- Canadian Tax Resource Blog - http://blog.taxresource.ca -

Non-Refundable Tax Credits

Tax credits and tax deductions are different [1]. A tax deduction is deducted from your taxable income while a tax credit is a dollar-for-dollar reduction in the amount of income tax payable. The value of the tax credit is the same for everyone while a tax deduction can be worth more to those in higher tax brackets.

The majority of personal tax credits are considered non-refundable because they can only be used to reduce your tax payable to zero. If your tax credit exceed the amount of tax payable, you do not get a refund of the difference.

For example, if your basic federal tax as reported on Line 39 of Schedule 1 was $2,250 and your total non-refundable personal tax credits (Lines 300 to 350) totaled $3,000, your tax payable would only be reduced to zero and you would not get a refund of the $750.00 difference.

Another way of looking at non-refundable tax credits is that the government will only refund up to what you paid in tax.

[2]