Maximizing Your T1 Personal Tax Return

T1 Personal Tax - Missed Credits & Deductions

With personal tax season on the horizon, taxpayers are collecting their slips, consolidating their receipts, and preparing packages for their tax preparers. If you are in this situation, you are not alone, although it may feel like it with all the confusion and seeming ambiguity regarding the information you need to produce. This challenge is due to the ever-changing legislation, added amendments, and budgetary decisions made by federal and provincial governments. These ongoing changes can make filing taxes an increasingly difficult task each year.

As such, I would like to discuss some common deductions and credits that may be missed, a brief description of where they are applicable, their requirements, and the related forms.

Personal, Education, and Retirement Claims

Medical Expenses

Description:
The Medical Expense Tax Credit is a non-refundable credit intended to help offset the costs of eligible health-related expenses. These expenses include prescription medications, dental care, certain medical treatments, devices, and medical related travel expenses. Premiums paid on your medical insurance are also claimable under this credit. You may claim expenses incurred for yourself, your spouse (common-law partner included), and dependent children.

How to Claim:
This credit is claimed on the form Medical Expenses as part of your T1. Any related expenses incurred within the tax year can be claimed. Generally, the claimable portion of these expenses begins when they exceed 3% of your net income. If you are claiming with a spouse or common-law partner, the partner with the lowest net income claims all medical expenses for the family.

Relevant Forms/Documentation:

• T1 – Medical Expenses
• Receipts and other supporting documents of purchase

Requirements:

• The expenses cannot be reimbursed by a third party (like an insurance company).
• All receipts must be kept in case of CRA audit.

Charitable Donations

Description:
This non-refundable tax credit rewards donors for their contributions to registered charities and  is calculated on a tiered basis. The first $200 of charitable donations are credited at 15% whereas amounts over $200 are credited at 29%, increasing the benefit of larger donations.

How to Claim:
List all donations made during the tax year on your T1 return. The credit can also be carried forward up to 5 years. Spouses can choose who claims the credit to get the highest taxable benefit for the household. 

Relevant Forms:
No separate form is required; however, you must keep official donation receipts for each donation, which include the charity’s registration number.

Requirements:

• Donations must be made to CRA-registered charities. Receipts from legitimate charities will have a charity registration number.
• The receipts must indicate that no material benefit was received in return for the donation. For example, if the donation was for a meal or for a gift basket, the receipt must record the implicit price of the item, and the total charitable donation becomes the difference between the total donation and price.
• The charity must be active in CRA’s database. See list here.

Political Donations

Description:
The Political Donation Tax Credit is a non-refundable credit designed to encourage financial support for political entities. The credit is calculated according to the following tiered system:

Donation Amount	Credit Percentage	Maximum Credit
First $400	75%	$300
Next $350 (from $401 to $750)	50%	$175
Amounts over $750 (up to $1,275)	33.33%	$183.25
Maximum claimable amount	$1,275	$658.25

How to Claim:
Report all eligible political contributions on your T1 return in the section dedicated to political donations.

Relevant Forms:
No separate form is needed, but you must retain the official donation receipts issued by the political entity.

Requirements:

• Contributions must be made to organizations recognized under the Income Tax Act as eligible political entities.

Digital News Subscription Tax Credit

Description:
The Digital News Subscription tax credit is a non-refundable credit that helps offset the cost of subscribing to a qualifying Canadian digital news service.  As this is a non-refundable tax credit, it is calculated at 15% of the total qualifying expense, up to a max of $500/year which would result in a $75 credit.

How to Claim:
Claim the credit directly on your T1 return by entering the appropriate amounts and keeping subscription receipts as evidence.

Relevant Forms:
The credit is claimed on your T1 in the section for “other non-refundable credits”.

Requirements:

• The subscription must be to an entity that holds the Qualified Canadian Journalism Organization (QCJO) license. A complete list of entities can be found here.
• You must have proof of subscription payments covering the required period.

Pension Split (Deduction)

Description:
Pension Splitting allows a pensioner to transfer up to 50% of their eligible pension income to their spouse or common-law partner. This sharing creates tax savings by moving income from a higher-tax bracket spouse to a lower one.

How to Claim:
Both spouses must jointly complete the pension split election by filling out Form T1032 and attaching it to their respective T1 returns.

Relevant Forms:
Form T1032 (Joint Election to Split Pension Income)

Requirements:

• Both parties must consent to the split.
• The income must be classified as eligible pension income under CRA rules (OAS & CPP are not included).
• Accurate records of pension income must be maintained.
• Note that the pension split calculation needs to factor in many aspects of the tax return to assess the most optimal split. Although some tax software allows for this, consulting a tax professional is the best way to ensure the most optimal mix.

First-Time Home Buyers’ Tax Credit 

Description:
This non-refundable credit assists new home buyers by providing a set amount that reduces their overall tax payable. It aims to alleviate some of the financial burdens associated with purchasing a home.

