If you are 65 or older, you should try to have at least $2,000 of income qualify for the Pension Income Credit. Income from pension plans, RRSP annuities, RRIFs, and certain other annuities qualify for this tax credit.
Old Age Security and Canada Pension Plan income do not qualify for this tax credit.
If you are 65 or older and your only sources of pension income are from Old Age Security and the Canada Pension Plan, but you have an RRSP, you can qualify by transferring a sufficient amount of RRSP funds into a RRIF or annuity to create qualifying income.
If you are under 65 and are receiving income from a pension plan, or are receiving income from RRSP annuities, RRIFs and certain other annuities as a result of the death of your spouse, you also qualify for the credit.
If you have qualifying pension income, but cannot use this credit, it can be transferred to your spouse.
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.
Make sure you qualify for the Pension Income Credit. Consult with a Chartered Accountant for more information.
Information for Tax Tips is provided as a public service by the Chartered Accountants of British Columbia.