Noh Review: Low Oil Price and the Implications

After a long break, Noh Review is finally back!

One of the biggest global issues right now is the falling price of crude oil. I think it is very important for us to know the implications that the low oil prices will have because it directly affects our money as consumers and investors.

As you can see in the graph, the crude oil crash has been very harsh. It's now going around $52.69 a barrel as of January 2, 2015. If you take a step back and remind yourselves that crude oil used to be priced at over $100 a barrel in July 2014, you will know that this is a serious matter.

The first negative implication of this is that there will be inevitable layoffs in the oil industry because less drilling will lead to a loss of jobs for oil workers. For example, American Eagle Energy announced that they would call off drilling entirely until oil prices rebound. This would also negatively affect the services around the drilling sites, such as restaurants, bars and construction. If the oil prices keep crashing, investors will lose more confidence in the oil-related businesses because this low oil price environment will significantly decrease the corporate profits. I expect that there will continue to be downward pressures on stocks like Suncor Energy (TSE: SU), Imperial Oil (TSE: IMO) and Husky Energy (TSE: HSE). Above all, the province of Alberta will take a direct hit.

But, we need to be aware of the positives because this actually makes the lives of consumers better. This global slump in the price of oil is leaving consumers with more cash in their pockets because we will spend less on gasoline, allowing us to purchase more and spend more on other items like groceries, travel and investments. So the low oil prices may actually stimulate the economy.

Noh Review's Outlook

• Consumers will have more to spend on travel, boosting the sales of airlines. Also, the low oil price would significantly decrease the gas expenses from the airplanes. WestJet (TSE:WJA) may be worth a watch.
• Now would be a wise time to invest in stable Canadian banks that have large retail operations in the U.S. because the US economy will continue to improve with lower oil prices. A great example would be TD Bank (TSE: TD). 
• The crashing of crude oil will not last forever as history tells us. Having said that, 2015 may actually be a good time to get into energy/oil stocks with a big discount. Suncor Energy (TSE: SU) with a consistent dividend yield of 3% seems to be an attractive choice.
• Detailed analysis on these companies will be provided in the next posts.

Noh Review Tax: Basic Tax Information for Newcomers to Canada

It has come to my attention that it would be very helpful for newcomers to Canada if I provided them with some basic tax information and tips. This post is geared towards people who are not familiar with the Canadian tax system. Please note that this post will not cover all necessary items, but I will go over some of the key items I think are important.

Given the assumption that you have recently moved into Canada, your taxable income will not consist of many sources. The common ones are 1) employment income (e.g. if you got a job and you worked during the tax year), 2) rental income (e.g. if you leased your property to a tenant and you received rent), 3) capital gains (e.g. if you sold an investment security at proceeds in excess of cost) 5) investment income (e.g. if you purchased shares of a stock and received dividends), and 6) interest income (e.g. if you put money in a non-tax free savings account and received interest on the principal). In the next post, I will provide investment and savings tips for newcomers to Canada in a tax perspective.

1. First, let's go over the employment income.

If you worked during the year, you would receive a T4 slip and you would have to report this as your employment income. Among other things, I suggest that you pay attention to the federal tax withheld amount on your pay stub because some of this amount can be refunded if your total tax payable is less than the total income tax deducted. Your non-refundable tax credits can help decrease your tax payable. Please refer to the previous post "Noh Review Tax: Non-Refundable Tax Credits" to see which one you are eligible for.

2. Next up is your rental income.

If you leased your property and you received rent from a tenant during the year, you would need to report this as your rental income on the T776 "Statement of Real Estate Rentals" form. It is important to note that the CRA lets you deduct some expenses from your rental income, so you don't pay taxes on the full amount of rent you received from a tenant. Just as an example, some of the expenses you can deduct are insurance, interest, maintenance and repairs, management and admin fees, professional fees and property taxes.

Please note that if you are the one paying rent to a landlord, you can claim the rent you paid during the year on the ON-BEN form. The Ontario Trillium Benefit (OTB) combines the Ontario Sales Tax Credit and Ontario Energy and Property Tax Credit. Simply put, these are the amounts you can get in a cheque from the CRA as a separate payment from your income tax refund. For OSTC, you can receive up to $278 for each member of your family provided that you are 19 or older and your family income is low to moderate. And if you pay rent, you can get the OEPTC up to $963 provided that you are 18 or older. Basically, the less money your family makes, the more money the CRA gives you for OTB. Please note that the CRA may ask you for proof of rent paid in a pre-assessment review.

