Each taxpayer files a personal tax return to the federal government. You must file a tax return if you have a balance owing of at least $2. The federal government collects tax on behalf of the provinces and territories. With the exception of Quebec which has its own provincial system, Form 428 calculates the provincial and territorial tax rates and tax credits.
Of course, each region has its own tax credits and tax rates. Review the eligibility requirements for each provincial deduction and credit. Although most requirements are identical to any federal counterparts, there are exceptions. Report the total tax payable at the end of the form on line 428 of your tax return.
Non-Refundable Tax Credits
The amount of non-refundable tax credits is based on the province or territory where you reside. Credits amounts typically increase each year based on inflation. Non-refundable tax credits only reduce your taxable income to zero (you cannot receive a refund from them). Claim the basic personal amount; every taxpayer is entitled to this. Claim any other tax credits you are entitled to, such as the age amount or spouse or common-law partner amount.
Read the description of each tax credit to make sure you qualify. Eligibility for many tax credits are based on requirements, such as age, number of children and taxable income. Claim deductions for Canada Pension Plan or Quebec Pension Plan contributions and Employment Insurance premiums , which you can find on your T4 slip.
Tax on Taxable Income
Calculate the tax on your taxable income in the province or territory where you live. Enter the amount of taxable income found on line 260 of your tax return. Calculate the amount of provincial or territorial tax payable based on your taxable income and the tax rates in effect in your province.
Refundable Tax Credits
Claim any refundable tax credits to which you are entitled. Unlike non-refundable tax credits, you do not need taxable income to receive a tax refund. Even if you earn less than the basic personal amount, you can receive a tax refund. Provinces and territories each have their own refundable tax credits. Add up your refundable tax credits on Form 428.
Province of Quebec
Residents of the province of Quebec have a much different system of provincial taxation. Unlike the other provinces and territories which include provincial calculations in the federal submission, the Quebec provincial return is sent separately to Revenu Quebec.
Rather than a provincial form 428, a form TP1 is completed. Additionally, if there is a provincial amount of tax owing and a federal refund, the amounts do not offset like other provinces. In this case, the balance due would be paid to Revenu Quebec and federally you would receive a refund.