The 2024 tax season is over for most Canadian taxpayers, except for self-employed individuals. Their deadline to file 2023 tax returns is on or before June 15, 2024 (but the tax payment date is April 30). The Canada Revenue Agency (CRA) did not introduce new tax credits this year, but I hope everyone got all the applicable credits or incentives and paid lower taxes.
Knowing the CRA credits and where they apply is more important than having an accountant prepare your tax returns. Early preparation is always the key to having more confidence before the next tax season.
Enhanced BPA
The federal government’s amendments to the Income Tax Act in 2019 include the basic personal amount (BPA). All individual taxpayers can claim or are entitled to claim the BPA. This non-refundable tax credit is deducted from your earnings to reduce the taxable income.
For the tax year 2024, the BPA is $15,705, and you can deduct the amount from your total income, not to exceed $173,705 (e.g., $40,000 – $15,705 = $24,295 taxable income).
Canada Training Credit
The Canada Training Credit (CTC) is a refundable tax credit for taxpayers ages 26 to 65 who are studying and paying tuition and other fees to an eligible educational institution. You can claim 50% of the eligible tuition or the CTC limit indicated in your latest notice of assessment or reassessment, whichever is lower. The CRA’s maximum limit in a lifetime is $5,000.
Canada Caregiver Credit
The Canada Caregiver Credit (CCC) is a non-refundable tax credit available to taxpayers who support a spouse, common-law partner, or dependent with a physical or mental impairment.
Your support to an infirm eligible spouse or dependent should cover some or all basic necessities such as food, clothing, and shelter. The CCC amount can be from $2,499 up to $7,999, as indicated on the specific lines on the tax return.
Seed capital
CRA tax credits, particularly the BPA, are significant and can be seed capital for dividend investing. You can transform $15,705 into a recurring passive income stream by investing in IGM Financial (TSX: IGM) or B2Gold (TSX: BTO). The former is an established wealth and asset management firm, while the latter is a gold producer with operating mines in three countries.
IGM is a $9.1 billion subsidiary of Power Corporation, an international management and holding company. In Q1 2024, IGM’s adjusted net earnings available to common shareholders increased 8.8% year over year to a record $224.5 million.
Besides the low 52.2% payout ratio, IGM has never missed a quarterly dividend payment since 2002. At $38.35 per share, you can partake in the generous 5.87% dividend.
B2Gold is a low-cost international senior gold producer. The $3.4 billion Canadian mining company owns and operates gold mines in Mali, Namibia, and the Philippines. In Q1 2024, gold revenue and net income declined 2.6% and 52.4% year over year respectively to $461.4 million and $48.5 million.
However, total gold production (225,716 ounces) was in line with expectations, and cash provided by operating activities jumped 248.7% to $710.7 million compared to Q1 2023. If you invest today ($3.80 per share), B2Gold’s dividend offer is 6.11%.
Put tax credits to work.
CRA credits are more than tax savings. You can make more money by investing them in income-producing assets like dividend stocks.
