2 Tax Credits Canadians Need to Remember This Tax Season

Tax season is here, so make sure you’re taking advantage of every single credit on offer by the government, then invest what you can.

| More on:
edit Taxes CRA

Image source: Getty Images

Tax season is upon us. And it couldn’t be at a worse time. We’re potentially about to enter a recession, and now there are many Canadians who aren’t looking forward to perhaps paying more out to the government.

However, that’s not necessarily always the case.

About 92% of Canadians are now filing their returns electronically, according to the Canada Revenue Agency (CRA). While this makes things much easier, you might be missing out on some tax credits! So, let me enlighten you, with two new payments that Canadians may miss out on otherwise.

Climate Action Incentive Payment

Now, this payment is only eligible for Canadians living in Alberta, Saskatchewan, Manitoba, and Ontario at the moment. However, you may also be eligible if you live in Newfoundland and Labrador, Nova Scotia, or Prince Edward Island. This credit could expand in the future as well, so definitely read on.

The CAIP is a “tax-free amount paid to help individuals and families offset the cost of federal pollution pricing,” according to the CRA. Before 2021, this was a tax credit that came out during returns. Now, it’s a quarterly benefit paid out starting from July 2022.

All you have to do is file an income and benefit return, and if you have a partner make sure it’s just one of you applying. What’s more, CRA recommends filing electronically by March 10 to make sure you receive the first issuance on April 14 of this year.

How much could you get? It depends on where you live. In Ontario can be as much as $488 for an individual plus $122 for each child. Alberta has the highest at $772 for each individual and $193 for each child! So, make sure to check out the rules and get applying!

Canada Housing Benefit

This year, the CRA also introduced a tax-free $500 one-time payment for lower-income renters. These are for those facing housing affordability challenges. To apply, you would need to claim a family net income for 2021 of $35,000 or less, or $20,000 or less for individuals. Further, this benefit requires that at least 30% of your 2021 income was spent on your principal residence in Canada during 2022.

What’s more, the deadline is March 31, 2023, if you want to obtain the $500 payment. So, make sure you have filed your 2022 return as well as your 2021 return. Again, online tax filing is the quickest way to get this money.

Invest what you can

If you’re struggling, then, of course, you should be creating an emergency fund first and foremost. However, if you’re able to put some money aside for stable investment, there is a way to create more income to help through this difficult year.

I would recommend an exchange-traded fund (ETF) that allows you access to multiple companies, as well as bonds, to create fixed income. It’s managed by financial advisors, so it’s like having a team doing the hard investment work for you.

A great option right now is Vanguard FTSE Global All Cap ex Canada Index ETF (TSX:VXC) for global exposure, besides Canada. This gives you diversified income, with shares on par with where they were a year ago, beating out the TSX today. Plus, you can add on extra passive income at $0.81 per share annually.

Bottom line

Take care of yourself, take care of your family, and take care of your finances. By taking advantage of your tax credits and investing what you can, you’ll be sure to have done that this year and in the years to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Vanguard Ftse Global All Cap Ex Canada Index ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

A airplane sits on a runway.
Stocks for Beginners

Are Airline Stocks a Good Buy in March 2023?

Few companies have felt the pandemic as much as airlines. But now that markets are open, are airline stocks a…

Read more »

Woman has an idea
Tech Stocks

3 No-Brainer Stocks to Buy for Less Than the Cost of 1 Tesla Share

Are you confused as to whether to buy Tesla shares? Here are three no-brainer stocks that can give you exposure…

Read more »

Make a choice, path to success, sign
Stocks for Beginners

2 “Bargain” TSX Stocks I’m Not Touching—and What I’d Buy Instead

Are you hunting for bargain stocks to make money from the recovery rally? Remember, not all stocks trading near their…

Read more »

Woman has an idea
Stocks for Beginners

The Best TSX Stocks to Invest $1,000 in March 2023

Do you have $1,000 to invest in March? Here are some ideas on how to use recent market drama to…

Read more »

financial freedom sign
Stocks for Beginners

2 TSX Stocks With Millionaire-Maker Potential

Here are two of the best TSX growth stocks you can buy now to expect eye-popping returns on your investments…

Read more »

stock market
Stocks for Beginners

Want to Beat the Next Bull Market? Buy These 2 Top Growth Stocks

The market is full of top growth stocks with massive long-term potential. Here are two options to buy now before…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Tech Stocks

Market Tremors: Buy These ETFs While Everyone Else Is Selling

The US bank crisis has triggered a sell-off raising the risk of a stock market crash. It’s time to buy…

Read more »

clock time
Dividend Stocks

How to Earn $500 in Tax-Free Monthly Passive Income

A $500 monthly investment with a 5% yield can help you build a passive income portfolio that pays $500/month.

Read more »