Illustration by The Globe and MAil. Source images: Getty Images
At tax time, single Canadians aren’t afforded the same benefits that married couples get, such as pension-income splitting and spousal tax credits. Single households – many of whom already struggle to save on their own – are faced with a higher tax burden and fewer financial breaks.
Yet this demographic has been a growing segment in Canada for decades: in 2021, nearly 30 per cent of all households were one-person households, according to Statistics Canada, a 5-per-cent increase from 2001.
“This is not a small portion of the population,” said Sarah Forhaeuser, a tax expert with Wealthsimple. “Yet, when we look at the Canadian tax system, it does not seem to offer many advantages for the single household demographic.” In fact, only Quebec has a credit specifically aimed for people who live alone.
While many tax advantages are geared towards households with multiple people, there are some tax strategies single people should consider when filing their taxes. “It is crucial for singles to take advantage of every available credit and deduction,” Ms. Forhaeuser said.
General deductions and credits
According to Ryan Minor, CPA Canada’s director of tax, many credits and deductions are “context-dependent” and easy to miss. It’s important to know what’s out there and to share your personal situation with a tax adviser, he says.
For single homebuyers, Mr. Minor suggests the first-time home buyers’ tax credit, a non-refundable income tax credit of up to $10,000. Those still saving for their first home should put down payment funds in a First Home Savings Account and claim up to $8,000 in contributions to reduce taxable income.
The Canada Workers Benefit is a refundable tax credit that helps lower-income workers who make less than $36,749. “You can claim up to $1,590,” Ms. Forhaeuser said. “It’s a good option to consider if you’re working full-time.”
There’s also the GST/HST credit, which is a tax-free quarterly payment for individuals with low and modest incomes. Taxpayers can also claim political contribution tax credits, which are often overlooked, according to Ms. Forhaeuser, along with any charitable donations and the digital news subscription tax credit, which ends in the 2024 year.
Caregiver and disability credits
The disability tax credit (DTC) is a non-refundable tax credit that helps people with disabilities or their supporting family member reduce the amount of income tax they may have to pay. “It may be possible to transfer the child’s disability credit up to the parent,” Mr. Minor said.
The Canada caregiver credit can be claimed by those caring for dependents with disabilities or aging parents or relatives. Similarly, the multigenerational home renovation tax credit, introduced in 2023, could be claimed if you renovate your home to care for aging parents or an adult who is eligible for the DTC.
Students
Students enrolled in postsecondary education should take advantage of tuition tax credits via the T2202 form. Any unused tuition and education amounts can be carried over to the next year, or transferred to the parent’s tax return to reduce their own tax liability.
Similarly, Mr. Minor says students should look into interest paid on your student loans to see if they’re eligible for a tax credit. “I’ve seen a lot of cases where that was missed if you have a qualifying student loan,” he said. “It’s not a huge credit, but it’s not nothing.”
Moving expenses can be claimed for those who are relocating closer to their postsecondary institution or a job or if the move is at least 40 kilometres closer to the new school or place of work.
Single parents
Single parents should claim the amount for an eligible dependent credit. “Managing taxes while raising children can feel very overwhelming and being single can make that trifold, so there are several key tax benefits designed to ease that specific burden,” Ms. Forhaeuser said.
The child care expenses deduction, for example, can include paying for daycare, babysitting, and certain types of tutoring. Certain provinces, including Manitoba, Newfoundland and Labrador, and Nova Scotia, offer a child fitness and arts program credit so single parents can claim eligible fees up to $500 per child.
Seniors
Seniors in Ontario could claim the provincial seniors care at home tax credit, seniors public transit tax credit, and the senior homeowners’ property tax grant. Quebec offers a tax credit for home-support services for seniors, which can include meal services, grounds and maintenance costs, and housekeeping services. It also has a senior assistance tax credit, and the independent living tax credit for seniors, which covers 20 per cent of expenses for purchasing or installing equipment that would facilitate independent living, such as a walker, a walk-in bathtub, or hearing aids.
Bottom line
“While there aren’t as many tax advantages that single people can leverage in comparison to households of multiple people, there are still a lot of opportunities that could apply – it just depends on your situation,” Ms. Forhaeuser said.
Tax software and tax planning experts can help singles understand what rules apply to their unique situation. “There’s no need to leave money on the table,” said Ms. Forhaeuser. “The government wants you to claim these.”