3. Let's discuss about taxable capital gains.

A capital gain arises when you dispose a financial asset and the proceeds are in excess of the cost. For example, if you purchase a stock for $100 and you sell it at the value of $150, your capital gain is $50. Usually, 1/2 of a capital gain amount is included in your taxable income.

4. Have an idea about capital losses so that you can take advantage of them.

A capital loss arises when the sale proceeds are less than the cost. Basically, if you sell an investment security and you receive less $ than what you originally paid for, you can claim this as a capital loss on your tax return. You can apply a capital loss against a capital gain by carrying this back 3 years or forward indefinitely.

I just gave you some very basic information on some of the items that make up your taxable income. If your taxable income is high, you can contribute to RRSP to lower your taxable income so that you pay less taxes in a lower tax bracket among other benefits. You can go back to "Noh Review Tax: RRSP and Tax Planning" for more information. Please stay tuned for the next post on investment and savings tips. 

Noh Review Taxation: Income From An Active Business of a CCPC

Today, we will discuss the topic of "Income from an active business of a CCPC."

First off, a CCPC is a Canadian-Controlled Private Corporation. Generally, it must meet the following conditions:

• It is a corporation resident in Canada, either incorporated in Canada or resident in Canada from June 18, 1971, to the end of the tax year;
• It is not controlled by non-resident persons;
• It is not controlled by public corporations;
• It is not controlled by a Canadian resident corporation that lists its shares on a designated stock exchange outside of Canada;

Corporate Tax Planning Tips: When it comes down to incorporating your business, I want you to learn the different types of corporation. Each type of business may bring you some key tax advantages over others. For example, incorporating your business as a CCPC will bring you the following advantages:

• Eligible for the small business deduction, which applies to the first $500,000 of active business income
• Enhanced investment tax credits for qualified expenditures on SR&ED - this may be fully refunded. CCPCs can claim federal R&D credits at a rate of 35% to reduce corporate taxes, which is far better than a credit of 20% for other types of corporations.
• Shareholder entitlement to the $500,000 capital gains exemption on the disposition of qualified small business corporation shares. 
• If you exercise stock options granted by a CCPC, you can defer the employee's taxable benefit from it
• The basic rate of Part I tax is 38% of your taxable income, 28% after federal tax abatement. After the general tax reduction, the net tax rate is 15% effective January 1, 2012. For a CCPC claiming the small business deduction, the net tax rate is 11%.

So now you may be wondering, "what is the small business deduction?" The small business deduction represents a credit against the tax otherwise payable on income from an active business carried on in Canada, which is designed only for small CCPCs. A corporation must be a CCPC throughout the year to qualify for it.

In specific, the small business deduction is the least of:

a) Net Canadian active business income

b) taxable income fully taxed in Canada achieved by removing from the total taxable income, foreign-source income estimated

c) the business limit $500,000 less any portion allocated to associated corporations

Types of Business Which Are Ineligible for the Small Business Deduction:

• Now, what is the "active business" in tax? The definition of it is "any business carried on by the corporation other than a specified investment business or a personal services business and includes an adventure or concern in the nature of trade." 
• Income earned by a specified investment business or a personal services business does not qualify for the small business deduction.
• A specified investment business is a business whose principal purpose is to derive income from property (e.g. interest, dividends, rents, royalties) unless the corporation employs in the business throughout the year more than 5 full-time employees. 
  
• A personal services business is a business of providing services where an individual who performs services or anyone related to the incorporated employee is a specified shareholder or an owner of 10% or more of the shares of the corporation. The incorporated employee would reasonably be regarded as an officer or employee of the entity. This is unless the corporation employees more than 5 full-time employees throughout the year or the services are provided to an associated corporation.

Noh Review Taxation: Integration and Avoiding Double Taxation

After a long wait, Noh Review Taxation is back. Today, we will briefly go over the concept of integration. 

As you may be aware, a corporation is a taxpayer which is taxed separately from its shareholders. We file T2 corporate tax returns for corporations while we also file T1 personal tax returns for individuals. Accordingly, there is always a chance of double taxation, with the same income being taxed at the corporate level and then at the individual shareholder level. 

