Tax Credit

Definition

  • Tax credits are much like credits you get from a store. You use the credit to reduce the amount of the tax you owe. Tax credits are more valuable than deductions because they directly reduce the amount of tax you owe, rather than reducing the amount of income that is taxed.

Synonyms
tax advantage, tax benefit, offset, Revenue Canada, tax aid

Acronyms
TC

Related Terms and Acronyms

  • Child Tax Credit (CTC) Acronym,
    • A tax break for those who claim eligible dependent children on their tax returns.
    See Canada Child Tax Benefit (CCTB).
  • Circuit Breaker Definition,
    • A tax credit that reduces property taxes for the elderly and permanently disabled. The credit is dependent on the amount of income earned which means the more you make, the lower the credit.
    • An electrical device used to turn power off and on in sectors of a building and to limit the flow of electricity through a circuit for safety purposes.
  • Filing Extension Definition,
    • An additional amount of time to file your return. A filing extension, however, does not give you more time to pay your taxes.
  • Foreign Tax Credit (FTC)Acronym, Canada,
    • This tax credit is for foreign income or profits taxes you paid on income you received from outside Canada and reported on your Canadian tax return.
    Form T2209 - Federal Foreign Tax Credits.
  • Home Renovation Tax Credit (HRTC)Acronym, Canada, Important,
    • Income Tax Definition,
      • The main source of revenue for the federal government and many Provinces. The tax is based on your earned and unearned income. The amount or percentage taxed is based on the amount of income, using the governments graduated tax scale.
    • Investment Tax Credit (ITC)Acronym, Canada,
      • Non-refundable Credit Definition,
        • Tax credits reduce your tax liability dollar-for-dollar. Non-refundable credits can get your tax bill down to zero.
      • Property Tax Credit (PTC)Acronym, Canada,
        • Refundable tax benefit claimed on the personal income tax return designed to provide assistance for Canadians with low to moderate incomes.
      • Short Tax Year Definition,
        • A tax period less than 12 months long, resulting from a business start-up or the transition to a tax year ending on a different date.
      • Tax Deduction Definition,
        • An expense that governments allow you to subtract from your income before computing your income tax.
      • Tax Liability Definition,
        • The total amount of tax you owe.
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