Grey Power 40 — April 10, 2014

John Fryters
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Part two of two


In follow-up to last week’s Part One, George Whitrow, Professional Accountant & Managing Partner at Whitrow, Stobbs and Associates got together with me to discuss a number of tips which might be useful to seniors before filing your income tax and benefits return on or before the tax deadline of April 30th, 2014.

George and I met for about one-and-a-half hours while we were both watching my granddaughter practising at her fencing classes. We had an interesting time watching her and, at the same time, discussing seniors’ tax issues. 

Here are some of George’s comments:

“Most ‘grey power folks’ have worked diligently for many years. Now in your retiring years you can look forward to receiving your government pensions. You may have been planning for this time of life for a while and also have put money away in your Registered Retirement Savings Plans (RRSP). You may have other investments or a Tax Free Saving Account (TFSA) too. And maybe you are among the favoured few who have a work-related Registered Pension Plan (RPP). Let’s talk for a minute about what income is going to be taxable. 

Even though you are retired, Canada Revenue Agency (CRA) still wants a piece of your annual income. Start your retirement income tax planning as early as you can and include the tax consequences that you will encounter. Remember that pension income is taxable income. Old Age Security (OAS) and Canada Pension Plan (CPP) benefits are both taxable incomes too. Now that you know some of the tax alphabet as stated here you will probably realize that you have some homework to do. Part of your ‘retirement job’ may be to know and claim all the ‘deductions’ and ‘credits’ available to you to reduce the tax you have to pay.

So here’s your first tip in understanding your task. ‘Deductions’ reduce your taxable income. The lower your taxable income is, in general, the lower your rate of tax is. Next, there are two ways that your tax payable is reduced. The first obvious one is payments made on your account. The second way is to use ‘credits’. Some credits are non refundable to you regardless of your tax payable. Other credits will actually result in a cheque being issued to you. The CRA tax guide and forms do a good job of separating these for you. 

All of these abbreviations and terms may seem too much; but please don’t give up reading yet. A little more reading may save you a lot of money.  Here are some more thoughts to start you on your tax saving path. Your possible greying hair that probably comes with your senior age also gives you additional tax strategies, deductions and credits to offset this tax burden. 

Here are some common tax strategies that should help married couples reduce their overall tax payable. 

Split your income to reduce your rate of tax:

In general and where possible you want to have your interest and dividend income, as well as taxable capital gains, reported in two names instead of just one per family. However, CRA looks at who earned the money that was invested, not just whose name the T slip comes in. 


-- for pension incomes received, other than OAS & CPP, consider the Income Splitting provision that usually reduces the actual tax being paid by the couple. 

-- you can request that your CPP be split as you receive it.


Some credits that your spouse does not fully use can be transferred to you.

Four to watch and transfer the leftover portion are:

-- age amount (line 301)

-- spouse amount (line 303)

-- pension income amount (line 314)

-- disability amount (line 316)


Allocate credits where they are best used:

-- medical expenses can be used by either spouse.

-- some medical expenses for travel and meals can be claimed without receipts. The current rates allowed are .455 per km and $17.00 per meal. The travel amount is allowed when you have to travel more than 40 km one way for medical services; and the meals are allowed after 80 km. The best way to keep track of your trips is to get a note from your Doctor.

-- charitable donations can be used by either spouse.

-- report all charitable donations in the year you pay them (even if you do not need the expense this year). Your unused donations will be carried forward.

-- new rules have been put in place to restrict less severe kinds of disability but the disability tax credit is still very useful when you qualify. Chat with your Doctor about his opinion for making the claim. He will fill out a form for CRA’s authorization.



-- living with your family may be a good idea when you compare the high cost of paying for assisted living. It might even help them to be able to buy their home instead of renting. A caregiver of a dependent loved one, except your spouse, is eligible for a credit of up to $4490 (for 2013).

-- also consider the Family Caregiver Tax Credit when family care is provided for infirm relatives; which could include spouse and minor children. 


Not living with family:

-- you can claim a credit for many non-family attendant care expenses that you pay. 


Remember to always file a tax return on time each year:

Lower income Seniors should still file a tax return even if they don’t owe any tax payable to ensure you are receiving all the government benefits due to you. Some of these benefits are GST Credits, Guaranteed Income Supplements (GIS) and Provincial drug plan subsidies.


Consider Capital gains type investments to defer and reduce your taxable income: 

-- don’t give your money away just to reduce your income to qualify for the GIS.

-- higher income Seniors must also be aware that the dreaded ‘claw-back’ starts when your annual income exceeds $70,954 (for 2013). This is the common name for the social benefits repayment that CRA uses to take back a portion of your OAS.

-- a solution for both of these proceeding high income issues is to consider changing your interest bearing savings and investment accounts to capital gain type account. There are many low risk options to put your money into that will make more sense than simply giving control of it away or leaving it at unrealistic low interest rate. 


Some thoughts about praying, listening and giving: 

-- wise folks learn to share their wisdom before they share their wealth with their family. 

-- I am not suggesting that well thought out donations to charities are bad either. Indeed it is good to give generously, especially when you love your Church or organization that you donate to. Your gift will create a tax credit of about $290.00 for every $1,000.00 you donate. 

-- if you help your children or grandchildren with paying tuition fees they can designate a special tax credit to you. 

-- financing missions trips are legitimate tax deductions when you give the gift to your church or charity, with no strings attached; and they choose to pay for certain of the mission expenses. 


Consider using non-taxable accounts:

-- tax free savings accounts (TFSA) earn interest income that is never taxable.

-- prepaid eligible funeral expenses (EFA) also can earn tax free interest. 

-- this is a good time to remind you that certain capital type investments can increase in value annually but are not taxed until the gain is withdrawn; and can be donated tax free.


Wise people know when to ask for help and advice:

There are more tax items and details to consider than the space of this article allows.  Grey Power people are generally wise people. Therefore, Wisdom suggests that you seek the advice of wise and trusted tax help when you recognize you need it.”

Thank you, George, for your invaluable suggestions. We had a fun couple of hours discussing this and, at the same time, watching the fencing class of my granddaughter.


John Fryters is a 65-year-old senior citizen who provides information for and about his own peer group. This particular column contains information from sources believed reliable but cannot be guaranteed. This is provided for information purposes only and should not replace advice/suggestions by professionals such as accountants or qualified tax specialists.

Organizations: Canada Revenue Agency, Old Age Security, Registered Retirement Savings Plans Stobbs and Associates

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Recent comments

  • reg dahl
    July 17, 2014 - 21:38

    Do YOU know HOW MUCH YOU are paying in TAXES?? Would 70% seem insane? 70 % ? How much tax for your next fuel up? 50%. YUP. At least 50% . GST. PST. PROPERTY . TAX FEES. INCOME . 70% is FASCIST INSANITY!! Wake up people!!