TLDR;
This video outlines five often-missed tax breaks and one crucial benefit available to Canadian retirees, particularly those with modest incomes. It emphasizes that these are not complex strategies for the wealthy, but rather straightforward credits and deductions built into the tax code that can significantly reduce the amount of tax owed or increase benefits received. The video stresses the importance of being informed and proactive in claiming these benefits, as many are not automatically applied and require specific knowledge or action.
- Age Amount: Claimable by those 65 or older, with potential transfer to a spouse.
- Pension Income Credit: Claimable on eligible pension income, unlocking pension splitting.
- Medical Expense Tax Credit: Covers a wide range of medical expenses, with strategic claiming options.
- Home Accessibility Tax Credit: For home renovations improving accessibility or safety, can be combined with the medical expense credit.
- GST/HST Credit: Requires filing a tax return, even with no income, to receive quarterly payments.
- Guaranteed Income Supplement (GIS): A non-taxable benefit for low-income seniors, requiring a separate application.
Introduction [0:00]
The video introduces Margarite, a 69-year-old retiree living on a fixed income, as an example of many Canadian retirees who overpay their taxes due to missed credits and deductions. Despite multiple provisions in the Canadian Tax Code designed to protect retirees in her situation, her tax preparer failed to apply them, resulting in her owing the CRA $412. The video aims to educate viewers on these five legal and readily available tax breaks, empowering them to discuss these options with their tax preparers.
Age Amount [1:45]
The age amount is a tax credit available to individuals 65 years or older, claimed on line 30,100 of the federal return. For the 2025 tax year, the maximum federal age amount is $9,028, reducing tax owed at the lowest federal rate. The credit is clawed back for net incomes exceeding approximately $45,500 and disappears entirely around $105,700. If a retiree qualifies but doesn't need the full credit, the unused portion can be transferred to their spouse or common-law partner, potentially reducing their tax burden.
Pension Income Credit [3:29]
The pension income credit allows individuals to claim a federal non-refundable tax credit based on the first $2,000 of eligible pension income, claimed on line 31,400 of the federal return. While CPP and OAS do not qualify, workplace pension income and RRIF withdrawals (if 65 or older) do. Individuals over 65 without a workplace pension can create eligible pension income by converting a portion of their RRSP to a RRIF and withdrawing at least $2,000. This unlocks both the pension income credit and eligibility for pension income splitting with a spouse, potentially saving thousands of dollars annually.
Medical Expense Tax Credit [5:13]
The medical expense tax credit allows individuals to claim eligible medical expenses exceeding 3% of their net income or $2,834, whichever is less, as a non-refundable tax credit. Qualifying expenses include prescription medication, dental work, hearing aids, prescription eyeglasses, physiotherapy, travel costs to medical appointments (over 40 kilometers away), private health insurance premiums, attendant care, nursing home costs, and home modifications for medical reasons. Medical expenses can be claimed from any 12-month period ending in the tax year, and the lower-income spouse should generally claim the credit to maximize its value.
Home Accessibility Tax Credit [7:47]
The home accessibility tax credit is available to those 65 or older or who qualify for the disability tax credit, allowing a non-refundable tax credit on up to $20,000 in eligible home renovation expenses that improve accessibility or safety. Eligible expenses include installing wheelchair ramps, widening doorways, adding grab bars and bathrooms, installing walk-in showers or bathtubs, lowering kitchen counters, adding stair lifts or elevators, improving lighting, and automating door locks. The same qualifying renovation expenses can be claimed under both the home accessibility tax credit and the medical expense tax credit, potentially doubling the tax savings.
GST/HST Credit [9:14]
The GST/HST credit is a tax-free quarterly payment designed to help low to moderate-income individuals and families offset the GST and HST they pay on everyday purchases. To receive the credit, individuals must file an income tax return every year, even if they had no income. The CRA uses the filed return to determine eligibility and calculates the payment automatically. Many low-income seniors who are not required to file a return miss out on this credit, as well as other income-tested benefits.
Margarite's Case [10:58]
The video revisits Margarite's case, detailing the specific credits she missed on her tax return. These include the age amount (with failure to transfer the unused portion to her husband), the medical expense tax credit, and the home accessibility tax credit. By filing an amended return, Margarite can recover approximately $560, highlighting the importance of knowing and claiming available tax benefits.
Action Checklist [13:14]
The video provides a five-item checklist for viewers to follow before filing or amending their tax returns:
- Verify the age amount claim and potential transfer to a spouse.
- Consider converting a small portion of RRSP to RRIF to unlock the pension income credit and splitting if 65 or older and lacking eligible pension income.
- Calculate medical expenses and compare them to 3% of net income, asking the preparer to compare standard deduction versus claiming medical expenses.
- Inquire about the home accessibility tax credit for renovations, and confirm if the same expenses qualify as medical expenses.
- Assist seniors who don't file returns in filing one to trigger the GST/HST credit and other benefits.
Guaranteed Income Supplement (GIS) [15:12]
The Guaranteed Income Supplement (GIS) is a monthly non-taxable payment for low-income seniors already receiving OAS. GIS is not automatic; seniors must apply. Eligibility is based on individual net income from all sources, excluding OAS. The video warns of a "GIS trap," where unnecessary RRSP withdrawals can reduce GIS benefits, potentially costing more than the tax savings. Low-income seniors should check GIS income thresholds on canada.ca and apply immediately if eligible, potentially receiving retroactive payments for up to 11 months.
Pension Income Credit Strategy Expansion [18:03]
The video expands on the pension income credit strategy with a scenario involving Gerald and Diane. By converting $20,000 of his RRSP to a RRIF and withdrawing $2,000, Gerald creates eligible pension income, claims the pension income credit, and unlocks the ability to split RRIF income with Diane. Splitting $5,000 with Diane, who has very little income, saves the household between $500 and $1,200 per year.
Medical Expense Credit Expansion [20:31]
The video expands on the medical expense credit, noting that the CRA allows combining all medical expenses for oneself, a spouse, and dependents into a single claim. The claim should be filed on the lower-income spouse's return because the 3% threshold is lower, maximizing the credit. This can result in significant savings over time compared to the higher-income spouse claiming the expenses.
