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 the threshold of the tax year. The age amount you can claim depends on your net income reported on line 23600. The age amount is reported on line 30100 as part of your non-refundable tax credits. This means that you will receive a 15% reduction on your federal tax.
Pension Income Amount
“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,” said Larson. 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, payments you received from an RRSP, or payments from splitting your spouse/common-law pension.
“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,” said Larson. 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 and province of residence. 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.
Home Accessibility Tax Credit (HATC)
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.
Other provincial tax Credits
- Ontario: if you are receiving Ontario Trillium Benefits (OTB), and you are 64 years of age or older, you might be qualified for Ontario Energy and Property Tax Credit (OEPTC) if you don’t have children under 18 years of age under your care. A similar credit is available for Seniors is the Ontario Senior Homeowners Property Tax Grant (OSGPTG) which gives homeowners extra credits if they are 64 years of age or older and own and reside in their principal homes. You can also apply for Ontario Senior’s Public Transit Tax Credit if you are 65 years or older as of December 31st of the tax year. Check the Ontario website for services that qualify for the credit.
- British Columbia: BC provides Low Income Grant Supplements for seniors. The programs reduce the amount of property taxes if you are 65 years or older. You have to own the property and pay a minimum of $100 in property taxes before you qualify. The grant is assessed based on your income, and the amount of property taxes paid.
- Quebec: a basic amount is granted to seniors who pay rent in a private senior’s residence. You and your spouse can receive up to a 70% grant of your rent costs if you are 70 years of age or older. If you are a dependent senior, you can receive up to 80% of the cost. You will qualify for Senior Assistance Tax Credit if you are 70 years of age or older, pay taxes, and did not confine in prison for more than 183 days in the tax year.
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