A NOTE FROM ALLAN GOLD– I’m a lawyer Montreal, elder law attorney, passionate about the well-being of seniors. I understand that a good number of you along with your adult children wonder about the question of elder law vs estate planning. That’s why I’ve started a new series of articles. Since, it’s that time of year again, I expect many are inquiring, “How much taxes do seniors pay in Canada?” Incidentally, with the subject of taxes, it’s not elder law vs estate planning. Indeed, it’s not one or the other. Instead, it’s a common topic of both.
By Allan Gold lawyer Montreal and elder law attorney
Vol. 14, #2 – April 25, 2023 – Allan Gold’s Blog
Opening In Canada, we’re approaching the deadline for the 2022 income tax filing. ‘Excuse the pun’ – such days are usually very taxing for Canadians. Adding to the angst, we’re being beaten up by high interest rates and inflation. And we can’t help but get further depressed by recent headlines about the economy. For those of you preparing to make a tax declaration, I’m sending along a tax credit checklist. It could be an aid to complete the return or a tool to find something overlooked. I also take this opportunity to share with you several of my ‘Golden Rules.
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“The hardest thing in the world to understand is the income tax.” ― Albert Einstein
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I know you’re eager to read this checklist, but first things first—I need to tell you that there are deductions, credits, and expenses which a taxpoayer can claim to reduce the amount of tax payable. If an individual, the most commonly missed tax credits and deductions are charitable donations, moving expenses, medical expenses.Today, tax credits are in focus. These are amounts of money that a taxpayer can subtract, dollar for dollar, from the income taxes that he or she does owe. If a refundable credit exceeds the amount of taxes owed, the difference is paid as a refund. If a non-refundable credit exceeds the amount of taxes owed, the excess is lost. So, without further ado, I’m pleased to present the main feature.
Canadian $enior $elect Tax ¢redit ¢hecklist
Hereinafter are several tax credits which are older age relevant. (N.B. Please note that these are broad line general descriptions. For specifics, please verify the precise governmental provision theretofore.)
□ Canada Disability Tax Credit (DTC). The DTC applies to those with a disability. One category is ‘Mental Functions.’ In this instance, the person has a severe and prolonged impairment, restricting ability to perform mental functions necessary for everyday life. The DTC addresses the costs related to the impairment through the reduction of income tax payable.
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Dementia refers to the “impaired ability to remember, think, or make decisions that interferes with doing everyday activities.” Alzheimer’s disease is the most common type of dementia. Although it isn’t part of normal aging, older adults are mostly affected. Indeed, the number of Canadians suffering from dementia are growing exponentially. Consider if you will, some statistics in this regard. In 2020, the figure was 597,000. By 2030, it’s expected to reach 955,900.
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□ Canada Caregiver Credit (CCC) – Line #30300/30425. The CCC is a non-refundable tax credit. It’s available to a taxpayer supporting a spouse, common-law partner or a dependant with a physical or mental impairment. The amount claimed is determined by claimant’s relationship to the supported person. And such figure is affected by claimant’s circumstances, the supported person’s net income, and whether other credits are being claimed for that person. As for example, in the instance of a spouse or common-law partner, one may be entitled to claim an amount of $2,350 in the calculation of line 30300. One could claim an amount up to $7,525 on line 30425.
□Quebec Senior Assistance Tax Credit. This tax credit is offered only to individuals aged 70 or more. Please be informed of changes which were published on Dec. 14, 2022. The maximum credit for 2022 is: (a) $2,000 for an eligible senior without a spouse whose family income is $24,195 or less; (b) $4,000 for a couple where both partners are eligible seniors and whose family income is $39,350 or less; (c) $2,000 for a couple where only one partner is an eligible senior and whose family income is $39,350 or less. In each instance, the credit is reduced by 5% above that threshold. However, a senior 70 or more is ineligible if his/her family income for 2022 is equal to or greater than the applicable maximums below: (a) Senior without a spouse – $64,195; (b) Senior with an ineligible spouse – $79,350; (c) Senior couple – $119,350.
□ Quebec Tax Credit for Home-Support Services for Seniors. This tax credit is only for those who were resident in Québec on Dec 31st, 2022. And to qualify, the taxpayer must be 70 or over. (N.B. If the person turned 70 during 2022, then eligibility starts on his/her birth date and strictly for services provided afterwards.) In addition, please note that the coverage of services/ expenses is dependent upon the taxpayer’s place of residence.
□ Quebec Tax Credit for Caregivers. On one hand, this tax credit is for caregivers rendering care to a person aged at least 18, having a severe and prolonged impairment in mental or physical functions, needing aid to carry out a basic daily living activity. On the other, it’s for caregivers co-habitating with and caring for a relative aged at least 70.
□ Quebec Tax Credit for Expenses Incurred by Senior During Stay in Transitional Care/Rehabilitation Unit. This is a refundable tax credit. To be eligible,
a taxpayer must be aged 70 or more. The credit is equal to 20% of amounts paid as expenses during a stay in a transitional care and rehabilitation unit, this up to a maximum duration of 60 days. Such is conditional upon: (a) His/her arriving or departing in the respective year; (b) Expenses not having been refunded (unless the refund is taxable). (N.B. A taxpayer is not entitled to any other tax credit or deduction theretofore.)
□Quebec Senior Activity Tax Credit – Line #275. This refundable tax credit is equal to 20% of the expense up to a limit of $200 (maximum credit of $40). To be eligible, a taxpayer must: (a) Be 70 or older and resident in Québec on Dec. 31st , 2022; (b) Have an income equal to or less than $44,630; (c) Have paid registration fees in 2022 for physical, artistic, cultural or recreational activities which were: (i). Part of a program of at least 8 consecutive weeks or 5 consecutive days; or (ii). Offered by a club, association or similar organization of which he/she was a member for at least 8 consecutive weeks. (N.B. Keep your receipt evidencing registration or membership fees.)