Integration should cause the total tax paid by a corporation and its shareholders to be equal to the total tax paid by a separate individual who carries on the same economic activity directly outside of the corporation. By integrating the corporate and personal tax systems, the double taxation of corporate income can be avoided.

Perfect integration is possible under 2 conditions:

1. The shareholder should include in income and pay taxes on the full pre-tax income earned by the corporation and then receive a full credit for all of the income tax paid by the corporation. 
2. All after-tax income of the corporation should be either paid out as dividends in the year earned or taxed at the shareholder level in that year.  

       The Gross-up Process is as follows:    

•    The gross-up is equal to the total income tax paid by the corporation, which is added to the dividend received by the individual shareholder. 
•    Now, the grossed-up dividend is the corporation's pre-tax income. 
•    Then, the shareholder will pay tax on the grossed-up dividend at his personal tax rate.
•    This process will equalize the tax paid on the income that is flowed through the corporation to its shareholders, with the tax paid on the same income that is earned directly.
  

I'll throw an example of perfect integration to make this easier:

1. Corporation A made income of $1,000. This corporate income gets taxed at 20% for $200. The after-tax earnings available for dividends is now $800. 
2. Now, the individual shareholder has a dividend of $800, but with the gross-up of $200 (equal to corporate tax), the taxable income goes back up to $1,000 which is equal to pre-tax corporation income. 
3. Then, the $1,000 pre-tax income gets taxed at his personal tax rate of 34%. 
4. This personal tax of $340 gets reduced after the dividend tax credit equal to the gross-up of $200. 
5. Now, the net personal tax is $140 for the individual shareholder.
6. Overall, the total taxes paid are $200 for the corporation and $140 for the shareholder.  This total of $340 is equal to marginal tax rate @ 34% earned directly by an individual.

There is a potential deferral of tax under perfect integration. The potential deferral is the shareholder net tax rate, which is the difference between individual tax rate and corporate tax rate. For example, if the individual tax rate is 34% and the corporate tax rate is 20%, the potential deferral is at 14%.

Before I let you go, I need to let you know that there are two different percentages for the gross-up.

Dividends eligible for 25% gross-up are:

• Dividends from the active business income of CCPCs that is eligible for the small business deduction
• Dividends from the investment income of CCPCs

Dividends eligible for the 41% gross-up are:

• Dividends from the active business income of CCPCs that is not eligible for the small business deduction.
• Dividends from Canadian public companies resident in Canada

Noh Review Taxation: RRSP and Tax Planning

In this post, I will discuss:
1) What an RRSP is
2) The Benefits of an RRSP
3) Contribution Amount Allowed
4) Eligibility
5) Income Splitting
6) RRSP Withdrawal
7) RRIF
8) Tax Tips and Planning For Your RRSP

1. What is an RRSP?

RRSP stands for "Registered Retirement Savings Plan." RRSPs are there so that Canadian residents can save their money for retirement. Think of it as a special type of investment account designed to help you save for your retirement in the future. An RRSP is registered with the Canadian federal government, and it can hold many different types of investments.

2. Why would you want to open an RRSP?

The first and foremost reason is the tax benefits for contributing to an RRSP. The government does not tax Canadians on the funds that they contribute to their RRSP's. This way, the government encourages further saving by rewarding those who save for retirement.

I would narrow down the major benefits to 2 things:
1) All investments within an RRSP account can have tax-deferred growth. What does this mean? Normally, whatever income you make off of dividends or interest, you would pay taxes on it. However, any profits made on investments within an RRSP account in the form of interest, dividends or capital gains are not considered as taxable income for now. The contributions made to an RRSP are tax-free, and the money can compound without your taxes on the gains. RRSP investors do have to pay taxes on the profits in their RRSP only when the funds are withdrawn. This tax deferral is a great benefit because your income will be lower in retirement than in your peak earning years at a younger age.

2) The second major tax benefit comes in the form of a tax credit. This means that your taxable income is reduced by the amount you contribute. 

3. Now, how much $ can you contribute to your RRSP?
Here is a real life example. Say that you made $39,800 earned income in 2012.

• The maximum amount that the government will allow you to contribute to your RRSP in 2012 is the lower of $22,970 or 18% of your earned income (18% * $39,800 = $7164).
• So, it comes down to the lower of $22,970 or $7,164.
• Accordingly, you can contribute up to $7,164 to your 2012 RRSP.
• This means that you will only have to pay tax on $32,636 ($39,800-$7,164) of your income as you receive $7,164 in your tax credits.

