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.
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|
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