How to Claim:
Enter the eligible amount on your T1 return in the section reserved for the Home Buyers’ Amount. Although the title implies that it must be your first home, if you have not owned a home in the past 4 years then you can claim the credit regardless of prior ownership. The credit is for $10,000 in the year the home is purchased. If you have a spouse or common-law partner, the credit can be split but the combined total cannot exceed $10,000 for the household.

Relevant Forms:
No separate form is necessary; however, supporting documentation such as a purchase agreement may be requested by the CRA.

Requirements:

• You must be considered a first-time home buyer (i.e., you and your spouse/common-law partner have not owned a home in the previous four years).
• The home purchased must be intended as your principal residence.

Tuition and Education Tax Credit

Description:
This non-refundable credit is available to students paying tuition fees to eligible post-secondary institutions.

How to Claim:
Use the information provided on your official Tuition and Enrolment Certificate when filing your T1 return. Unused credits may be carried forward or transferred to a parent or spouse.

Relevant Forms:

• Tuition and Enrolment Certificate (T2202):tax slip obtained from the Canadian educational institution
• TL11A for institutions outside of Canada
• T1 – Schedule 11: for transfers and carry forward amounts

Requirements:

• Enrolment in a qualifying program at a recognized post-secondary institution.
• Tuition fees must be paid to an eligible institution and the amounts claimed must match the figures on the certificate.

Canada Training Credit (CTC)

Description:
The Canada Training Credit is a refundable credit that assists workers in upgrading their skills through eligible training courses. It provides financial support to cover training costs that enhance employability.

How to Claim:
Claim the credit on your T1 return using the CTC amount that the CRA has tracked for you based on your previous employment earnings. The CRA reports your CTC reserve balance on your Notice of Assessment each year. 

Relevant Forms:
There is no separate form; the credit is applied directly on your T1 return. Receipts for training may be requested by the CRA.

Requirements:

• Must be between 25 and 65 years of age.
• You must have accumulated training credit entitlement from your employment earnings. Accumulation of $250 a year to a maximum of $5,000. The CTC began in 2019, so the $250 began accruing at that time.
• Enrolment in a qualifying training program is required, and proof of payment (receipts and course details) must be maintained.

Student Loan Interest Tax Credit

Description:
This credit offers tax relief for the interest paid on eligible student loans.

How to Claim:
Include the amount of interest paid on your T1 return in the section for interest expenses.

Relevant Forms:
No special form is needed; however, maintain your student loan statements and interest payment receipts.

Requirements:

• The student loan must be a government-sponsored program or provided by an approved financial institution.
• The interest must not be related to interest paid related to prior non-payments of the loan
• Interest must be paid in the prior 5 years or the current year incurred.

Disability Tax Credit (DTC)

Description:
The Disability Tax Credit is a non-refundable credit aimed at reducing the tax burden on individuals with severe and prolonged disabilities or those supporting them. It is one of the most valuable credits available, often enabling the transfer of unused credit amounts to a supporting family member.

Given the value of this tax credit, in 2024 alone it has the potential to save you up to $2,000 through non-refundable federal and provincial tax credits, depending on province of residence. It also has the benefit of allowing approved individuals to create a Registered Disability Savings Plan, which provides grants and other benefits. The DTC is a popular programme, and thus highly regulated by CRA when applying for this credit. 

How to Claim:
To claim, you must first have a qualified medical practitioner complete Form T2201 (Disability Tax Credit Certificate) and submit it to the CRA. Most doctors charge a fee to fill out this form, so it is important to do your research and consult a tax professional with knowledge of the credit beforehand to see if you qualify.  After submission, the CRA will then process an approval or denial of the credit. If approved, you will receive a Notice of Determination from the CRA indicating the approval, how many retroactive years are applicable, and the date it will expire (in some cases it is indefinite). The DTC can be claimed up to 10 years prior, and you have the option of doing this automatically by filling out Part A section 3 of the T2201 or doing it manually through an application after the fact.

Once approved, the credit is claimed on your T1 return. 

Relevant Forms:
Form T2201 is required for application; once approved, include the credit on your T1 return.

Requirements:

• The applicant must meet the CRA’s strict criteria for a severe and prolonged impairment, supported by detailed medical documentation.
• The impairment must be expected to last (or have lasted) for at least 12 consecutive months.

Employment Expense Deduction

Description:
Employees may incur various expenses, such as supplies, travel, and specific work-related equipment, that are necessary to perform their job duties. This deduction allows you to reduce your taxable income by claiming these unreimbursed costs.

How to Claim:
Expenses related to employment can be varied, but most commonly motor vehicle expenses, meals, and cell phone bills. If the expense has both personal and business implications an estimate must be done to pro-rate the personal use from the employment related use. Form T777 (Statement of Employment Expenses) is filled out as part of your T1 tax return.

