FEDERAL NON-REFUNDABLE TAX CREDITS

At first sight, when you worked out what 16% was for Maria and Jack, it looked like an awful lot of money for them to pay, especially if you look at how much each of them earned. If you also worked out 16% of your own taxable income, it probably looked like a lot of money too.

However, taxpayers are able to use tax credits - amounts that can be credited towards, or put towards, any tax that should be paid. This will reduce how much tax they have to pay.

These tax credits are called non-refundable tax credits, On the real Schedule 1, you claim these credits on the bottom half of page 1. In our simplified Schedule 1, and you claim them on page 2.

Non-refundable, in this case, means that if your tax credits come to more than the tax you owe, you don't get the extra amount as a refund.

Say your calculated tax came to $1,000 in one year, and your non-refundable tax credits came to $1,200. You wouldn't have to pay any tax, but you wouldn't get any of the extra money back. (If you had already paid the $1,000 in income tax, you'd get that back, but that's a different matter.)

In the following pages, you'll read about these tax credits.