Canadian senior citizens are eligible to receive a wide range of tax benefits, including a few not available to younger taxpayers. Combined with other tax credits, such as the basic personal amount, that all Canadian taxpayers are eligible to receive, these credits mean senior citizens can save more on their taxes. Randy Larson of Focused Bookkeeping in Vancouver, British Columbia, a certified bookkeeper with more than 17 years of experience, says that senior citizens are commonly entitled to receive tax benefits for pension income, medical expenses and disabilities.
You are allowed to claim a credit if you were 65 or older at the end of the tax year. Your net income on your tax return must also be less than $89,421. The age amount you can claim depends on your income. If your income is less than $38,508, you would claim $7,637.
As people get older, they often stop working, meaning their income may be derived from a public pension plan, such as the Canada Pension Plan, or private pension plan, Larson said. As of publication, you may claim up to $2,000 in credit for the pension income amount if you have eligible pension income. Eligible income may include pension or annuity income you received as payments for a pension or superannuation plan or from payments you receive from a RRSP.
“If you are married or have a common-law partner, you may shift pension income from one partner to another so the family pays lower tax,” Larson said. If you earn a higher income than your spouse, your spouse may have a lower tax rate, and transferring your eligible pension income amounts to your spouse will allow a decrease in the overall tax your family pays, he said. As of publication, you can transfer up to 50 percent of your eligible pension income to your spouse or partner.
Medical expenses are a significant cost for anyone. But as people get older, the need for medical care increases and that portion you pay adds up for medical costs. Larson said people are allowed to claim medical expenses that aren’t reimbursed if they exceed 3 percent of income.
The CRA allows people to claim a wide range of medical expenses — some of them obvious and others, not so much. You may include your prescription medication costs and the amounts you pay to your doctors, for instance. You can also include more obscure medical expenses, such as air conditioning, bathroom aids and book page-turning devices. When you list your medical expenses, you must be able to account for each cost with documentation. “You must keep your receipts,” Larson pointed out.
Other Federal Credits
You may be eligible to receive several other tax credits and benefits depending on your individual situation. For instance, if you are married or have a common-law partner, you may be able to claim the spousal amount if you supported your partner who has lower income. You may also elect to have some of your tax credits transferred to your spouse’s tax return or vice versa. Once your tax liability is reduced to $0, you can then transfer any additional tax credits to your spouse to reduce his tax liability.
“Those who have the misfortune of a serious medical impairment may receive a disability tax credit,” Larson said. The tax credit, which requires a doctor to certify disability, is substantial, coming in at $8,235.
If you are 65 or older and you made changes to your home to improve your quality of life, you may be eligible to receive the Home Accessibility Tax Credit. This is a non- refundable credit tax credit, meaning this credit may only reduce your tax owing, not itself garner a refund. This credit allows you to claim up to $10,000 in home improvement expenses. Of the expenses you claim, 15 percent of them come back to you as a credit. According to the CRA, among the expenses you can claim are: wheelchair ramps; walk-in bathtubs or wheel-in showers; widening of doors; non-slip bathroom flooring; ergonomic, easy-to-use, door locks; hands-free water taps; and motion-censored lights. Relatives who support a related senior may also be eligible for this credit.
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