What is the difference between a refundable and non-refundable tax credit in Ontario?

A non-refundable credit reduces the tax you owe, but cannot reduce your tax bill below zero. If you owe $500 in tax and have a $700 non-refundable credit, the credit wipes out the $500 owing, but you do not receive the remaining $200 back. Examples include the basic personal amount, the age amount, and the tuition credit.

A refundable credit, by contrast, can reduce your tax owing below zero and generate an actual payment to you. If you owe $500 in tax and have a $700 refundable credit, you receive $200 back as a refund. Examples include the GST/HST credit, the Ontario Trillium Benefit, the Canada Workers Benefit, and the Climate Action Incentive (where applicable).

Some Ontario credits — such as the Ontario Trillium Benefit — are fully refundable and paid out even if you owe no tax at all, making them very valuable for lower-income Ontarians. When reviewing your tax return, identifying which credits you hold matters: stacking non-refundable credits above your tax owing wastes the excess; refundable credits are always worth claiming regardless of income level.