Why the qualifier "non-refundable" and not just the term "tax credit"? Because some tax credits can actually result in the government sending you a cheque, such that in a way you make a profit off the credit. Non-refundable credits can at best reduce your payable tax to zero, but you'll never get a dollar back directly from the government (unless you've overpaid your tax instalments or deductions, leading to a refund).
You can receive non-refundable tax credits against both federal and provincial payable income taxes. The credit equals a "base amount" times the applicable tax rate. So, for example, the spousal credit can net you a $1699 credit federally, and an even greater $1821 credit against Alberta provincial tax, but only a tiny $423 credit against Ontario provincial tax.
Some non-refundable taxes credits can be claimed by either spouse. Usually it will be the higher earning spouse who claims the credit. These include:
- amount for infirm dependants 18 or older;
- public transit amount;
- children's fitness amount;
- children's arts amount;
- home buyer's amount;
- adoption expenses;
- caregiver amount;
- tuition and education amounts.
The Dividend Tax Credit for Canadian Dividends is an important one for investors, as it effectively reduces the tax rate payable on dividend income. But foreign dividends don't qualify for the dividend tax credit. And even within Canadian dividends, there is a split between:
- Canadian public corporations which are eligible for the enhanced dividend tax credit (commonly known as "eligible dividends";
- Canadian-controlled private corporations (CCPCs) which are eligible for the regular or small business dividend tax credit.
You'll probably be able to figure out many of the available personal non-refundable tax credits yourself when completing your return, but if you've got significant investments then getting the advice of an accounting professional would be prudent. In either case, make sure you carefully go over the fairly lengthy laundry list of available non-refundable credits to ensure you don't miss one you might benefit from!