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The Most Commonly Used Tax Deductions and Credits to  Reduce Your Tax Liability

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    The Most Commonly Used Tax Deductions and Credits to Reduce Your Tax Liability

    There are a variety of tax deductions and credits that are available to Canadian taxpayers to reduce their tax liability. While it is beyond the scope of this article to review every single tax deduction and credit, it would be helpful to highlight the most prevalent and useful:

    tax deductions and credits
    • Family, child-care, and caregivers deductions and credits
    • Education deductions and credits
    • Disability deductions and credits
    • Pension and savings plans deductions and credits
    • Employment expenses and credits

    Let’s drill down each of these categories to get a better idea of how these deductions and credits can help you reduce the amount of tax that you will owe.

    1. Family, child-care, and caregivers deductions and credits include the following:

    • Child-care expenses: These are expenses that involve amounts that you pay to another person to look after your child in order that you can continue working or attend school. Payments made for child-care can be made to individual caregivers, nursery day school, day care centres, day camps and day sports schools, and overnight camps.  This is a deduction, not a credit, and so reduces tax payable at an individual’s marginal rate.
    • Support Payments: Individuals can claim deductions for spousal support paid to a former spouse. However, they cannot claim child support payments.
    • Spouse or common law partner amount: You can claim a tax credit if at any time in the year you “supported” a spouse or common law partner and their net income was less than $12,069.

    2. Education deductions and credits include amounts you may be able to claim as a deduction or a credit related to education. This refers to a variety of credits, including for tuition, interest on student loans, moving expenses, and in prior years, expenses for textbooks.

    3. Disability deductions and credits relate to deductions and credits that can be claimed for someone with an impairment in physical or mental functions. This can include yourself, your spouse or common law partner, and other eligible dependents. These credits can be very valuable for people with disabilities and significant incomes, but eligibility is reviewed frequently.

    4. Pension and savings plans deductions and credits relate to the amounts thatyou can claim related to pension plans and savings income you report, contributions to the Canada Pension Plan, RRSPs and more. In particular, these can allow taxpayers to partially offset tax that would otherwise be payable on pension income. Pension plans include what you earned under your employer’s registered pension plans (RPP) and deferred profit sharing plans (DPSP, and some unregistered retirement plans.

    5. Employment Expenses and Credits involve amounts that you can claim related to employment. This includes union and professional dues, moving expenses, GST/HST paid to earn income, and employment insurance premiums.

    A lawyer at Kalfa Law is available to help you assess which deductions and credits apply to your situation, your eligibility, the amount allowable, and any exceptions. Claiming all the allowable deductions and credits can help you save substantially on your tax liability.

    F.A.Q’s

    I am employee! Can I claim employment expenses?
    Maybe, but probably not. Most workers do not claim expenses against employment income. Claiming some of the most common employment expenses, including for payment of an assistant or for a home office, requires a form from your employer certifying that you meet fairly restrictive conditions, referred to as a T2200. Some other employment expenses, such as for pursuing unpaid wages, do not require this form.
    I forgot to claim some expenses! Is it too late?
    Probably not. When dealing with personal tax credits and deductions, CRA has a fairly generous policy in allowing taxpayers to amend old tax returns, unless the year has already been subject to a formal audit. You can amend old returns using a “T1 Adjustment”. We would encourage you to be particularly careful in doing so, ad amended claims are reviewed vigorously.
    Can I claim child support payments?
    No—you cannot claim a deduction for child support payments. If you receive child support payment, you do not pay tax on these amounts, and may also be able to claim a deduction for some expenses in obtaining or protecting a right to support.
    Can I claim education credits for textbooks?

    No—not for years ending in 2017 or later.

    You work hard for your money. We work hard for you to keep it ™ .

    – James Alvarez, Tax Counsel

    © Kalfa Law 2020

    The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.

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