Federal tax credits for seniors and other tax considerations

These tax measures may result in tax savings for you   

  • The age amount:  You can claim this amount if you are 65 years of age or older and your net income is less than $80,256 (for 2013). If your net income was $34,562 or less, you would qualify for a $6,854 credit. If you earn between $34,562 and $80,256 you have to calculate your claim
  • Pension income amount: If you reported “eligible pension,” “superannuation” or “annuity payments” on your tax return, you may be able to claim up to $2,000. To find out if you can claim the pension income amount, visit the Canada Revenue Agency website.  
  • Pension sharing: If you and your spouse or common-law partner are both receiving Canada Pension Plan (CPP) benefits, you may be able to share your benefits. A few key facts about pension sharing:
    • Pension sharing can result in tax savings.
    • The overall amount of your benefits do not increase or decrease with pension sharing.
    • You have to apply to share your CPP benefits.
  • Pension income splitting: You and your spouse or common-law partner may be able to split your eligible pension income, including:
    • annuity payments from a superannuation or pension fund or plan
    • annuity and registered retirement income fund (including life income fund) payments
    • registered retirement savings plan (RRSP) annuity payments.
 For more information, visit the Pension income splitting section of CRA’s wesbite.

 Other tax credits you might qualify for 

  • Medical expenses: For many people, medical expenses increase as they grow older. Be sure to keep track of your medical expenses because you may be able to claim certain eligible medical expenses for yourself and your spouse or common-law partner when filing your taxes.
The disability tax credit (DTC): If you suffer from a severe and prolonged impairment in physical or mental functions, you might be eligible for the DTC. The DTC might reduce the amount of income tax that you have to pay in a year to help offset some of the costs of dealing with impairment.
For more information on the DTC and other medical and disability-related information, visit the Canada Revenue Agency (CRA) website.
  • Family caregiver amount: This tax amount provides additional tax relief to people caring for relatives in poor health, including spouses and common-law partners.

    For more information, visit the CRA website.

Provincial or territorial tax credits

Don’t forget to check for similar provincial or territorial tax credits that you may be eligible to claim. 

Reduction of Old Age Security (OAS) pension for higher-income seniors  

The OAS Recovery Tax is part of the Income Tax Act and requires all higher-income pensioners to repay their OAS pension at a rate of 15 percent of their income above a certain threshold.
 
If your net income is less than $70,954 per year (for 2013) then there is no impact on the OAS pension you receive. This is the case for the large majority of Canadian seniors.
 
Those with a net income between $70,954 (2013) and approximately $114,640 will receive a reduced amount of OAS pension.
 
The OAS Recovery Tax is 15% of the difference between your income and the OAS repayment threshold ($70,954). For example:
 

 

(A) 
Adam’s net income (2012)
(B) 
OAS recovery threshold  in 2013
(C)
Difference(Adam’s income minus the OAS recovery tax threshold)
(D)
OAS amount recovered from Adam (15% of the difference)
(E)
OAS pension maximum amount in 2013*
(F)
Adam’s OAS amount after the OAS recovery tax in 2013*
 
$74,500
 
 
$70,954
 
$3,546
 
$532
 
$6,553
 
$6,021
 *Amounts assume that the individual has at least 40 years of residence in Canada, which is a requirement to receive the full OAS benefit. 
To calculate your OAS amount, you can use the following formula: 
Step 1: (A) net income – (B) recovery threshold = (C) income difference
Step 2: (C) income difference  x 15% = (D) OAS amount recovered
Step 3: (E) OAS pension maximum amount – (D) OAS amount recovered = (F) OAS amount
   
Those with a net income of $114,640 a year, or more, will have to pay back all of their OAS pension.
 

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