Are You Eligible for the $5,000 From This Canadian Tax Credit?

This Canadian tax credit could bring in up to $5,000 in a lifetime! But given it’s refundable, use that refund to put straight towards your future.

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The market continues to be a volatile place for investors. However it’s not the only worry that many have these days. Canadians are dealing with an economic situation that has many wondering if they need to perhaps explore new work positions or even go back to school.

If you’ve been thinking about this at all, or even if you haven’t, there could be a Canadian tax credit just for you.

The Canadian Training Credit

The Canadian Training Credit (CTC) is a tax credit eligible for refunds that can help Canadians with the cost of eligible training fees. These fees are eligible as long as they’re with a university, college, or other institution providing skill straining.

There is a catch, however, and that’s that Canadians must be above 26, and younger than 66 years old to be eligible for this program. But for every year that you file a tax return, the Canada Revenue Agency (CRA) will review your return to see if you’re eligible for the CTC program. Then, you will be allocated up to $250 each year (or 50% of course costs or fees, whichever is less) for a maximum of $5,000 during a lifetime!

Thing is, you’ve already paid for the program

Now, again, this is a refundable tax credit. Therefore, you’ll already have to pay up front all the costs that come with your education. And it’s not like you can just leave that cost on a credit card until your refund comes down the line.

So, instead, use this as an opportunity. Save and act like you’re not going to get that refund. So, when it comes later on, you’ll have already prepared your finances to be able to pay for your education costs. Yet when the refund does come, you’ll be able to use that refund for something else.

Like investing towards your future even more!

Consider investing and investing again

There’s investing in the market and investing in your future. This strategy uses both. You’re investing in your future by furthering your education. But when your refund comes, then move on to use that cash to invest in your financial future.

Do this by investing back into the market. It doesn’t have to be anything fancy, complicated, or, of course, risky. Instead, it could be a safe and stable stock such as Hydro One (TSX:H). Hydro One stock is a utility company on the climb. It offers exposure to the company, providing power to the most populated province in Canada.

Right now, Hydro One stock offers a 3.3% dividend yield, with shares up 14% in the last year and a trailing price-to-earnings ratio of 21 as of writing. As it continues to expand, you should therefore bring in more cash through both returns and dividend income.

Bottom line

Now, if you were to use that $5,000 to invest in Hydro One stock over a lifetime, let’s see how much that could create by putting it towards the stock today, seeing it climb to 52-week highs.

H – today$36139$1.19$165.41quarterly$5,000
H – highs$41139$1.19$165.41quarterly$5,699

In just a year, this amount could create $699 in returns and $165.41 in dividends. That’s a total of $864.41 in passive income alone! See this continue to rise in the years to come, and you’ll be glad you took advantage of the CTC when you did.

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 no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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