When filing your taxes, there are numerous personal tax credits available that will help you offset the federal (and sometimes provincial) taxes owing on your tax return. We previously discussed how tax credits affect your balance owing. In this posting we will be providing you with some relevant information about a few of these tax credits.

Please note that technical data below has been taken from the Canada Revenue Agency Website at the following link:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/menu-eng.html

 

Basic Personal Amount
Every citizen of Canada gets this basic tax credit. By default, this is usually reflected in your payroll for the year. For 2012, the basic personal amount tax credit is $10,822 at the federal level. In Alberta, this amounts to $17,282. What this means is that if you make less than $10,822 in income a year, you will not pay any federal tax. In Alberta, if your income is below $17,282 for the year, the same applies for the provincial portion of your taxes.

On line 300 of Schedule 1, Federal Tax, enter the basic personal amount of $10,822.

Remember to claim the corresponding provincial or territorial non-refundable tax credit to which you are entitled, on line 5804 of your provincial or territorial Form 428.

 

Age Amount
You can claim this amount if you were 65 years of age or older on December 31, 2012, and your net income (line 236 of your return) is less than $78,684. If your net income was:

• $33,884 or less, enter $6,720 on line 301 of Schedule 1, Federal Tax;
• more than $33,884, but less than $78,684, complete the chart for line 301 on the Federal Worksheet to calculate your claim.

Enter your date of birth in the “Information about you” area on page 1 of your return.

Remember to claim the corresponding provincial or territorial non-refundable tax credit to which you are entitled, on line 5808 of your provincial or territorial Form 428.

You may be able to transfer all or part of your age amount to your spouse orcommon-law partner or to claim all or part of his or her age amount. See line 326 – Amounts transferred from your spouse or common-law partner, for more information.

 

Spouse or common-law partner amount
You can claim this amount if, at any time in the year, you supported your spouse or common-law partner and his or her net income was less than $10,822. However, if you claimed the family caregiver amount for your spouse or common-law partner, his or her net income must be less than $12,822. Calculate your amount on line 303 of your Schedule 5,Amounts for Spouse or Common-Law Partner and Dependants.

Enter the information about your spouse or common-law partner in the “Identification” area on page 1 of your return if you were married or living common-law on December 31, 2012. In certain situations, your spouse’s or common-law partner’s net income must be stated even if your marital status has changed. See “Net income of spouse or common-law partner” below.

Both of you cannot claim this amount for each other for the same year.

If you were required to make support payments to your current or former spouse or common-law partner, and you were separated for only part of 2012 because of a breakdown in your relationship, you have a choice. You can claim the deductible support amounts paid in the year to your spouse or common-law partner on line 220 of your return, or an amount on line 303 of your Schedule 1, Federal Tax, for your spouse or common-law partner, whichever is better for you. If you reconciled with your spouse or common-law partner before the end of 2012, you can claim an amount on line 303 and any allowable amounts on line 326 of your Schedule 1.

Remember to claim the corresponding provincial or territorial non-refundable tax credit to which you are entitled, on line 5812 of your provincial or territorial Form 428.

Net income of spouse or common-law partner

This is the amount on line 236 of your spouse’s or common-law partner’s return, or the amount it would be if he or she filed a return.

If you were living with your spouse or common-law partner on December 31, 2012, use his or her net income for the whole year. This applies even if you got married or back together with your spouse in 2012 or you became a common-law partner or started to live with your common-law partner again (see Marital status).

If you separated in 2012 because of a breakdown in your relationship and were not back together on December 31, 2012, reduce your claim only by your spouse’s or common-law partner’s net income before the separation. In all cases, enter, in the “Information about your spouse or common-law partner” area on page 1 of your return, the amount you use to calculate your claim, even if it is zero.

If you cannot claim the amount on line 303 (or you have to reduce your claim) because of dividends your spouse or common-law partner received from taxable Canadian corporations, you may be able to reduce your tax if you report all of your spouse’s or common-law partner’s dividends.

 

Amount for an eligible dependant

You may be able to claim the amount for an eligible dependant if, at any time in the year, you met certain conditions.
You may be able to claim this amount if, at any time in the year, you met all of the following conditions at once:


• You did not have a spouse or common-law partner or, if you did, you were not living with, supporting, or being supported by that person.
• You supported a dependant in 2012.
• You lived with the dependant (in most cases in Canada) in a home that you maintained. You cannot claim this amount for a person who was only visiting you.
In addition, at the time you met the above conditions, the dependant must also have been either:
• your parent or grandparent by blood, marriage, common-law partnership, or adoption; or
• your child, grandchild, brother, or sister, by blood, marriage, common-law partnership, or adoption and under 18 years of age or has an impairment in physical or mental functions.

Notes
Your dependant may live away from home while attending school. If the dependant ordinarily lived with you when not in school, we consider that dependant to live with you for the purposes of this amount.

For the purposes of this claim, your child is not required to have lived in Canada but still must have lived with you. This would be possible, for example, if you were adeemed resident living in another country with your child.

Even if all of the conditions have been met to claim the amount for an eligible dependant (read Can you claim the amount for an eligible dependant?), you cannot claim this amount if any of the following applies:

• You or someone else is claiming a spouse or common-law partner amount (line 303) for this dependant.
• The person for whom you want to claim this amount is your common-law partner. However, you may be able to claim the amount on line 303.
• Someone else in your household is making this claim. Each household is allowed only one claim for this amount, even if there is more than one dependant in the household.
• The claim is for a child for whom you were required to make support paymentsfor 2012. However, if you were separated from your spouse or common-law partner for only part of 2012 due to a breakdown in your relationship, you can still claim an amount for that child on line 305 (plus any allowable amounts on lines 306, 315, and 318) as long as you do not claim any support amounts paid to your spouse or common-law partner on line 220 of your return. You may claim whichever is better for you.
• You have made a claim for this dependant for the amount for infirm dependants age 18 or older (line 306).

Note
If you and another person were required to make support payments for the childfor 2012 and, as a result, no one would be entitled to claim the amount for an eligible dependant for the child, you can still claim this amount as long as you and the other person(s) paying support agree you will be the one making the claim. If you cannot agree who will claim this amount for the child, neither of you can make the claim. For more information, see Pamphlet P102, Support Payments.

 

If you would like more information on the above we would gladly be able to assist you with your needs.