Filing your T1 General Income Tax and Benefit Return is a critical step in staying compliant with the Canada Revenue Agency (CRA). While many taxpayers focus on their income, understanding the tax deductions available to you is equally important. Deductions reduce your taxable income, which directly lowers the amount of income tax you owe—and in many cases, increases your refund.
This comprehensive guide explores the major deductions you can claim on your T1 return for the 2025 tax year, along with eligibility criteria, line numbers, and documentation requirements to help you file accurately and maximize your savings.
1. What Is a Tax Deduction?
A tax deduction reduces the portion of your income that is subject to tax. Unlike tax credits, which reduce the amount of tax you owe, deductions lower your overall taxable income. This means deductions can be especially valuable if you’re in a higher income bracket.
Deductions are generally claimed on the federal T1 return using specific lines on the form and applicable schedules.
2. Common Tax Deductions on the T1 Return
Below are some of the most widely used deductions available to Canadian taxpayers:
2.1 RRSP Contributions (Line 20800)
Registered Retirement Savings Plan (RRSP) contributions are one of the most powerful tax-saving tools available. Contributions made during the calendar year—or within the first 60 days of the following year—can be deducted from your income.
- Annual contribution limit: 18% of earned income (up to CRA’s annual cap)
- Unused contribution room carries forward indefinitely
- Reported on the RRSP Contribution Receipt
2.2 Union and Professional Dues (Line 21200)
If you paid dues to a trade union or professional association, you can deduct them in full. These are often shown on your T4 slip or provided as a separate receipt by your union or association.
2.3 Childcare Expenses (Line 21400)
If you paid for childcare while you worked or attended school, you may claim those expenses. Eligible expenses include daycare, summer camps, and after-school care. Usually, the lower-income spouse must claim this deduction.
- Maximum claim: $8,000/year for children under 7
- Up to $5,000/year for children aged 7–16
- Receipts from the provider are mandatory
2.4 Moving Expenses (Line 21900)
You may deduct reasonable moving expenses if you relocated at least 40 km closer to a new job, business, or educational institution. Eligible expenses include transportation, temporary lodging, and meals during the move.
2.5 Support Payments (Line 22000)
Support payments made to a former spouse or child under a court order or agreement may be deductible. Only the taxable portion of the payment is deductible, and both parties must report amounts consistently.
2.6 Employment Expenses (Line 22900)
If you’re required to pay for work-related expenses not reimbursed by your employer (e.g., home office, vehicle use), you may deduct these amounts with a completed T2200 or T2200S form signed by your employer.
2.7 Home Office Expenses (COVID-19 and Beyond)
The CRA introduced simplified rules during the pandemic. For 2023 and beyond, you may continue to deduct work-from-home expenses using:
- Temporary flat rate method: $2/day, up to $500
- Detailed method: Requires receipts and a signed T2200S
2.8 Carrying Charges and Investment Expenses (Line 22100)
You may deduct fees for managing your investments, interest on money borrowed to invest, and certain accounting or legal fees related to earning income. Interest on loans for RRSPs or TFSAs is not deductible.
2.9 Deduction for CPP/QPP Contributions on Self-Employment Income (Line 22200)
If you’re self-employed, you must pay both the employer and employee portions of CPP/QPP contributions. The employer portion is deductible, while the employee portion qualifies for a tax credit.
2.10 Self-Employment and Business Expenses (Lines 13500–14300)
Self-employed individuals can deduct a wide range of business expenses, including:
- Advertising and marketing
- Office supplies and internet
- Professional services
- Vehicle and travel costs
Use Form T2125 to calculate your net business income.
2.11 Northern Residents Deductions (Line 25500)
If you live in a prescribed northern zone for at least six consecutive months, you may claim residency and travel deductions to offset the high cost of living in remote areas.
3. Other Useful Deductions
- Tuition Amounts Transferred from a Child (Line 32400): Up to $5,000 can be transferred to a parent or grandparent if the student does not need the deduction
- Canada Pension Plan Contributions on Employment Income (Line 30800): Deductible on Schedule 8
- Registered Pension Plan Contributions (Line 20700): Reported on T4 slips and deducted to reduce taxable income
4. Common Mistakes to Avoid When Claiming Deductions
- Claiming deductions without receipts or supporting documentation
- Double-claiming amounts already reimbursed by an employer
- Confusing deductions with non-refundable tax credits
- Not using carry-forward amounts (e.g., unused RRSP room)
- Incorrect allocation of childcare or tuition amounts between spouses
Always keep supporting documents for at least six years in case the CRA asks for verification.
5. Where to Report Deductions on the T1 Return
Deductions are primarily reported on pages 3 and 4 of the T1 General form under “Total Income” and “Deductions from Total Income.” The net result appears as your Taxable Income, which forms the basis for your federal and provincial taxes.
Many deductions also require accompanying schedules and forms (e.g., Schedule 7 for RRSPs, T777S for work-from-home expenses).
6. Tips to Maximize Your Deductions
- Use tax software: Certified CRA NETFILE-compatible software will automatically prompt you to claim relevant deductions
- Split income with your spouse: Pension income splitting and spousal RRSPs can reduce household tax
- Contribute early: Early RRSP and RESP contributions allow for tax-deferred growth and better planning
- Track expenses year-round: Keep digital copies of receipts and invoices to avoid missing claims
7. Final Thoughts
Tax deductions play a crucial role in reducing your taxable income and increasing the amount you keep in your pocket each year. By taking full advantage of the available deductions on your T1 return, you not only lower your tax burden but also ensure that you’re not leaving money on the table.
Whether you’re an employee, self-employed, a parent, student, or retiree, understanding your deduction rights and obligations can go a long way in maximizing your tax efficiency. For complex situations, consulting with a tax professional or using CRA-authorized software can help you avoid errors and fully benefit from the Canadian tax system.
Be proactive, keep your records, and file your T1 return on time to enjoy every deduction you’re entitled to.
