Most often when it comes to any savings on taxes we like to see them in lump sums and hopefully significant amounts. Anyone that is actually going to get money refunded to them consider this to be quite pleasing. As a result of this though, a lot of tax payers just don’t realize how significant the non refundable tax credits can be.
Basically we tend to look at our pay slips when we get them and are not too happy when we see the amount of taxes that are taken off each pay. At the same time though, when we do our tax return and it all balances out where we don’t have to pay anything extra then we are fairly happy.
You really need to try and put yourself in this position or even better perhaps getting some type of refund. The best way to try and achieve this is by using all of your potential tax credits where it raises the possibility of bringing you into a lower tax bracket. In summary, your non refundable tax credits help to reduce your taxes payable. One thing you want to be sure of so you are not faced with an additional tax bill at the end of the year, is to make sure that your employer is deducting the proper amount of taxes applicable to your earnings.
Refundable tax credits are often paid to you in a different way, and because of this you may not consider them as a reduction in your tax obligation. These would be payments that you receive as a child tax benefit, your GST/HST rebates and the working income tax credit for example.
In addition to this each province addresses their non refundable tax credits differently.
You have probably heard about tax planning and figure that being just an average working person this is beyond you. You don’t have any extra income to consider tax planning for. In fact though, by really learning about all of the potential tax breaks that you could take advantage of, it is really a form of tax planning.
Our Canada tax system is huge and it is complex, where it is nearly impossible to gain a full understanding of it. This is why many people rely on the experts such as their Toronto accountants when it comes to tax filing time. They have begun to realize that both the non refundable and refundable tax credits can be equally important, and they don’t want to miss out on them.
