How a non-refundable credit works
A credit is not a deduction. A deduction lowers your income before tax is calculated. A credit starts as an amount, which is then converted into a tax reduction by applying the lowest federal rate, although a few credits, such as donations, have their own conversion rules. For 2026 the lowest rate is 14%, so an eligible amount of $1,000 is generally worth about $140 against your federal tax.
The federal return totals these credits at line 35000, and you claim the matching provincial credits separately on Form ON428 if you live in Ontario. Provincial amounts and rates are their own calculation, so a federal figure does not tell you the Ontario result.
An illustrative example
Suppose the credits on your return add up to $10,000 of eligible amounts, and your federal tax before credits is $1,000. At 14%, those amounts produce a credit of $1,400. The credit wipes out the $1,000 of tax, and the remaining $400 is not refunded. These numbers are illustrative only and ignore other items on a real return.
The point is that a credit is only useful up to the tax available to absorb it. Someone with little taxable income may gain nothing extra from a medical or donation claim, while someone with a larger tax bill may use the whole amount.
Common examples and common mistakes
The CRA lists the basic personal amount, medical expenses and donations and gifts among the federal non-refundable credits on the return. Each has its own eligibility rules, supporting records and limits, so do not treat the list as permission to claim everything that looks similar.
A frequent mistake is describing a credit as if it were cash back. Another is overlooking that a claim made in a year with little tax may be less valuable than the same claim made in another year, where the rules allow a choice. Ask before filing rather than after.
What to discuss with your accountant
Bring receipts, slips and a note of any life changes such as a move, a new dependant or a change in work. Ask which credits you are eligible for, who in the household should claim them, and whether the tax available means part of a claim would go unused.
If you have already filed and think you missed a credit, ask about the process for adjusting the return instead of filing a second one. Keep the notice of assessment and the claim records together.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Federal Income Tax and Benefit Information (5000-G)Canada Revenue Agency
- Line 35000 – Total federal non-refundable tax creditsCanada Revenue Agency
- 2026 personal income tax rates and bracketsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.