May 25, 2012
Pension Income Credit
Clients between the ages of 65 and 71 years old who are not presently receiving pension income, may wish to consider taking income from their registered plans to take advantage of the Pension Income Credit provided by CRA.
The Pension Income Credit is available to Canadian taxpayers over the age of 65. It is a federal tax credit of 15% on qualifying pension income (which is pension income from private pension sources - it excludes CPP, OAS or the Guaranteed Income Supplement) up to a maximum of $2,000 of income. Income drawn from RRIF accounts would qualify as pension income but not a withdrawal from a RRSP account unless it is an annuity payment from a RRSP. You claim the credit when filing your tax return. To take advantage of this, if you and your spouse are over 65 and are not currently receiving pension income, you may wish to consider transferring part of your RSP into a RIF and withdrawing $2,000 per year.
We encourage you to consult your tax professional prior to making any changes to your portfolio.
This article is not intended to provide advice, recommendations or offers to buy or sell any product or service. All tax decisions should be made after discussing your individual positioning with a qualified tax accountant, as everyone’s tax situation is unique. The information provided in this report is compiled from our own research and is based on assumptions that we believe to be reasonable and accurate at the time the report was written, but is subject to change without notice
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