Essential tax benefits low-Income Canadians should know about

Before you know it, it’ll be time to start preparing to file your taxes again.

Did you know that you might be leaving money on the table by not filing your tax returns? A study conducted by Carleton University found that in 2015 alone, taxpayers missed out on a staggering $1.7 billion in tax benefits. For low-income Canadians grappling to make ends meet, that's a lot of extra money left on the table that could significantly ease financial burdens and provide additional support.

There are various federal and provincial tax credits and benefits available specifically for low income tax filers in Canada, but you must file your tax return to take advantage of them. 

Turbotax has shared 9 avenues to help low income tax filers either save or earn money through filing taxes.

Understanding Low Income in Canada

Defining low income varies based on different benefit programs and the criteria used by researchers and policymakers. Income thresholds for eligibility can differ for each credit or benefit. Simply put, your income determines the benefits and credits you're entitled to receive.

1. Canada Workers Benefit (CWB)

   • Designed for low-income working individuals and families, the CWB offers up to $1,5185 for single individuals in the 2023 tax year. Advance payments, termed Advanced Canada Workers Benefit (ACWB), starting July 2023, will equate to 50% of the CWB across three instalments.

2. GST/HST Credit

   • Aids lower-income Canadians in offsetting the federal Goods and Services Tax/Harmonized Sales Tax (GST/HST) expenses, ranging from $496 to $650 based on net income and family situation.

3. Canada Child Benefit (CCB)

   • A tax-free monthly payment for eligible families with children under 18, offering up to $7,437 per child for the 2023–2024 benefit year. The amount hinges on family income and size.

4. Canada Dental Benefit

   • The interim Canada Dental Benefit is intended to help lower dental costs for eligible families earning less than $90,000 per year. Parents and guardians may be eligible if they pay for dental care for a child under 12 years old who does not have access to a private dental insurance plan.

5. Refundable Provincial Credits

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     In addition to the available federal tax credits and benefits, many provinces and territories have separate benefits and credits. For example, Ontario residents have access to the Ontario Trillium Benefit, which offers a tax credit of $172 to $265 based on income and family status.

6. Basic Personal Amount (BPA)

   • Federal and provincial governments offer non-refundable tax credits, with the federal BPA at $15,000 for the 2023 tax year and varying amounts per province.

7. Tuition Tax Credits

   • Available for students, allowing claims up to $5,000 in tuition fees per year and transfer options for spouses, partners, or parents.

8. Canada Training Credit (CTC)

   • A refundable tax credit accumulating as students complete post-secondary education, accessible within specified age and tuition expense criteria.

9. Tax Credits for Seniors

   • Involving various credits like the Home Accessibility Tax Credit, Age Amount Tax Credit, and the option to split pension amounts.

Navigating life within the low-income bracket in Canada presents challenges, especially amid soaring living costs. Filing taxes not only ensures compliance but unlocks essential benefits and credits crucial for financial stability.

Whether a student or navigating job transitions, filing taxes remains a critical avenue to leverage government support and mitigate financial strains.