What is the basic personal amount and how does it reduce my Ontario taxes?
The basic personal amount is a non-refundable tax credit available to every Canadian resident. It works by allowing you to earn a certain amount of income before any federal or provincial income tax applies. Ontario has its own basic personal amount for provincial tax purposes, which is separate from the federal amount.
The credit works by multiplying the basic personal amount by the lowest provincial tax rate, giving you a dollar-figure reduction in your Ontario tax payable. Because it is non-refundable, it can reduce your provincial tax to zero but cannot create a refund on its own. If your income is below the basic personal amount, you will generally owe no provincial tax.
The exact dollar value of the basic personal amount changes most years, adjusted by the province. The federal basic personal amount is also indexed annually. You claim both on your T1 — the federal amount on the federal schedule and the Ontario amount on Form ON428. If you support a spouse or common-law partner with low income, you may also claim an equivalent spousal amount credit.
Key takeaways
- Every Ontario resident gets a basic personal amount credit at both federal and provincial levels.
- It reduces tax payable but cannot create a refund (non-refundable).
- The amount is indexed and changes annually — check the current year's figure.
- A spousal amount credit may be available if your partner has low income.