Tax Credits Newcomers Commonly Miss in Canada

The Difference Between a Tax Credit and a Tax Deduction

Before diving in, it helps to understand the difference:

• Tax deduction: Reduces your taxable income. If you earn $70,000 and have $5,000 in deductions, you are taxed on $65,000.
• Tax credit: Directly reduces the tax you owe. A $500 non-refundable tax credit saves you $500 in tax (not $500 × your marginal rate).
• Refundable tax credit: Unlike a non-refundable credit, a refundable credit can result in a refund even if your tax owed is zero.

Credits You Might Be Missing

1. GST/HST Credit (Refundable)

What it is: A quarterly payment to low- and middle-income Canadians to offset the GST or HST they pay on goods and services.

How to claim it: File your tax return. That is it. The CRA automatically assesses your eligibility.

How much: Varies by income and family size — roughly $300–$600/year for a single person, more for families. Paid quarterly (January, April, July, October).

2. Basic Personal Amount

What it is: Every Canadian resident is entitled to a basic personal amount (~$15,700 federal in 2025) — the amount of income on which you pay zero federal tax.

How to claim it: Applied automatically by tax software. But make sure your province's basic personal amount is also claimed (each province has its own).

3. Moving Expenses

What it is: If you moved to Canada (or within Canada) to start a new job or attend school full-time, and your new home is at least 40 km closer to your new workplace or school, you can deduct eligible moving costs.

Eligible expenses include: Travel costs, temporary accommodation, storage, lease-breaking fees at your old home, and some costs of selling your old home.

How to claim it: Form T1-M. Keep all receipts.

Limitation: You can only deduct moving expenses against employment or self-employment income earned at the new location.

4. Canada Workers Benefit (CWB) (Refundable)

What it is: A refundable tax credit for low-income working Canadians. As of 2023, an advance portion is paid quarterly.

Eligibility: You must have earned income and meet income thresholds (varies by province, but roughly under $35,000–$45,000 for single adults).

How to claim it: Schedule 6 of your T1 return. Tax software handles it automatically.

5. Tuition Tax Credit

What it is: If you attended an eligible post-secondary institution in Canada, you can claim the tuition you paid as a tax credit.

How to claim it: Your educational institution issues a T2202 slip showing eligible tuition. Enter this in your return.

Transfer rules: If you have more credits than you owe in taxes, you can transfer up to $5,000 in unused tuition credits to a parent, grandparent, or spouse.

6. Medical Expense Tax Credit

What it is: You can claim eligible medical expenses above a certain threshold (either $2,759 or 3% of your net income — whichever is less) as a non-refundable tax credit.

Eligible expenses include: Prescription drugs, dental treatments (not covered by insurance), glasses and contacts, physiotherapy, and many others.

How to claim it: Keep all receipts. Medical expenses can be claimed for any 12-month period ending in the tax year.

7. Charitable Donation Tax Credit

What it is: Donations to registered Canadian charities earn you a tax credit — 15% on the first $200, and 29%–33% on donations above $200.

How to claim it: Keep your donation receipts. Enter them in your tax return.

Tip: Combining multiple years of donations into one return (up to 5 years can be combined) maximizes the above-$200 credit rate.

8. Home Office Expenses (If Working from Home)

What it is: If your employer requires you to work from home and you incur home office expenses, you may be able to deduct a portion.

Methods:

• Flat rate method: $2/day up to 250 days = up to $500 (no receipts required, simpler)
• Detailed method: Actual expenses (internet, rent proportion, utilities) based on workspace percentage — requires T2200 from employer