Federal Benefits & Credits: What's Tax-Free & What You'll Have To Claim On Your Tax Return
If you received federal benefits, credits and payments or are looking to get money back from the federal government, there's a lot to know for tax season this year.
That's because only some benefits and credits are tax-free while others have to be claimed on your tax return.
A few credits could reduce the amount of tax you have to pay or even get you a tax refund from the government!
You can start filing your 2023 tax return online as of Monday, February 19, 2024.
Then, the deadline to file a tax return is Tuesday, April 30, 2024, for most Canadians.
If you file your return and you owe money, the deadline to pay your taxes is also April 30.
So, here's what you need to know about which benefits and credits are tax-free and which ones you'll have to claim on your taxes this year.
Canada Child Benefit
The Canada Child Benefit is a tax-free monthly payment made to eligible families to help with the cost of raising children under 18 years old.
Since CCB payments aren't taxable, you won't receive a slip for it during tax season and you don't have to report it on your tax return.
To keep getting the CCB, you need to file your tax return on time every year. If you have a spouse or common-law partner, they also have to file their tax return on time each year.
Even if your income is tax-exempt or you have no income, you still need to file your tax return.
Not doing that means you will no longer get CCB payments.
GST/HST credit
The goods and services tax/harmonized sales tax credit — which is also known as the GST/HST credit — is a tax-free quarterly payment to help individuals and families with low and modest incomes offset GST or HST.
Since it's a tax-free payment, you don't have to claim it on your taxes.
However, you need to do your tax return if you want to get this payment because the Canada Revenue Agency automatically considers you for the GST/HST credit when you file your taxes.
Canada Workers Benefit
The Canada Workers Benefit (CWB) is a refundable tax credit to help individuals and families who are working and earning low income.
If you don't know, refundable tax credits reduce the amount of tax you have to pay. Then, if there is any excess tax credit, you get a tax refund from the federal government.
The CWB now provides advanced payments equal to 50% of the CWB across three payments under the Advanced Canada Workers Benefit (ACWB).
You can claim the CWB when you file your tax return.
You don't need to apply to receive the advanced payments. The CRA will determine your eligibility when you file your tax return.
If you're entitled to a CWB amount on line 45300 of your tax return, the CRA will automatically send you the advanced payments.
Canada Pension Plan
The Canada Pension Plan (CPP) retirement pension is a monthly taxable benefit that replaces part of your income when you retire.
Your CPP retirement pension counts as income and is taxable.
Taxes aren't automatically deducted with the CPP.
You can request for federal income tax to be deducted from your monthly payments but if you don't request monthly tax deductions, you could have to pay your income tax each quarter.
Climate action incentive payment
The climate action incentive payment is a tax-free amount to help eligible individuals and families offset the cost of federal pollution pricing.
If you're a resident of Canada, you don't need to apply to receive the climate action incentive payment. You just need to file your income tax and benefit return and the CRA will send the payments you're entitled to.
To continue receiving the money from these quarterly payments, you need to file an income tax and benefit return every year even if you have no income to report.
The climate action incentive payment includes an additional amount for residents of small and rural communities. To claim the rural supplement you must tick the box on page two of your income tax and benefit return.
Employment insurance
If you received employment insurance (EI) benefits and claimed an amount for EI or other benefits on line 11900 of your tax return, you could have to repay all or part of your social benefits.
You have to repay part of the EI benefits that you received in 2023 if all the following conditions apply to you:
- there is an amount in box 15 of your T4E slip
- the rate in box seven is 30%
- the result of the following calculation is more than $76,875:
- line 23400, minus
- line 11700 and line 12500, plus
- line 21300 and/or the amount for repayment of registered disability savings plan income included on line 23200
Canada Dental Benefit
The Canada Dental Benefit is intended to help lower dental costs for eligible families earning less than $90,000 a year.
Parents and guardians may be eligible to receive money if they pay for dental care for a child under 12 years old who doesn't have access to a private dental insurance plan.
Payments for this benefit are tax-free and depending on your adjusted family net income, you could get $260, $390, or $650 for each eligible child.
The Canada Dental Benefit payment is not taxable so you don't need to report it as income on your tax return.
If you claim dental costs as medical expenses for your child on line 33099, you can only claim expenses that aren't reimbursed.
Canada training credit
The Canada Training Credit (CTC) is a refundable tax credit that's available to help Canadians with the cost of eligible training fees.
Refundable tax credits not only reduce the amount of tax you have to pay but also get you a tax refund from the government if there's any excess tax credit.
You can claim the CTC for tuition and other fees that you paid for courses you took in 2023.
If the credit is more than your tax owing, you may get a refund for the difference.
You claim the CTC on line 45350 of your tax return and it will reduce your tax owing.
This article's cover image was used for illustrative purposes only.
