Which statement is incorrect with regards to non-refundable tax credits, refundable tax credits and tax deductions? Refundable
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Which statement is incorrect with regards to non-refundable tax credits, refundable tax credits and tax deductions?
Refundable tax credits are credits that will be paid to you if you are eligible, regardless if you owe tax or not. To claim them you must file a tax return. For example: Goods and Services Tax (GST) credit.
- Non-refundable tax credits can only be used against tax that you would otherwise owe. For example: Medical expenses.
- If the total of the non-refundable tax credits is greater than the taxes owing than you will receive a refund for the difference.
A tax deduction, such as an RRSP contribution is deducted from Total Income to arrive at your Net Income for tax purposes.
Other deductions such as net capital losses from prior years that are claimed against the current year's taxable capital gains, reduce your Taxable Income.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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