Personal Finance

Non refundable tax credit

  • Last Updated:
  • Oct 27th, 2012 6:25 pm
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Deal Addict
Aug 14, 2007
2228 posts
155 upvotes
Waterloo

Non refundable tax credit

Hi, what exactly is a non refundable tax credit?
My thinking is that if I am eligible for a 750 non refundable tax credit, and I owe $1000 at year end I will only owe $250, However if I owe $250 Ill owe nothing, but will not get a refund for $500.. Is this correct?
Or does it mean that if I have paid $15,000 in taxes over the course of the year (being withheld on my paycheque) , I will get a $750 refund.. But if I had only paid $700 in income tax over the entire year I would get no refund?

If it is the first case than what is the best way to take advantage of this since I rarely owe anything (maybe $50) when taxes are due? Ask my employeer to not withhold $750 worth of income tax?

Mainly I am asking about the first time home buyers tax credit http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... u-eng.html


Thanks
3 replies
Sr. Member
User avatar
Oct 24, 2011
595 posts
142 upvotes
Timmins
Non-refundable tax credits are the ones listed on Schedule 1 (and the equivalent provincial schedule)- personal exemption, spousal exemption, child amount, tuition/education credit, medical, first time home buyers credit, etc. You add these up and multiply by 15%. They are credits in so far as they will bring down the federal tax owing (example you owe $5000 - 2750 credits = you pay 2250, plus the provincial calculation). They are non-refundable in so far as- if the credits bring your tax owing to below zero, you do not get a refund based on that calculation (example you owe $2750 - 5000 credits = you pay 0 and do not get the negative as a refund)

First time home buyers credit is 5000 x 15% = 750 credit. If you don't need it to reduce your tax owing to zero, you lose it and you cannot use it the next year.
[OP]
Deal Addict
Aug 14, 2007
2228 posts
155 upvotes
Waterloo
ok so basically I should ask my employer to not without about 1k worth of income tax then??
If that works, seems kind of dumb..
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