Tax credits for seniors

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 age-65 credit amount has a base of $7,033 in 2015, leading to a maximum credit of $1,054.95 in 2015. The amount’s reduced for income in excess of $35,466, and is completely nixed when your income reaches $82,353.

These federal values are in addition to provincial credits. Keep in mind that the provinces also reduce the credit as your income goes up. You can check the credit amounts for your province or territory here:

Alberta

British Columbia

Manitoba

New Brunswick

Newfoundland

Northwest Territories

Nova Scotia

Nunavut

Ontario

Price Edward Island

Quebec

Saskatchewan

Yukon

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.

Updated June 2016.

Doug Carroll, JD, LLM (Tax), CFP, TEP, is vice president, Tax and Estate Planning, Invesco Canada