The basic personal amount is just one of the non-refundable tax credits every Canadian resident is entitled to claim on his or her income tax return. This amount changes year to year, in order to keep up with inflation. In 2016, the federal basic personal amount is equal to $11,474; this amount is applied to your return to reduce the amount of income you’re required to pay tax on.
For example, let’s say you made $35,000 in 2016. Applying your federal basic personal amount will reduce your federal taxable income to $23,526 ($35,000 – $11,474). This means that instead of being taxed on your entire income, you’ll only be taxed on the remaining income once your basic personal amount has been applied.
You’re also entitled to claim a corresponding provincial basic personal amount, which will vary in amount depending on which province or territory you live in:
- British Columbia
- New Brunswick
- Newfoundland and Labrador
- Northwest Territories
- Nova Scotia
- Prince Edward Island
Let’s say you live in Alberta – your provincial personal basic amount for 2016 is $18,451. This means that applying this amount to your return will reduce your provincial taxable income to $16,549 ($35,000 - $18,451).
Note: If you moved to or from Canada in 2016, your basic personal amount will be adjusted to reflect the amount of time you lived here during the year.
Where can I claim this?
H&R Block’s tax software will automatically claim both your federal and provincial basic personal amounts on your return.