I can’t believe it’s that time again !
The older you get the faster another tax season seems to be upon us, especially if you’re an accountant!
Whether you file your own return or help an older family member or friend, I hope this annual update of my Top Age Friendly Tax Tips will help ease the pain of the season! These tax tips are particularly relevant to those over the age of 65 but many also relate to those living with a disability. Please check this list to ensure that you are receiving all the credits and rebates you may be eligible for.
Top Age Friendly Tax Tips
- Make sure to file a tax return!. It may sound odd, but the first tax tip is to file a return! Too many Canadians don’t file a tax return because they don’t earn an income, or their income level is such that no taxes are due. However, without filing a return, other credits and benefits may not be received. As an example, in order to receive the Guaranteed Income Supplement (GIS) – GST/HST credits and Ontario sales tax credits, a return needs to be filed.
- The Age amount. A non refundable credit of up to a maximum of $7,333 is available if you were over age 65 at December 31st 2018 and your income was less than $36,976. A partial credit is available if your income was over this amount but less than $85,863.
- Pension income amount. Up to a $2,000 non refundable tax credit is available for those who receive an eligible pension, superannuation or annuity payments. Canada Pension Plan payments or OAS do not qualifiy as eligible income for this credit.
- Check eligibility for the disability tax credit (DTC) An estimated 60% of the 1.8 million Canadians living with a severe and prolonged impairment in physical or mental functioning are not filing for the Disability Tax Credit which they are entitled to if they also meet certain conditions. To qualify, Form T2201 must be completed, certified by a medical practitioner and submitted to Canada Revenue Agency for review. If part or all of the disability tax credit can’t be used by the taxpayer, it can be transferred to a spouse or supporting taxpayer. The DTC is also a precondition for other benefits like the Registered Disability Savings Plan and other credits. Please speak with an accountant about the credit and not a third-party firm that takes a portion of the claim or works on a commission.
- Medical expenses A portion of many medical expenses can be claimed over a certain threshold, but spouses can add their expenses together so that there is only one threshold. Expenses can also be for any 12-month period ending in the year, in order to get a larger credit. The list of eligible medical expenses has expanded slowly over the years so it’s worth checking to make sure you’re deducting everything possible. Some items are fairly obvious but there are less obvious ones to consider like air conditioning or air filters, bathroom aids, disposable briefs, note taking services, some travel and service animals. See the complete list of medical expenses here
- Pension income splitting with a spouse A joint election to splitting up to 50% of eligible pension income with a spouse can mean a significant tax reduction especially if one spouse earns less income than the other. It also allows a couple to claim two pension income tax credits of $2,000 each. Eligible pensions include annuity payments, pension income, RRSP and RRIF income but not Canada Pension Plan , Old Age Security payments or foreign income pensions
- Split/Share your Canada Pension Retirement Pension with a spouse Pension sharing can save tax if only one spouse contributed to the Canada Pension Plan or if one spouse contributed more than the other. Spouses can apply to receive equal shares of the CPP retirement pensions that they earned during the years they were living together.
- The Canada Caregiver credit The Canada Caregiver credit is a non-refundable tax credit that a family caregiver maybe eligible to take if they support an eligible relative that has a physical or mental infirmity at any time in the year. The caregiver does not necessarily have to live with the eligible relative in order to qualify.
- Attendant care expenses For individuals eligible for the disability amount, attendant care expenses (not including food and rent) can be claimed as a medical expense if an individual is living at home or in a care home. If attendant care costs are incurred in order to be employed or self-employed, those costs maybe claimed to reduce income as part of the disability supports deduction. That’s better than a credit for medical expenses.
- Nursing home/Long Term Care expenses Expenses for full time care can be deducted as a medical expense either by the individual cared for or by the individual paying the expense subject to limits. You can’t claim the cost of nursing home care AND the disability tax credit, but you could instead deduct the attendant care portion of such fees so it’s important to strategize around what makes more sense. It can get complicated.
- Share your Tax credits! Certain federal tax credits maybe transferred to a spouse or eligible relative if an individual can’t use all their credits. These include the Age amount, Disability amount and Pension income amount.
- Home Accessibility Tax Credit (HATC) This non-refundable credit provides those over age 65 or those eligible for the disability tax credit, a 15% credit on up to $10,000 for home improvements (to a max of $1,500) incurred to renovate a home to make it more accessible or to improve mobility. Some eliigible expenses would include items like wheelchair ramps, walk-in bathtubs, wheel-in showers, widening of doors, non slip bathroom flooring, ergonomic, easy to use door locks, hands-free water taps, and motion sensored lights.
- Ontario Seniors Transit Tax Credit This is a refundable tax credit to help seniors with public transit costs by providing a benefit of 15% of eligible public transit. Up to $3,000 in eligible public transit expenses can be claimed for a maximum credit of $450.00. Specialized public transit services for those with disabilities qualifies as well as fares paid on Ontario or municipally operated public transit commonly used for a return trip in a single day.
- Ontario Senior Homeowners’ Property Tax Grant For those who are 64 or older, a resident of Ontario and paying property taxes, a property tax grant of up to $500 is possible based on income
I hope that you will find this list useful for reducing the ‘sting’ that comes with tax time. However, if you need help filing your return and have a modest income and a simple tax situation, you may be eligible to have your tax filings prepared by a volunteer tax clinic in your area sponsored by the Canada Revenue Agency and CPA Canada. You can find one by checking the Canada Revenue Agency website or by calling 1-800-959-8281 or your local community 2-1-1 service. To qualify for assistance with your tax filing, certain eligibility thresholds apply. Also, some Canadians (950,000 last year) will receive an invitation from CRA to file by phone which is a new service introduced last year with some success. The “File My Return” services helps individuals with a simple tax situation, file their return by answering a few questions over the phone through an automated service. This is good news for those who are eligible for federal support programs but are not receiving them because they have failed to file a return.
As always, please don’t hesitate to connect if you have any questions. All the best this tax season !
