However, they may be screened when auditors carry out assessment checks for RRSP contributions, moving expenses or any other claim categories. Tax credits, like medical expenses and charitable donations, reduce the amount of tax payable. Credits also vary from province to province. For instance, Ontario offers property, sales and child care tax credits and Manitoba has cost of living, property and learning tax credits, while British Columbia has a sales tax credit. Refundable tax credits have value even if no tax is payable.
Credits reduce tax perhaps to zero.
If credits exceed the tax payable, the difference is given as a tax refund. Non-refundable tax credits have no value when no tax is payable. Excess non-refundable credits are not given as tax refunds. If an expense is treated as a tax deduction, taxable income is reduced by the amount of the expense. Deductions such as registered retirement savings plan contributions favor those in higher tax brackets.