Tax credits for seniors

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The financial perks of being a senior extend beyond occasional 10% discounts – there are also tax credits available that can reduce your tax burden when it’s time to settle up with CRA.

Calculating credits

A tax credit allows you to reduce tax otherwise owed to a government.

A credit is expressed as an amount that’s then multiplied by a credit rate. With few exceptions (e.g., donations over $200), the credit rate’s at the lowest bracket rate.

So, while the amount gets the headlines, the credit’s dollar value is much smaller. It can be as little as 1/20th in some provinces.

Value of common credits

At the federal level, the pension credit amount is available on up to $2,000 of qualifying pension income. This includes income from registered pension plans at any age. At the 15% credit rate, it’s worth up to $300.

Typically, income from your Registered Retirement Income Fund (RRIF) only qualifies after you reach age 65.

The pension credit amount has a base of $6,854, leading to a maximum credit of $1,028 in 2013. The amount’s reduced for income in excess of $34,562, and is completely nixed when your income reaches $80,256.

Add these federal values to the corresponding provincial credits shown in the accompanying table, and you’ll get the potential total value of your credits.

Province Pension Credit Age Credit
BC $51 $224  
AB $136 $490  
SK $110 $511  
MB $108 $403  
ON $67 $236  
QC $428 $482  
NB $94 $430  
NS $103 $364  
PE $98 $369  
NL $77 $415  

 

Other credits

Pension and age credits aren’t the only ones available. Disability and medical expense credits, as well as GST/HST and provincial sales tax credits can also help. And almost all provinces have a property tax credit or deferral program. But keep in mind the latter often have a low-income requirement at or near the cut-off for the guaranteed income supplement.

 

BY Doug Carroll March 11, 2014

www.fromyouradvisor.ca

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