2022, you may qualify for the Canada Training Credit. You may also qualify if you wrote 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 not considered eligible if they were paid for or reimbursed by your employer or a government training program.
Who is eligible: Canadians between the ages of 26 and 66 who took a licensing examination or a course at a Canadian post-secondary institution in 2022
How much you can claim: 50% of eligible tuition and training fees paid, up to the Canada Training Credit Limit shown on your latest notice of assessment (whichever is less)
Federal Political Contribution Tax Credit
Did you know? Participating in our democracy can come with tax perks. If you donated to a federal political party in 2022, you may be eligible to claim the Federal Political Contribution Tax Credit. The credit is subject to specific limits and thresholds, and the amount you receive back may be affected if you also received (or expect to receive) any additional advantages for your contribution. For example, if you paid to attend a political party’s event, the entry fee may be claimed, but any gift bags or food provided could count as an advantage. Similar tax credits exist for provincial political party donations as well. Visit your province’s government website for more details.
Who is eligible: Canadians who donated to a federal political party in 2022
How much you can claim: The fair market value of your or your spouse’s contribution, up to certain limits. The maximum available credit is $650, provided you donated $1,275 or more
Medical Expense Tax Credit
Most medical expenses not covered under your provincial health care plan can be claimed under the Medical Expense Tax Credit, with some limitations. Eligible expenses include ambulatory services, laboratory services and laser eye surgery, among others. The complete list can be found here. Canadians can claim these expenses in any 12-month period ending in 2022 if they weren’t claimed in 2021: For example, a claim between July 2021 – June 2022 is valid. Expenses that have been or will be reimbursed by an insurance plan or third party are not eligible.
Who is eligible: Canadians who paid for an eligible medical expense paid for by themselves, their spouse or common-law partner.
How much you can claim: A specific formula lays out how much you will actually receive
Tax deductions in Canada
Work from home tax deduction
The temporary flat rate method for claiming home office expenses was first introduced in 2020 as a response to the COVID-19 pandemic and continues to be available to taxpayers. Employees who worked from home due to the pandemic for more than 50% of the time for at least four consecutive weeks can claim up to $500 using the “flat rate method” without needing their employer to provide a completed and signed T2200 form. If the taxpayer has other employment expenses beyond home office expense, they may prefer to claim the actual amount paid using the “detailed method.” Individuals may decide to use the detailed method if their employment 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 worked from home more than 50% of the time for a period of at least four consecutive weeks in 2022, due to the COVID-19 pandemic
How much you can claim: $500 using the “flat rate method”
2022 was a difficult year for many Canadians. If you experienced a capital loss in 2022, you may be able to deduct that loss against your 2022 capital gains. A capital loss occurs when you sell a capital property for less than you paid for it (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 help offset their capital gains before December 31 of 2022, 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.
Who is eligible: Anyone who experienced a capital loss in 2022
How much you can claim: Any capital loss you incurred during the 2022 calendar year
As you prepare your tax filing, don’t forget to review any provincial credits or deductions you may be eligible to receive as well. For example, if you’re a resident of Ontario, you might be eligible for the Ontario Staycation Tax Credit which offers up to $400 for any travel taken within the province of Ontario in 2022.
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 help build a tax strategy that suits your needs, it may also be helpful to visit the TD Direct Investing Tax Centre.
How do I get tax credit in Canada?
You can claim a variety of tax credits in Canada by filling out the required tax form for each credit. Learn more on the CRA website.
Is mortgage interest tax deductible in Canada?
No, mortgage interest is not tax deductible in Canada. If you hold U.S. property, your mortgage interest may be deductible under certain circumstances.
What is a tax credit vs. refund?
Tax deductions in Canada reduce your taxable income, while tax credits reduce the amount of tax you pay on your taxable income.