Relevant Forms:

• Form T777 is used for detailing your expenses
• Form T2200 (Declaration of Conditions of Employment) provided and signed by your employer

Requirements:

• Your employer must certify on the T2200 that you were required to incur these expenses and that you were not reimbursed for them.
• You must retain detailed records and receipts for all claimed expenses.

Work-from-Home Deductions

Description:
As part of employment expenses, employees who work from home may claim a portion of their home expenses , such as utilities, internet, and maintenance, which are related to a dedicated workspace.

How to Claim:
To claim this deduction, you must, as with other employment expenses, be required to work from home. It cannot be optional. Once approved, you must allocate the percentage of your home to your office and use that amount to pro-rate total expenses. 

Relevant Forms:

• Form T777
• Completed Form T2200

Requirements:

• You must have a designated workspace in your home.
• Your employer must require you to work from home (generally at least 50% of the time).
• Detailed records and receipts for expenses are necessary.

Union and Professional Dues Deduction

Description:
This deduction applies to fees paid to unions or professional organizations that are a condition of employment. It reduces your taxable income by allowing you to deduct the amounts paid during the tax year.

How to Claim:
Report the total amount of union or professional dues on the appropriate line of your T1 return.

Relevant Forms:
No additional form is required; however, you should keep annual statements or receipts as proof.

Requirements:

• The dues must be directly related to your employment.
• The organization must be recognized by the CRA.

Moving Expenses Deduction

Description:
If you relocate to be closer to a new job or educational institution, you may deduct many of the expenses incurred during your move. This deduction covers costs such as transportation, temporary lodging, and storage fees.

How to Claim:
Use Form T1-M (Moving Expenses Deduction) to list and detail all eligible moving expenses. Attach this form to your T1 return.

Relevant Forms:
Form T1-M

Requirements:

• Your new residence must be at least 40 kilometers closer to your new work location or post-secondary institution than your previous home.
• Only expenses that meet CRA guidelines are claimable, and you must retain receipts and supporting documentation.

Investment and Business-Related Deductions/Exemptions

Exploration and Development Expenses (E&D Expenses)

Description:
The Mining and Exploration (ME) industry has a lot of upfront costs by nature and little to no revenue generation. As such the Canadian government allows them to offer up their expense deductions to investors in the form of “flow-through shares”. These shares allow the investors to recoup some of their money by claiming the expense credits that would otherwise be claimed by the ME company, as well as reap the benefit of investment growth. Depending on the investment’s performance, this method of investment could generate savings on tax payable and gains from the investment. 

As they are complicated in nature, please consult a financial expert with knowledge of flow-through shares prior to investing. Innova Wealth offers packages that include this type of investment and have years of experience in assessing their use case.

How to Claim:
ME Company will supply a T5013 slip that provides their renunciations of expenses, as well as the type. This claim could impact the tax deduction as Critical ME companies get an extra increase. Subsequent forms need to be filled out depending on the provision from the ME company. Consult a tax professional with knowledge of flow-through shares to ensure these forms are completed properly. 

Relevant Forms:

• T5013
• Resource Summary
• T1229
• Statement of Resource Activities

Requirements:

• No requirements other than proper entry of T-Slips and forms.

Investment Interest Expenses Deduction

Description:
This deduction allows you to claim the interest paid on money borrowed specifically to generate investment income, such as investment property, dividends, or interest. This claim helps offset the cost of financing your investments.

How to Claim:
Enter the amount of interest paid on your T1 return in the section designated for investment expenses.

Relevant Forms:
No special form is required; simply include the amount on your T1 return and retain interest statements.

Requirements:

• The borrowed funds must be used exclusively to earn investment income.
• Detailed documentation is needed to prove the purpose of the borrowing and the amounts paid.

Afterword 

While this is not an exhaustive list of tax credits and deductions, it highlights the many potential complexities involved in filing a T1 tax return. Some of these deductions are relatively new and may be unfamiliar to many taxpayers.

Although tax software and professional tax preparers typically stay updated with current deductions and credits, some tax benefits require the taxpayer’s awareness to ask the right questions and provide the necessary documentation. Without this proactive approach, valuable deductions may go unclaimed.

This complexity is why working with a knowledgeable tax professional can be highly beneficial. A tax specialist who understands the specifics of your household’s financial situation will know which targeted questions to ask and what documentation is required to maximize your eligible credits. The best tax professionals go beyond basic filing; they equip you with the right tools to assess your own situation and ensure you receive all the credits and deductions you are entitled to through active communication and a personalized approach.

This publication is for informational purposes only and shall not be construed to constitute any form of advice. The views expressed are those of the author alone. Opinions expressed are as of the date of this publication and are subject to change without notice and information has been compiled from sources believed to be reliable. This publication has been prepared for general circulation and without regard to the individual financial circumstances and objectives of persons who receive it. You should not act or rely on the information without seeking the advice of the appropriate professional.