CRA Money: 3 Benefits to Claim in 2024

TSX stocks like Fortis Inc (TSX:FTS) produce dividends that can be reduced by the dividend tax credit.

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September is right around the corner, and it’s an excellent time to start thinking about your 2024 tax return. Although taxes aren’t due until April of next year, it helps to keep track of your expenses and benefits throughout the year. 2025 will be here sooner than you think, and the sooner you start documenting your benefits and deductible expenses, the more prepared you’ll be to file.

This year, there are some major changes to long-standing Canada Revenue Agency (CRA) benefits. Some have been increased in value, others have new filing systems in place, and still others are completely new for the year. In this article, I will explore three CRA tax breaks you should claim on your 2024 taxes.

Canada Carbon Rebate

The Canada Carbon Rebate is a longstanding rebate available to Canadians from certain provinces. It gives you a certain amount of cash to offset the money you paid in carbon taxes. The amount varies from province to province. For example, a single Albertan with no children gets $225 per quarter, while a single Newfoundlander with no children gets $149 per quarter. These are flat rates: they don’t vary depending on how much you drive or fly, as you might think they do.

The Canada Carbon Benefit is higher for rural Canadians. Traditionally, people got 10% more than normal if they lived in a rural area. This year, the “rural supplement” increased to 20%. Also, you no longer need to have lived in a rural area this year to get the supplement; long-term residence as far back as 2016 can earn you the supplement. The increase in the supplement makes 2024 a very good year to claim the CCB.

Canada Child Benefit

Next up, we have the Canada Child Benefit. This is a cash benefit you can get if you have a child and your income is below a certain threshold. The amounts range from $7,787 per year for a small child and $6,570 per year for a child between the ages of six and 17.

Dividend Tax Credit

Next up, we have the dividend tax credit. This is a credit you claim on dividends.

Imagine that you held $100,000 worth of Fortis (TSX:FTS) — a major Canadian utility stock — in a taxable account. Let’s also imagine that you had a 50% marginal tax rate and lived in Ontario. Your $100,000 Fortis position would produce $3,990 worth of taxable dividends in a year, as the table below shows.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Fortis$59.011,695$0.59 per quarter ($2.36 per year)$999.75 per quarter ($3,999 per year)Quarterly
Fortis Inc: dividend math.

How much tax would you save by claiming the dividend tax credit on Fortis stock?

Well, Fortis pays eligible dividends, which means they are “grossed up” by 38% when calculating the credit. $5,519 is the amount for tax purposes. We’re assuming you have a 50% marginal tax rate, so you “pay” a pre-credit tax of $2,759. Then you subtract the 15% federal credit ($414) and the 10% provincial credit ($275.90) to arrive at your actual taxes payable: $2,069 — $690 in savings!

Created with Highcharts 11.4.3Fortis PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

As you can see, the dividend tax credit saves you a lot of money. So, be sure to claim it when you file next year. It can make a big difference.

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

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