350 to 398.1 – Non-Refundable Tax Credits
□ Quebec Age Amount, Amount for a Person Living Alone & Amount for Retirement Income – Line #361. This tax credit is for a senior 65 or older on Dec. 31st, 2022. To be exact, he/she must have been born before Jan. 1st , 1958. (N.B. This credit can be claimed for a deceased person. However, it’s conditional upon his or her being 65 or older at the time of death.) In addition, there’s a credit for: (a) Senior maintaining and ordinarily resident alone in a dwelling throughout the year. (N.B. A claimant is not disqualified if cohabitating with (i). One or more persons under 18; or (ii). One or more full-time students (children, grandchildren or great-grandchildren 18 years or older). (b) Spouse on Dec. 31st receiving eligible retirement income (or if spouse had transferred a portion of his/her eligible retirement income thereto.)
□ Quebec Tax Credit for Severe & Prolonged Impairment in Mental or Physical Functions – Line #376. It’s available to a person with a severe and prolonged impairment in mental or physical functions. In the year 2022, this tax credit must be certified as applicable by the following: a physician, a specialized nurse practitioner, an optometrist, an audiologist, a speech-language pathologist (speech therapist), an occupational therapist, a psychologist or a physiotherapist. The figure is $3,584.
□ Quebec Tax Credit for Expenses Securing Medical Services Unavailable in Area – Line #378. This tax credit is for expenses paid to obtain medical services unavailable in area. The medical services must have been for the taxpayer, his/her spouse or a dependant. It’s required that the costs were incurred in 2022. And the money must have been spent on the following: (a) Travel and lodging for the purpose of securing, in Québec, medical services unavailable within 200 kilometres of your house; (b) Moving to within 80 kilometres of a health establishment in Québec located 200 kilometres or more from the former home.
□Ontario Senior Public Transit Tax Credit
This refundable tax credit is for a person aged at least 65. It amounts to 15% of the costs (up to $3,000) for public transit. The maximum is $450.
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Elder law vs estate planning : As lawyer Montreal, elder law attorney, I say taxes run right through them both. Here’s why. Sure – making some money is good. And that makes for a better retirement. But revenue brings taxes and more revenue brings even more taxes. Of course, taxes affect disposable income during the ‘golden’ years. But applicable tax credits offer relief to eligible seniors. Furthermore, taxes impact upon the ultimate bequest left to heirs. As a result, tax provisions applicable to seniors are relevant when making plans for the management and transfer of one’s estate after death. And all of this is part of the law which pertains to people of a certain age.
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BONUS – Two of My ‘Golden’ Rules
#1 – Be organized. Open a new hard copy dossier at the start of each taxation year. In the old days, some people used a brown A-Z accordion file folder with 21 pockets to sort paperwork alphabetically. Nowadays it could be a digitized folder. Regardless what you use, it’s important to insert therein ALL the year’s pertinent documents, writings, receipts, etc. Be conscientious when it comes to your filing. Of course, you need to have your documents to report income and claim deductions. Should you have a supplier or project file, make a duplicate for the tax file. If you don’t, you’ll be rummaging for slips and documents at tax time. Chances are that you won’t find some. The risk is that you’ll miss out on some material deduction or credit or you won’t get the full extent thereof. Indeed, your orderliness could enhance the liklihood of your making in due time, a more complete tax filing.
#2 – File on time. Note that your return will be considered filed on time if the Canada Revenue Agency (CRA) receives it, or it is postmarked, on or before May 1, 2023. This is because Canada Tax Deadline (i.e., April 30, 2023) falls on a Sunday. However, a self-employed taxpayer has until June 15th, 2023 in order to file his/her income tax declaration.
CONCLUSION
Here we go again. For many this tax season, the question is, “How much taxes do seniors pay in Canada?” But as lawyer Montreal, elder law attorney, I’m much more interested in how much seniors can save. As you can see above, there are ways for an older taxpayer to reduce the tax he/she pays on taxable income. I hope that you found something else which is applicable. And by following the ‘Golden’ rules, I would hazard to guess that you’re on track to saving some money next year.
Allan Gold
P.S. Here’s something to think about – “A person doesn’t know how much he has to be thankful for until he has to pay taxes on it.” ― Anonymous
! Call to action: To every attorney in the field, I say, “Write a post/article. Let’s help seniors & their families become better informed about elder law Canada! And by the way, please send it along. I’d love to read it.”
NOTICE – CAUTION –DISCLAIMER.
The material provided herein is of a general nature, strictly for informational purposes. The interpretation and analysis is not to be misapplied to a personal situation with a particular set of facts. Under no circumstances, are the herein suggestions and tips, intended to bring a reader to the point of acting or not acting, but instead, the hope is that they are to be a cause for pause and reflection. It is specifically declared that this content is not to be a replacement of, or a substitution for, legal or any other appropriate advice. To the contrary, for more information on these presents, related subjects or any other questions, it is the express recommendation of the author that everyone seek out and consult a qualified professional or competent adviser.
© 2023– ALLAN GOLD – ALL RIGHTS RESERVED- TOUS LES DROITS SONT RÉSERVÉS Ed. 2023-04-25-001
*©/TM 2006, 2008, 2018 Allan Gold, Practitioners’ Press Inc. – ALL RIGHTS RESERVED
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