4. Who is eligible to set up an RRSP?
Any Canadian residents under the age of 69 who file income tax with the Canadian government are eligible to set up an RRSP.

5. Income Splitting? - Knowledge is money.

If you are in a different tax bracket than your spouse/partner, RRSP contributions can be used to lower the total amount of taxes you and your spouse/partner as a couple must pay. The greater the difference between the two spouses' incomes, the greater the advantage of using RRSPs to income split. This way, you could save the combined taxes that you and your spouse have to pay.

Here is a real life example. You make $150,000 and your wife makes $35,000. You are in a higher tax bracket than your wife.

• If you make RRSP contributions, you can reduce your taxable income. Same goes for your wife.
• But if your wife does income splitting by making a spousal contribution, your wife will pay the same amount of taxes as she did before she made her RRSP contributions – she is basically transferring the benefits of RRSP contributions to you and she as an individual does not get any tax benefits from her RRSP contributions.
• But, you, the one in the higher tax bracket, will have less taxable income and pay less taxes.
• In the end as a couple, the combined taxes paid will be lowered.
• Morale of the Story: Definitely consider income splitting if there is a significant difference between your income and your spouse's income in the year.

6. When can I take out the money from my RRSP? - Don't even think about it.

It is not wise for you to take money out of an RRSP account before retirement because withholding taxes will apply. From $0 to $5,000, you pay 10%. From $5,001 to $15,000, you pay 20%. Over $15,000, you pay 30%.

Aside from the ridiculous amount of taxes you pay from early withdrawal, you should note that you can never re-contribute the amount of your early RRSP withdrawal. This means that if you take out $12,000 from your RRSP prior to your retirement and put the $12,000 back in at a later date, you used up your unused RRSP contribution room by $12,000, which is a major tax disadvantage in the long run.

However, there is a legitimate excuse for you to take the money out of your RRSP. By using the RRSP Home Buyer's Plan (HBP), RRSP contributors are allowed to borrow money from their RRSPs without paying a withholding tax. The maximum amount that you can borrow from your RRSP is limited to $25,000. Those who choose this option are given a 15-year period to pay back the money they borrowed from their RRSPs.

Another legitimate excuse is the Lifelong Learning Plan, which allows you to use the money to go to school. The maximum amount you are allowed to withdraw is $20,000. ($10,000 per year)

7. What happens when I'm actually retired? - The RRIF (Registered Retirement Income Fund) will be waiting for you.

Once you are retired, you can go to the financial institution holding your RRSP account, and you can start getting your cash back from the RRSP account through an annuity - This is called the Registered Retirement Income Fund.

8. Noh Review Taxation – Tax Planning: How to Strategize

Contributions for the current tax year can be made until March 1 of the following year. Here is how you strategize. If you made a large amount of income in 2012 and you know that you will make less income in 2013, you want to make sure that you make your RRSP contribution by March 1, 2013 in order to reduce the taxable income on your 2012 return. (From March 2, 2012 to March 1, 2013)

On the other hand, if you made less income in 2012 and you think that you will make higher income in 2013, you might as well wait it out and max out your RRSP contribution next year by March 1, 2014. (From March 2, 2013 to March 1, 2014) This way, you will be able to lower your high 2013 taxable income by the amount of RRSP contributions as credits.

It is also important to note that even if you don’t max out your RRSP contribution, you don’t lose that contribution room. Any unused contributions are carried forward to your future deduction limit. What does this tell us? This tells us that we can wait it out in a year of less earned income and max out our RRSP contribution room in a year of high earned income. So, you can be strategic with the timing of your RRSP contribution.

This brings us to my next point. If you are a student who isn’t making much taxable income, it may be wise for you to wait it out and accumulate your RRSP contribution room until you make enough taxable income in the future. Say that you made $12,000 earned income as a student either through summer jobs or co-op. You don’t have enough taxable income for you to actually have taxes owing to the government. If you make your RRSP contributions now, you are killing one of the main benefits of an RRSP – being able to reduce your taxable income. Hence, I would say that the timing of your RRSP contribution is critical here for your proper tax savings. But, if you are a student investor and your main focus is to have your investments compound tax-free, then your RRSP contribution can take place whenever you please.

