9 Overlooked Tax Deductions and Credits

Every year in Canada, millions of dollars in tax deductions and credits go unclaimed. Here are nine of the most overlooked deductions and credits so that come tax season, you can minimize your tax bill and maximize your refund.

1. Medical expenses

Often, people don’t claim their medical expenses because they don’t think it’s worth it. However, medical expenses are hidden everywhere; even the additional amount you pay for gluten-free food may qualify as a medical expense if recommended by a doctor. In addition, what the Canada Revenue Agency (CRA) describes as “Medical expenses for self” actually includes medical expenses for you, your partner, and your minor children.

2. Disability Tax Credit

The disability amount is one of the most valuable Canadian tax credits, worth about $1,500 for an adult and even more for a child. Even if you can’t take advantage of the entire credit — e.g., because your income isn’t high enough — the unused part of this credit can be transferred to a wide range of people.

Those who need life-sustaining therapy, those with a marked restriction in any one of the following categories, or significant limitation in two or more of the categories might be eligible for the credit:

• Walking

• Mental functions

• Dressing

• Feeding

• Eliminating (bowel or bladder functions)

• Speaking

• Hearing

• Vision

For more information, check out the CRA’s guidance here. 

3. Amounts for your children

There are several tax credits available for parents. Some of these credits include child care expenses, amounts for your child’s fitness and arts programs, and, if you are a new adoptive parent, adoption expenses.

4. Eligible dependant amount

If at any time in the year you were single, divorced, separated, or widowed and you were supporting a person who lived with you in a home that you maintained, you may be able to claim a tax credit for an eligible dependant. Starting in 2012, that amount can be increased if you qualify for the new family caregiver amount for your dependant.

5. Moving expenses

Most people know that if you’ve moved to a new location to start a new job or business, you can get a tax credit for your moving expenses. However, many people don’t realize that you can also claim moving expenses if you are a student who has moved to study in a full-time program. One of the most frequently overlooked moving expenses: the commissions you paid to your realtor when selling your old home.

6. Student loan interest

Don’t toss those Statements of Interest Paid! Repaying your student loan can be a drain in your early career, but at least you’re eligible for a tax credit for the interest you pay on federal and provincial or territorial student loans. Note, however, that this credit does not apply to loans held with a private lender (e.g., a student line of credit with a financial institution) or to loans that have been consolidated.

Your student loan interest can be carried forward for five years, so if you are unable to use your interest in the year, you should consider carrying it forward to a higher earning year.

7. Carrying charges

One of the most often overlooked deductions is your “carrying charges,” which can reduce your taxable income. It’s not surprising that these are often missed, since the name “carrying charge” isn’t exactly crystal clear. Even if you don’t have very complicated investments, you may have carrying charges that include:

• Some of your investment advisor’s fees on non-registered investment accounts (but not their commissions)

• Fees for some investment advice

• The cost to have someone prepare your tax return but only if you have income from a property or business (if you have just a T4 and a few donations, unfortunately you can't claim the expense of your tax preparation software)

• The interest you paid on money you borrowed to try and earn investment income

8. Charitable and political donations

Small deductions to eligible charities can add up over the year. If you claim your charitable donations, you can receive a 15% credit on the first $200 (worth $30) and a 29% credit on donations in excess of $200 — up to a maximum of 75% of your income in the year. You can also receive tax credits for donations made to federal and provincial or territorial political parties and candidates.

9. Home buyers’ amount

If you purchased a home and you have not lived in a home owned by you or your partner in any of the four preceding years (or you have purchased a home and you can claim the disability amount), you might be eligible for a $10,000 tax credit — worth up to $1,500. If you qualify for this amount, claiming this credit is as simple as ticking a box.