What can you claim on your income taxes: 7 deductions not to miss

by Ann deBruyn

a computer with receipts on a table, with a stick note saying, Don't forget to do you your taxes.

Photo by Nataliya Vaitkevich from Pexels

There are some tax deductions and credits you know you should claim on your income tax return every year. It’s unlikely you’ll ever forget to deduct your RRSP contributions, for example, and claiming a tax credit for your charitable donations is a no-brainer. But other claims can be easy to overlook if they’re new—or just new to you because you haven’t had the opportunity to use them before.

With that in mind, here are some of the deductions and credits that you should check to see if you are eligible to claim this year—along with their potential tax savings—to make sure you don’t end up leaving money on the table. (Note that these are all federal claims; in some cases there may be similar claims you can make on your provincial/territorial taxes.)

Is there a medical expense tax credit?

If you or an immediate family member had a whack of uninsured medical costs in 2021, and/or your income was lower than usual (perhaps due to COVID-19), it’s worth it to tally up those expenses to see if you have enough to claim this non-refundable tax credit. 

The Medical Expenses Tax Credit allows you to claim a whole slew of eligible costs, including prescriptions, private or semi-private hospital care, tests, dental care, health plans (premiums and/or co-pays), travel expenses (when your only option for treatment was at least 40 kilometres away), and many other medical services and devices. The catch is, you must have shelled out enough during the year to reach the minimum claim threshold—either 3% of net income or $2,421 for 2021, whichever is less. Keep in mind you don’t have to use the calendar year for your accounting—you can use any 12-month period ending in 2021 (say, May 1, 2020, to May 31, 2021) if it gets you past the threshold—but you can’t include any expenses you already claimed on last year’s return.

Who’s eligible: Any taxpayer who paid medical costs for themself, a spouse, and/or dependents is eligible, as long as they were not reimbursed for the amounts by insurance, an employer or any other source.

How much you could save: The credit can reduce your federal taxes by 15% of your claim amount. For reference, a claim of $2,421 could save you up to $360.

How to claim medical expenses: Enter the amount of the eligible medical expenses for yourself, your spouse and dependent children on line 33099 of your tax return (use line 33199 for other dependents).

Read more about the medical expenses tax credit.

CRA-approved home office expenses 

If you’re among the millions of Canadians who worked from home in 2021, you may be able to claim this now-simplified deduction for home-office expenses. 

It is a simplified version of the Employment Expenses deduction from the Canada Revenue Agency (CRA) that allows you to reduce your taxable income by $2 for every day you worked at home due to the pandemic, up to a maximum deduction of $400. (The government has pledged to increase the maximum deduction to $500, but it’s uncertain if this will apply for 2021.) You don’t need any receipts or other documentation for this claim.

Who’s eligible: Employed Canadians who worked from home due to the pandemic (or because their employer asked them to work from home for other reasons) and who performed more than half of their usual work hours from home over a period of at least four consecutive weeks. This was the qualification rule for 2020; at publication it was unclear whether the same threshold will apply for work performed during 2021.

How much you could save: This deduction could save you up to $60 if your income is in the lowest tax bracket, and up to $132 if you’re in the highest income tax bracket.

How to claim home office expenses: Fill out form T777S (Statement of Employment Expenses for Working at Home Due to COVID-19) and enter your claim on line 22900 of your return.

Are moving expenses tax deductible? 

While the increase in remote work and study options probably make this one a longshot, if you packed up and moved to be closer to your workplace or school in 2021, you may be able to deduct some of your out-of-pocket moving costs from your taxable income. 

The Moving Expenses Deduction allows a surprising number of write offs, including amounts paid for transportation and storage; travel (i.e., gas, vehicle maintenance, meals, accommodation); temporary living expenses (for up to 15 days); real estate commissions and other costs of selling and/or buying a home; utility hookups and disconnections; and fees for cancelling a lease. Fees for mail forwarding, home staging and repairs are not included.

Who’s eligible: Canadian workers or full-time students who moved at least 40 km closer to a new workplace or school. This includes students who moved for a co-op or summer job.

How much you could save: It depends on the total amount of your moving expenses but, for example, a deduction of $2,500 would save you $375 if your income is in the lowest tax bracket, and $825 if you’re in the highest income tax bracket.

How to claim moving expenses: Fill out form T1-M and report your total allowable moving expenses on line 21900 of your tax return.

Get a tax credit for tuition and training fees 

If 2021 was the year you started university or college, went back to school or took courses or training to upgrade your skills, there are two possible tax credits available for you to claim. 

