How to declare pension income

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What to do

1. Report OAS and GIS.

› Enter the taxable pension in Box 18 of your client’s T4A(OAS) Statement of Old Age Security on Line 113 of her return.

› Enter the net supplement in Box 21 of T4A(OAS) on Line 146 of the return.

› If your client’s net income before adjustments is less than $71,592, claim the deduction on Line 250. “In effect, you don’t pay tax on it,” says Sean Marek, founding partner of M Group Chartered Accountants in Winnipeg.

› Add any amount in Box 20 of T4A(OAS) to Line 232 of the return.

Why read this?

Your client:

• receives a government or foreign pension;
• is withdrawing money from a retirement account.

2. Report CPP or QPP benefits.

› Enter the amount in Box 20 of T4A(P) Statement of Canada Pension Plan Benefits on Line 114 of the return.

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3 Report other pension payments.

› The information appears on T4A Statement of Pension, Retirement, Annuity and Other Income and T3 Statement of Trust Income Allocations and Designations.

›› Enter the amounts in Box 22 of the T3 and Box 18 of the T4A on Line 130 of the return.

›› Enter the amounts in Box 16 of the T4A and Box 31 of the T3 on Line 115 of the return.

If your client elects to split her pension with her spouse, she must claim the full amount on Line 115 of the return and then deduct the split amount on Line 210 (see “Tax Treatment,” April 2014).

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4 Report annuity, PRPP, RRIF and LIF payments.

› Amounts appear on T4A Statement of Pension, Retirement, Annuity and Other Income, T4RIF Statement of Income From a Registered Retirement Income Fund or T5 Statement of Investment Income.

a If your client is 65 or older on Dec. 31 of the tax year, or she’s receiving payment on the death of her spouse or common-law partner, enter these amounts on Line 115 of the return:

TIP

You can also list Saskatchewan Pension Plan payments onLine 115 on the T1

›› Boxes 24, 133 and 194 of the T4A;

›› Boxes 16 and 20 of the T4RIF; and

›› Box 19 of the T5.

b If your client is younger than 65 on Dec. 31 and isn’t receiving death payments:

›› enter the amounts in Boxes 24 and 144 of the T4A, and Boxes 16 and 20 of the T4RIF, on Line 130 of the return; and

›› enter the amount in Box 19 of the T5 on Line 121 of the return.

$2,000

The maximum amount a taxpayer can claim on a federal non-refundable tax credit for eligible pension income.

Source: Financial Consumer Agency of Canada

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5 Report RRSP income.

› Enter the amounts in Boxes 16, 18, 28 of T4(RSP) Statement of RRSP Income on Line 129 of the return

a If your client’s spouse didn’t contribute to your client’s RRSP, also include the amounts in Boxes 20, 22 and 26.

b If your client’s spouse did contribute in the last three years, then the spouse must report the income withdrawn on his return. Use Form T2205 Amounts from a Spousal or Common-law Partner RRSP or RRIF to Include in Income to calculate how much income to include on each of their returns.

TIP

If Quebec tax was deducted from your client’s income, and she isn’t a Quebec resident, include it on Line 437 of the return and attach provincial information slips.

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6. Claim total income tax deducted.

› Calculate all the amounts shown in the “Income tax deducted” boxes of your client’s tax slips and enter it on Line 437 of the return. (See “Where to find tax deducted at source,” below.)

› If your client split her pension income, complete Step 5 of Form T1032 Joint Election to Split Pension Income to calculate her and her partner’s amounts for Line 437.

Sources: CRA; Sean Marek, MAcc., CA, founding partner, M Group Chartered Accountants, Winnipeg, Man.

Where to find tax deducted at source

› Box 22 on:

›› T4A Statement of Pension, Retirement, Annuity and Other Income

›› T4A(OAS) Statement of Old Age Security

›› T4A(P) Statement of Canada Pension

Plan Benefits

›› T4A-RCA Statement of Distributions from a

Retirement Compensation Arrangement

› Box 28 on T4RIF Statement of Income from a Registered Retirement Fund

› Box 30 on T4RSP Statement of RRSP Income

Source: CRA

by Jessica Bruno, content editor of Advisor Group.