The CRA Credits All Canadians Should be Using

Many tax credits are available to Canadians. The accumulated amount would be sufficient seed capital for dividend investing.

| More on:
Dollar symbol and Canadian flag on keyboard

Image source: Getty Images

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.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends B2Gold. The Motley Fool has a disclosure policy.

More on Dividend Stocks

investment research
Dividend Stocks

2 TSX Stocks to Buy in 2024 and Hold for the Next 10 Years

Are you looking for some great TSX stocks to buy in 2024? The market is full of options, but these…

Read more »

Retirement
Dividend Stocks

Pensioners: 2 Stocks That Cut You a Cheque Each Month

Monthly pay dividend stocks like First National Financial (TSX:FN) cut you a cheque each month.

Read more »

money cash dividends
Dividend Stocks

Want Decades of Passive Income? 2 Energy Stocks to Buy Now and Hold Forever

Are you wondering what TSX energy stocks could pay and grow their dividends for decades ahead? Here are two for…

Read more »

The sun sets behind a power source
Dividend Stocks

2 No-Brainer Utilities Stocks to Buy Right Now for Less Than $200

These two utilities stocks can be some of the best picks for investors if you want to shell out some…

Read more »

financial freedom sign
Dividend Stocks

Million-Dollar TFSA: 1 Way to Achieve to 7-Figure Wealth

Achieving seven-figure TFSA wealth is doable with two large-cap, high-yield dividend stocks.

Read more »

analyze data
Dividend Stocks

How Much Will Manulife Financial Pay in Dividends This Year?

Manulife stock's dividend should be safe and the stock appears to be fairly valued.

Read more »

food restaurants
Dividend Stocks

Better Stock to Buy Now: Tim Hortons or Starbucks?

Starbucks and Restaurant Brands International are two blue-chip dividend stocks that trade at a discount to consensus price targets.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

1 Growth Stock With Legit Potential to Outperform the Market

Identifying the stocks that have outperformed the market (in the past) is relatively easy, but selecting the ones that will…

Read more »