Question

The TD1 form is used by employees to claim federal personal tax credits impacting their tax deductions. Choose three of the tax credit amounts available on the TD1 (except the basic personal amount) and explain who might claim these tax credits and how this will impact the employee's tax situation.   

Answer 1

What is TD1?

As stated in the question, the TD1 form is the Personal Tax Credits Form used by employees to claim federal personal tax credits impacting their tax deductions in Canada.

What is a Tax Credit Amount?

Tax credit amounts are in the nature of deductions that reduce the taxable income of the employee and in turn, reduces their tax liability for the said financial year.

Following are the various tax credit amounts available in TD1-2019 (other than the Basic personal amount). I have explained 3 of them in detail in the table below.

1. Line 2- Canada caregiver amount for infirm children under age 18
2. Line 3- Age amount
3. Line 4- Pension income amount
4. Line 5- Tuition (full time and part time)
5. Line 6- Disability amount
6. Line 7- Spouse or common-law partner amount
7. Line 8- Amount for an eligible dependant
8. Line 9- Canada caregiver amount for eligible dependant or spouse or common-law partner
9. Line 10- Canada caregiver amount for dependant(s) age 18 or older
10. Line 11- Amounts transferred from your spouse or common-law partner
11. Line 12- Amounts transferred from a dependant

Category of Tax credit amount	Amount of tax credit	Who might claim these tax credits?- Conditions	Impact of tax credits on employee's situation
Line 5-Tuition (full time and part time)	Total Tuition (full time and part time)	1) A student (enrolled full time or part time)enrolled at a university or college, or an educational institution certified by Employment and Social Development Canada.	Since the employee has the additional burden of an education, in addition to a family or personal expenses the financial taxation burden significantly reduces to the extent of the tuition fees paid.
		2) Pays more than $100 per institution in tuition fees.
Line 4-Pension Income Amount	$2,000 or estimated annual pension income, whichever is less.	Receives regular pension payments from a pension plan or fund (excluding Canada Pension Plan, Quebec Pension Plan, Old Age Security, or Guaranteed Income Supplement payments),	Targeting the older age group, this deduction gives a cushion for people having pension as their major source of income to have more disposable income in hand for their living expenses.
Line 10-Canada caregiver amount for dependant(s) age 18 or older	i. $7140- If Net Income for the dependant is Less than or equal to $16,766	1) Can be claimed for supporting one or more than one infirm dependant age 18 or older.	A support to families with elevated medical expenses for supporting an infirm child and low net income. Partial deduction for families with a slightly higher net income bracket.
	ii. Partial claim (appropriate sections of Form TD1-Work Sheet needs to be filled)- If Net Income is in between $16,766 and $23,906	2) Excludes spouse or common-law partner or eligible dependant actually claimed(if any) in line 9 or could have claimed an amount for if his or her net income were under $14,299)
		3)If sharing this amount with another caregiver who supports the same dependant, appropriate sections of Form TD1-Work Sheet needs to be filled.

Note: Source used is 2019 Personal Tax Credits Form of Canada

Link: https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/td1/td1-19e.pdf