  1. The non-refundable Tuition Tax Credit allows a maximum claim of $5,000, which could save you up to $750 in federal income taxes. If you don’t owe enough tax to make full use of the credit, you can either carry forward the extra amounts to claim in the future, or transfer them to a spouse, parent or grandparent. 
  2. The Canada Training Credit lets you claim up to half your eligible tuition or training fees as a refundable credit—which means it will be paid out to you regardless of how much tax you owe. To make this claim, however, you must have enough accumulated in your Canada Training Credit account, which the government contributes to annually. The program began in 2019 with allocations of $250 per year, so eligible taxpayers who haven’t yet made any claims would have $500 available to claim for 2021. (Here’s a good tip: Your notice of assessment from last year’s tax return will specify how much you have in the account.)

Who’s eligible: Canadian students aged 16 or older can claim the Tuition Tax Credit, while the Canada Training Credit is open to working Canadians between the ages of 25 and 64. In either case, you must have paid fees to a designated university, college or other educational institution, and will need a T2202 slip issued from the school to make a claim. Both credits can be claimed in the same year, if applicable, but any amount claimed under the Canada Training Credit will reduce the fees eligible for the Tuition Tax Credit, accordingly.

How much you could save: The Tuition Tax Credit can reduce your federal taxes by 15% of your claim amount, up to a maximum of $750 in tax savings. The Canada Training Credit could save you up to $500 in 2021.

How to claim it: Complete Schedule 11 and, if claiming the Canada Training Credit amount, enter it on line 45350 of your return. To claim the Tuition Tax Credit, enter the (remaining) eligible amount on line 32300. Any amounts transferred to a parent/grandparent or spouse will be claimed on their returns, on lines 32400 and 36000, respectively.

How to claim Canadian political contributions 

Well, it was an election year, so chances may be greater that you made a federal political contribution in 2021 and can claim a tax credit.

The Federal Political Contribution Tax Credit is one of the most generous non-refundable credits around, as you can save nearly 50% or more on eligible donations of up to $1,275.

Who’s eligible: Taxpayers who donated (or whose spouse donated) amounts to a registered federal political party or a candidate for election to the House of Commons.

How much you could save: You can claim 75% of the contributions up to $400 (up to $300 in tax savings); 50% for amounts between $400 and $750 (for a total tax savings of up to $475), and 33.5% for any amounts between $750 and $1,275 (for a maximum tax savings of up to $650).

How to claim it: Enter your total federal political contributions on line 40900 of your return, and the calculated credit amount on line 41000. 

First-home buyer tax credit for Canadians 

If 2021 was the year you became a homeowner, you may be able to claim this non-refundable credit.

The Home Buyers’ tax credit is a straightforward claim of $5,000 for anyone who is eligible.

Who’s eligible: First-time home buyers (including those who haven’t lived in a home that they/their spouse owned for the past four years), and buyers with disabilities, who purchased a qualifying home in 2021.

How much you could save: The credit reduces your federal taxes by 15%, which means you could save up to $750. The government has pledged to increase this credit to $10,000, for a potential tax savings of $1,500, but this change has not yet come into effect.

How to claim it: Enter the claim on line 31270 of your return.

Read more about the recent tax proposals.

How to claim investment fees on your tax return 

If you invested money in a non-registered account in 2021 (perhaps with the savings you enjoyed from reduced spending on travel, dining and other expenses during the pandemic), you may be able to deduct some investment-related fees from your taxable income.

This claim falls under the Carrying Charges and Interest Expenses deduction. It can include fees for certain investment advice, such as guidance on buying or selling a specific share or security, as well as fees for managing your non-registered investments. Note that the principal business of the financial professional you use must be providing advice on whether to buy or sell specific shares (or the administration/management of those assets), so fees paid to a financial planner are likely excluded. Also, commission fees or embedded fees, like management expense ratio (MER) are not eligible for the deduction.

Who’s eligible: Taxpayers who paid fees to an investment advisor to earn income from non-registered assets.

How much you could save: It depends on the total amount of your eligible investment fees but, for example, a deduction of $1,000 would save you $150 if your income is in the lowest tax bracket, and $330 if you’re in the highest income tax bracket.

How to claim it: Report your total eligible fees on line 22100 of your return.Read more about the investment fees you can claim.

READ MORE ON 2021 TAXES:

  • 2021 tax season primer: Our roundup of the best tax tips for Canadians
  • What are you waiting for? Doing your taxes is easier than you think
  • When are tax-deferred and tax-free accounts actually taxable?
  • “Where do we pay income tax if we retire abroad?”