Many people told you, “Invest into your RRSP as early as possible. Starting early is always better for you.” But, they never told you about the proper timing of your RRSP contributions. My personal advice for you is to keep accumulating your unused contribution room until your taxable income gets high enough. If you are a student, my bet is that you have many other blackholes sucking in your money. You need to think about your opportunity costs, as well.

Once you start working full-time upon graduation, you will be making a higher taxable income where you’d actually have taxes owing this time. But, in the first year of your full-time employment upon graduation, you would normally claim your accumulated non-refundable education credits (T2202), which could go up to around $30,000 (if you have never transferred it to your parents). So, the most strategic timing would be maxing out your RRSP contributions in the year of your full-time employment once you have run out of your accumulated non-refundable education tax credits. But again, it all depends on your needs and goals. If you are planning on purchasing your first home upon graduation, then there you go - start your RRSP account now so that you can take advantage of the RRSP Home Buyer's Plan.

Noh Review Taxation: Foreign Tax Credit

Today, we will briefly go over the concept of foreign tax credits.

If you paid taxes in a foreign country, you may be eligible to claim the Foreign Tax Credit. The purpose is to eliminate the double taxation of the same income by both the US and Canada. It alleviates the US taxpayer of taxes owed in the US when taxes are required on that same income in Canada. This means that the taxes payable on your US tax return will be lowered. You do not have to necessarily live or work in that foreign country in order to claim this benefit. For example, you can claim this credit if you paid foreign taxes from a mutual fund. The Foreign Tax Credit reduces your US tax liability on a dollar-for-dollar basis.

Maximum Allowable Foreign Tax Credit:

Your foreign tax credit cannot go over a certain amount, which is your US tax liability mutlipled by the percentage of your total foreign-source income divided by your total world income. Any foreign tax credit amount in excess may be carried back or carried forward.

Real Life Example: You are a U.S resident/taxpayer who has exited Canada. You have $10,000 in a Canadian Mutual Fund which pays a 5% dividend ($500 at the exchange rate of CAD $1 = USD $0.75)

Canadian Tax Implications:

• The withholding on dividends is 15%. Hence, CAD $500 * 0.15 = CAD $75 must be remitted to CRA.

U.S. Tax Implications:

• Dividend Income on US return = CAD 500 * 0.75 exchange rate = USD $375
• 25% tax bracket for non-qualified dividends = USD $375 * 0.25 = USD $93.75 tax liability
• Passive foreign tax credits on US return = CAD $75 * 0.75 exchange rate = USD $56.25.
• Use U$56.25 in foreign tax credits to offset USD $93.75 in tax = USD $37.50 Tax Liability

Noh Review Taxation: Non-Refundable Tax Credits

In this post, Noh Review will cover the non-refundable tax credits for 2012. First of all, it is critical for you to understand where these tax credits go. The basic outline looks like below:

 

Employment Income

+ Business Income

+ Property Income

+ Other Income

+ Taxable Captial Gain

- General Deductions

- Losses                          

= Income

- Division C Deductions

= Taxable Income

* Tax Rate                      

= Tax Payable

 - Division E Credits      

= Net Tax Payable

 

Here, the Division E Credits are non-refundable tax credits that we will discuss in this post today.

 

Non-Refundable Tax Credits for 2012 (Federal)

1. Basic Personal Credit: Every resident of Canada is eligible to claim this credit.

15% * 10,822

2. Married Credit (Spouse or common-law partner amount): If you are supporting your spouse or common-law partner who lives with you, and whose net income for the year will be less than $10,822, you can claim this credit.

15% (10,822-Spouse's Division B Income)

3. Equivalent to Married (ETM): There is a person who lives with you or The person is under 18 or infirm/parent

15% (10,822-Spouse's Division B Income)

4. Child Amount (Dependent Child Under 18 Years of Age): Either parent(not both) can claim $2,191 for each child under 18 who resides with both parents throughout the year. If the child is infirm, add $2,000 to the claim for that child. Any unused portion can be transferred to that parent's spouse/common-law partner.

15% * 2,191

5. Caregiver Amount: If, at any time in the tax year, you maintained a dwelling and your/your spouse's parent/grandparent (resident) aged 65 or older lived with you, you can claim this credit. This credit is reduced when the net income of the parent/grandparent exceeds a certain level.

