For seniors in Canada, filing tax looks a little different to other age groups across the country. You will likely be pleased to know that there a number of sources of tax relief for seniors, including several that younger taxpayers are not eligible for. This gives you a number of chances to save on your tax payments and avoid a hefty tax bill. Because of all the additional tax credits and deductions that come into play, filing a tax return as a senior can feel confusing. At Spergel, we are here to help you – especially if you are faced with an unmanageable tax bill that you were not expecting. In this article, we share all you need to know about tax relief for seniors, and how to get expert support when it may be needed.
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What tax relief for seniors is available in Canada?
When it comes to tax relief for seniors in Canada, there are plenty of tax credits that you may be eligible for, depending on your circumstances. While there are some additional options too, here are the most common tax credits for seniors:
If you are aged over 65 at the end of the tax year, there is a non-refundable tax credit that you can claim as tax relief. This age related tax credit is income dependent – to qualify in 2023, you need to earn less than $42,335 per year. For your 2023 tax return, the age amount you can receive in tax credit is $8,396. Age amount is one of the simplest forms of tax relief for seniors in Canada given that you are eligible if you are over a certain age. Age amount can be transferred to your spouse if you would prefer.
As you get older, it is likely that medical expenses will become a larger part of your outgoings. From doctor visits to prescriptions, to devices including hearing aids, in Canada you can claim tax relief on your medical expenses. Costs that you may have not yet been reimbursed for can be claimed on your tax return, even down to home improvements to improve your health. The CRA has a fully detailed list of medical costs that are tax deductible. Do note that the CRA could ask for evidence of any expenses you claim, so be sure to keep any relevant receipts for a couple of years after filing your tax return.
Pension income amount
As most of us will wind back the work when we age, most of our incomes will come from a public pension, like the Canada Pension Plan, or a private pension or RRSP. If you report pension income on your tax return, you can claim up to $2,000 as a tax credit when you file. You are able to split your pension with your spouse if you wish so that overall your family may be able to pay less tax.
Disability tax credit
If you have a disability and are aged 65 or above, you are likely eligible for the Disability Tax Credit (DTC). This tax relief for seniors is designed to help ease the additional spending that may be required for disability expenses. In 2023, the maximum disability tax credit amount is $9,428.
Home accessibility tax credit
If you needed to make your home more accessible and have made home improvements as a result, you may be eligible for the Home Accessibility Tax Credit (HATC). The HATC is a non-refundable tax credit that can be claimed for up to $10,000. This can include any home improvements for accessibility like installing a stair lift, or adding wheelchair ramps. Although a popular form of tax relief for seniors, you do not need to be a senior to be eligible.
Provincial tax credits
Some forms of tax relief for seniors come from your province of residence. Here are a few examples of key provincial tax credits:
- Seniors’ Home Safety Tax Credit – if you are in Ontario and in a residence with a senior aged 65 or above, you may be eligible. The Seniors’ Home Safety Tax credit covers any accessibility improvements made to your home. This might include measures like an automatic garage door opener or a walk-in bathtub to make your home safer. If you meet the eligibility criteria, you can claim up to $2,500 back.
- Low Income Grant Supplement for Seniors – if you live in British Columbia and are aged at least 65, the low income grant supplement for seniors can reduce the amount you need to pay towards property taxes. To be eligible, you must qualify for the homeowner grant for seniors, and have a net income of $32,000 or less.
- Senior Assistance Tax Credit – in Quebec, if you are 70 or older, you may be eligible to receive $800 if you also have a spouse who meets the criteria on 31 December 2022, or $400 if you do not.
Old Age Security (OAS) Pension
If you are aged 65 or above, the Old Age Security Pension is intended to help you through your retirement financially. The amount you receive will depend on the length of time you have lived in Canada as an adult, and you will receive a monthly payment from the government as a result. If your income exceeds $86,912 in 2023, you might need to repay some of your OAS pension to the government, also known as OAS Pension Recovery Tax. There are ways to gain tax relief for seniors on this tax:
- Splitting your pension with your spouse
- Using a TFSA to generate income that is not taxed
- Avoiding capital gains before reaching retirement
When it comes to RRSPs, you are protected from tax until you withdraw the amount of money you have in there. This makes RRSPs a good option for when you are earning money. Your RRSP can be converted into income by setting up a Registered Retirement Income Fund (RRIF), purchasing an annuity, or withdrawing cash from it when needed.
How can I make sure I’m not missing any tax relief for seniors?
At Spergel, we know filing your tax return can be confusing and complicated. With different measures and tax relief credits coming into force from the government, it can seem unmanageable to handle your tax return. You also want to make sure you are not missing out on any tax relief for seniors that you might be eligible for, and so it is well worth seeking the support of a tax consultant or using software to file your return. This can make the process much quicker for you, and you can rest assured that somebody is assessing all of the options for support that you may meet the criteria for.
What if my tax bill is still too high even after receiving tax relief for seniors?
This year, your tax return is due on Sunday April 30th 2023. If you have a balance owed on your account, payment is due by this date also. As the tax deadline is due on a Sunday, you will need to make sure provisions are in place for this to be paid ahead of the deadline. If you miss this deadline, you could well find yourself facing interest charges and penalties from the CRA. Unfortunately for many seniors in Canada, despite receiving additional measures of tax relief, their tax bills are still unmanageable. In this scenario, you do not need to panic – there are plenty of options, no matter how high your tax bill. Your first port of call should be to reach out to an expert Licensed Insolvency Trustee. As the only experts in Canada legally able to file all forms of debt relief, they are best placed to review your financial circumstances and advise you as to the best methods for you to reduce or eliminate your tax debt completely. At Spergel, we treat all individuals with compassion and understanding, and have been helping Canadians on their journey to debt relief for over thirty years. Here are some of the most popular forms of tax debt relief for seniors:
When your tax debt is unmanageable and you have other debts that are overwhelming, a debt consolidation loan may be a good option for you. It is a new loan that is taken out to combine and condense all your outstanding debts. This has the advantage of simplifying your debt into one manageable monthly payment, and often reduces the amount of interest that you need to pay. At Spergel, we can help you to see how this may look for you.
A consumer proposal is a great way to reduce your tax debt – and any other unsecured debts – by up to 80% while avoiding bankruptcy. It is the process of proposing a manageable monthly repayment figure to your creditors with the support of your Licensed Insolvency Trustee. Your trustee will negotiate with your creditors on your behalf, and if accepted, you will only need to make your proposed payment each month for a period of three to five years. Consumer proposals have a number of advantages, including the ability to keep your assets and protection from your creditors. At Spergel, we have a 99% acceptance rate on any consumer proposals that we file for Canadians.
Bankruptcy in Canada is the best tax debt relief solution for when you need a fresh financial start. Bankruptcy is the process of assigning any non-exempt assets you may have over to your Licensed Insolvency Trustee. They will be sold with any proceeds going towards your creditors in exchange for the clearance of your unsecured debts. While many Canadians think that bankruptcy leaves you with nothing, this is far from the reality. Each Canadian province has its own list of bankruptcy exemptions for you to keep, including a vehicle up to a certain value. At Spergel, we will support you through the process and help you to gain protection from your creditors.
If you are in need of tax relief for seniors, or are concerned about the amount of tax debt that you owe, book a free consultation with an expert Licensed Insolvency Trustee at Spergel. We are here to help you, and will review your financial circumstances and recommend your options so that you are well placed to make the right decision for you. Reach out today, you owe it to yourself.