Top 5 Commonly Missed Tax Deductions and Credits

Mar. 11

Unused RRSP Contribution Room

Unused RRSP Contribution Room If you are an individual working in Canada, you more than likely have built up RRSP contribution room. Your contribution room is based on how much you earn and accumulates throughout your life. An RRSP is a tax-deferred investment vehicle, which means you are only taxed when you start making withdrawals. To avoid double taxation, you can claim the amount of contributions you make each year on your tax return, and you will not be taxed on that portion. You may also claim any contributions you make in the first 60 days of the next year. For example, you could claim any RRSP contributions on your 2023 tax return if you made them between January 1st, 2024, and February 29th, 2024. This results in your taxable income being lower, and you may end up paying less tax.

Interest Paid on Student Loans

On your personal tax return, you can claim and interest you paid on your student loans if you received from the government. Student loans issued by private banks and other institutions is not included in this. The actual value of your tax credit may vary based on your individual circumstances.

Medical Expenses

You can claim eligible medical expenses on your tax return if during the calendar year you, your spouse, or common-law partner paid for medical expenses. The CRA offers a non-exhaustive list of medical expenses, where it tells you if it is eligible, and if you need a backup to claim the expense (e.g. prescription, certification, etc). The amount of medical expenses you can claim (in a very general case) is based on the following formula:

(Medical Expenses) - (lesser of $2479 and 3% of your net income) = Claim Amount

The list of medical expenses provided by the CRA can be found here.

Childcare Expenses

You are eligible to claim childcare expenses according to the CRA if you meet one of the following items:

The child was under 16 years of age at any time in the tax year.
The child is you or your spouse or common-law partners.
Someone else was paid to look after an eligible child so that you or the other person could do one of the following:

Earn income from employment.
Carry on a business either alone or as an active partner.
Carry on research or similar work, that you or the other person received a grant for.
Attend school under the conditions of an education program.
The child lived with you or the other person when the expenses were incurred.
Services were provided in Canada by a Canadian resident.
You are the only person supporting the eligible child while they were living with you.

Some of the expenses you can include under child care expenses include; caregivers providing childcare services, day nursery schools, daycare centres, educational institutions (portion of fees that relate to child car services), day camps and day sports schools where the primary goal of the camp is to care for children, boarding schools, overnight schools, or camps where lodging is involved. There is also some expenses that you may not claim which include, medical or hospital care, clothing costs, transportation costs, costs relating to education (tuition fees), and fees for recreational activities.

Disability Tax Credit

The disability tax credit (DTC) is a non-refundable tax credit that will reduce the amount of income tax you have to pay. To purpose of the DTC to is help offset the extra costs related to an impairment. In order to claim the DTC, you must apply through the government and be accepted. A very basic list of the criteria includes:

You are unable to do the activity, or it takes 3 times longer than someone of similar age without the impairment, even with the use of appropriate therapy, medication, and devices.
This restriction is present all or almost all of the time (generally at least 90%).
The restriction has lasted or is expected to last for a continuous period of at least 12 months.

Some of the categories that a restriction may fall into include, walking, hearing, mental functions, speaking, dressing, vision, feeding, life-sustaining therapy, and eliminating (bowel or bladder functions).

In the application process you may need a registered practitioner to certify your restriction or impairment. You then must fill out a form either digitally, or by hand and submit it to the CRA for review.

In the case where the individual with the impairment does not need the entirety of the DTC, some or all of the DTC may be transferred toa supporting family member who is deemed to be one of the following by the CRA:

A spouse or common-law partner.
A child or grandchild.
A parent, grandparent, brother, sister, uncle, aunt, niece, or nephew.
A child or grandchild of their spouse or common-law partner.
A parent, grandparent, brother, sister, uncle, aunt, niece, or nephew of their spouse or common-law partner.

Agency, C. R. (2023, January 24). Government of Canada. Personal income tax - Canada.ca. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/deductions-credits-expenses.html

marie rupolo