The concept of a tax refund is simple. You pay tax through payroll deductions through the year, then, at the end of the year, you adjust your income to reflect your life circumstances. When tax on your adjustment is less than you paid through the year, you get back the difference. Deductions and tax credits are your tools to lower both your taxable income and the amount of tax you’re required to pay.

Your employment contract may require you to buy office supplies, in which case, they're deductible.

Your employment contract may require you to buy office supplies, in which case, they’re deductible.

Know your deductions

Two types of deductions are subtracted from your total income to determine your taxable income. Lines 205 to 236 on your federal tax form reduce your total income to net income. These deductions include items such as:

  • your registered pension and registered retirement plans,
  • any union dues or professional association fees you’re required to pay,
  • child care expenses,
  • qualifying moving expenses, and
  • certain deductible support payments.

Lines 244 to 260 then reduce your net income to determine your taxable income.

Provincial considerations

Each province and territory has additional credits, nonrefundable credits or income reductions that apply to you as a resident, in addition to federal amounts. For example, Ontario offers an energy and property tax credit, the Northern Ontario energy credit and the senior homeowners’ property tax grant, as well as a list of credits similar to the federal list. Manitoba offers an advance tuition fee income tax rebate as well as credits targeted to farmers and agricultural businesses.

Canada Revenue Agency: Line 326 — Amounts Transferred from Your Spouse or Common-Law Partner

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