Your age could be worth money at tax time. If you were 65 years of age or older in 2007, then you may be eligible for some tax breaks. You may be eligible to claim a tax credit for being 65 years of age or older, depending on your income level.
The maximum age credit is reduced once net income exceeds approximately $30,900 (for federal tax purposes, $30,100 for B.C. tax purposes) and declines to zero at net income of approximately $65,400 (for federal tax purposes, $57,100 for B.C. tax purposes). In 2007 the combined Federal and British Columbia tax credit can reduce your taxes payable by as much as $1,007.
You may also claim another tax credit for an amount equal to the lesser of $2,000 and the “pension income” you included in income for the year. The combined Federal and British Columbia tax credit can reduce your taxes payable by as much as $360.
Eligible pension income includes payments you receive from superannuation or pension plans, the income element of annuity payments and RRSP annuities or payments from a registered retirement income fund (RRIF). Old Age Security and Canada Pension Plan income do not qualify for the pension credit, although US Social Security will qualify to the extent that it is taxed in Canada. The pension credit is also available to individuals under age 65 on life annuity payments from superannuation or pension plans and on certain annuity payments arising by virtue of the death of a spouse.
Effective starting in 2007 you will also be able to split up to 50 per cent of your eligible pension income with a spouse or common-law partner. If you were 65 or older during 2007 consult a Chartered Accountant to see what tax breaks you might be eligible for.
Information for Tax Tips is provided as a public service by the Chartered Accountants of British Columbia.