Federal: 15% [4,402- (Relative's Division B income - 15,033)]

6. Infirm Dependent Amount: If you support an infirm dependent relative age 18+, you can claim this amount.

15% [4,402 + 2,000 Family Caregiver Amount Tax Credit - (Dependent's Division B income - 6,420)]

* Family Caregiver Amount Tax Credit (New in 2012): If the dependent is infirm, you can claim this credit. You can have an increase of $2,000 to spousal amount, equivalent-to-married, child amount, caregiver amount, or infirm dependent amount.

7.  Age Credit: If you will be 65 or older on December 31, 2012, you can claim this credit.

15% [6,720 - 15% (Division B Income - 33,884)]

8. Pension Income Credit: If you will receive regular pension payments from a pension plan/fund (excluding CPP, QPP, OAS), you can claim this credit.

15% * Lesser of $2,000 and pension income

9. Canada Employment Credit: If you are employed in Canada, you can claim this credit.

15% * Lesser of $1,095 and employment income

10. Disability/Impairment Amount: If you have an impairment in physical/mental functions that is severe and prolonged, you can claim this credit.

15% * 7,546 15% * 4,402 for disabled child

11. Tuition, Education, and Textbook Amounts (Full-time and part-time): If you are a student enrolled at a university or college and you will pay more than $100 in tuition fees, you can claim this credit. The university can be both in and out of Canada.

Tuition Credit: 15% * Total tuitions if over $100 Education Credit: 15% ($400 * full-time months + $120 * part-time months) Textbook Credit: 15% ($65 * full-time months + $20 * part-time months) If  you are a part-time student and have mental/physical disability, you receive the tax treatment of a full-time student.

12. Charitable Donations Credit: If you made a charitable donation to a CRA-registered charity, you can claim this credit with official donation receipts.

(15% of first $200) + (29% of next) Maximum donations amount is 75% of net income

13. Medical Expenses: You can claim this medical expenses credit if they were paid by you or your spouse/common-law partner.

15% of medical expenses which exceed the lesser of $2,109 and 3% of Division B Income If medical credit is more than $10,000, deny impairment credit.

14. Fitness for Children: You can claim to a maximum of 15%* $500 per child the fees paid in 2012 relating to the cost of registering your child in a prescribed program of physical activity. Children less than 16 years old

15. Artistic, Cultural and Recreational Activities for Children: You can claim to a maximum of 15% * $500 per child the fees paid in 2012 relating to the cost of registration or membership of your child in a prescribed program of artistic, cultural, recreational or developmental activity. Children less than 16 years old

16. Home Buyer's Amount: You  can claim an amount of 15% * $5,000 for the purchase of a qualifying home made in 2012, if You or your spouse acquired a qualifying home. This is your first home and you are a first-time home buyer.

17. Public Transit Passes Credit: You can claim an amount of 15% * total public transit passes expenses.

Amounts transferred from your spouse/common-law partner: If your spouse will not use all of his/her age amount, pension income amount, tuition, education and textbook amounts, disability amount or child amount on his/her income tax return, you can claim the unused amount. Cannot transfer medical, charitable donations or CPP/EI amounts

Amounts transferred from a dependent: If your dependent will not use all of his/her disability amount on his/her income tax return, you can claim the unused amount. If your dependent child/grandchild will not use all of his/her tuition, education and textbook amounts on his/her income tax return, you can claim the unused amount.

It is interesting to note that some of these non-refundable credits have a clear purpose, and they are for the benefit of the society. For example, home buyer's amount credit is available in hopes of encouraging more people to buy their first houses. The public transit passes credit is another great example. You can basically take back 15% of what you paid for your bus fares. This could be interpreted as the Canadian government's efforts in attempting to reduce air pollution and greenhouse gas emissions. Increasing the use of public transit, including buses, subways and commuter trains, will help ease traffic congestion and reduce air pollution. This tax credit makes public transit more affordable for Canadia residents.

 

But if you are a student, these non-refundable credits are not as meaningful because your net income is likely low anyways. Again, these are non-refundable credits for the year, so you cannot technically get these back as cash. In other words, you can only deduct these amounts from your net income, and if your net income is low, these credits are useless realistically. My assumption is that once you start working full-time, you are going to be looking for every possible non-refundable tax credit in order to minimize the tax that you pay to CRA.