Tax Credits for Seniors

The Income Tax Act provides preferential treatment for seniors, especially those with moderate income.

Federal non-refundable tax credits for seniors include:

The Age Amount: Taxpayers over the age of 65 will receive a non-refundable credit of 15% of $6,916 if their income is $34,873 or less. If their income is over $34,873 the age amount is reduced and is eliminated when their income exceed $80,980 for the taxation year.

The Pension Income Amount: Those receiving eligible pension, superannuation or annuity income can claim a non refundable tax credit of up to $2,000. In addition, those receiving eligible pension income who have a spouse or common-law partner may elect to split up to 50% of that pension income with their spouse or common-law partner thereby reducing taxes payable by the couple.  Although meant to help seniors, pension income splitting is available to all taxpayers who receive pension income regardless of age.

Other credits often claimed by seniors include:

Disability Tax Credit: If the taxpayer has a severe and prolonged impairment that restricts the activities of daily life they may qualify for the Disability Tax Credit. To qualify for this credit, Form T2201 Disability Tax Credit Certificate must be signed by a qualified practitioner who certifies the impairment and the form must be approved by CRA. For the 2014 taxation year the claim is $7,766 and is affected by income level.  Where the disabled taxpayer’s income is too low to benefit from the credit, it may be transferred to a spouse or other supporting individual.  Taxpayers who were eligible in previous years and did not claim this amount can request an adjustment to previously filed returns as far back as 10 years once the signed T2201 form is approved for those years.

Medical Expenses: Taxpayers may claim eligible medical expenses paid in any 12 month period ending in the taxation year. For example, claims on the 2014 tax return could be for the period February 1, 2013 to January 31, 2014. All amounts paid, even if not paid in Canada, can be claimed so long as they qualify and the taxpayer is a resident of Canada. The claim for medical expenses for the taxpayer, their spouse and dependent children are reduced by 3% of the claimant’s net income or $2,171 whichever is less.  Claims for other dependants are reduced by 3% of that dependant’s net income. 

Where a taxpayer has a claim for attendant care expenses as well as a claim for the disability amount, both claims can be made, but only if the attendant care claim does not exceed $10,000. If more than $10,000 was paid for attendant care, the claim should be limited to $10,000 unless the total claim exceeds the disability amount by more than $10,000. Your tax professional should be consulted to help maximize such claims.

The provinces also mirror these claims but some provide additional credits for seniors. For example: the Ontario senior homeowners’ property tax grant, the British Columbia seniors’ home renovation tax credit, and the Newfoundland and Labrador seniors’ benefit.