By Olev Edur
Filing your taxes may seem a daunting challenge, but make your way through the process line by line and you’ll be finished in no time
Yes, it’s time once again for your annual reckoning with the taxman. If you have any taxes owing and you don’t file your return by April 30, you may be subject to interest costs as well as late-filing penalties. And it’s particularly important to file your 2024 return by April 30 if your income is low. Failure to do so may mean that you miss out on numerous tax credits, benefits, and rebates for the year, including:
- Guaranteed Income Supplement (GIS);
- the GST/HST tax credit;
- the Canada Carbon Rebate (CCR, formerly the Climate Action Incentive payment);
- various provincial credits and benefits.
If you aren’t employing a professional to help with your return, you should consider using Canada Revenue Agency (CRA) certified tax-return-preparation software. These products can help immensely in coping with the myriad calculations, cross-references, and easily overlooked tax-saving opportunities in what has become a prodigious compendium of federal and provincial/territorial returns, schedules, worksheets, and supplementary forms. You might also want to consider e-filing your return rather than printing out a ream of paper and mailing it off. As well as being simpler, electronic files are processed faster, and any expected refund will be in your hands (or in your bank account if you’ve arranged for direct deposit with the CRA) sooner.
While you’re at it, you should also consider signing up for the CRA’s My Account if you haven’t yet done so. This CRA website provides one-stop access to all your tax information, including assessment notices, balances owing, tax refund or benefit status, and many of the information slips and forms you might need to file your return. You can also arrange to view all your CRA mail online rather than receiving paper notices, make online payments to the CRA, and change your contact or banking details.
If your income is low and your return is relatively straightforward, you may be able to avail yourself of free assistance through the Community Volunteer Income Tax Program (CVITP), or the Income Tax Assistance – Volunteer Program in Quebec. Find out if you qualify, or locate a tax-preparation clinic near you.
Since the Tax Guide traditionally supplied in the T1 Tax Return Package has been discontinued, you have to go online to get further information on any particular line on the forms. The relevant information can be found at canada.ca/line-X, with X representing the number of the line being queried.
This added complexity provides further impetus for using tax-preparation software or services, as the answers to many questions will have already been incorporated. (You may also find some answers on the Worksheets accompanying the return.)
Calculating Your Total Income
Moving to the heart of the return, you start your tax calculations by declaring all your income worldwide for 2024. You are generally required to declare every dollar you received during the year, but there are some specific exceptions, notably:
- lottery winnings
- gifts and inheritances
- most life-insurance proceeds
- GST/HST credits
(A complete list of exempt earnings can be found at canada.ca.)
For the rest, even if you’re using software or a professional to help prepare your return, you still must assemble the documentation and basic information that will be required to complete your return, and in the process you must ensure that you haven’t forgotten anything. To that end, the following are items that could be of particular interest to seniors. Bear in mind, however, that this is not a comprehensive list: individual circumstances vary, so you should always ensure that you’ve included anything else that might apply in your case.
Employment income (line 10100): CRA taxation statistics for 2021 show that more than one million Canadians continued to work part- or full-time past age 65. The information to be entered on this line will appear on the T4 slip(s) you should have received earlier this year if this applies to you. Similarly, commissions per T4 slips must be entered on line 10105.
Pension income (lines 11300, 11400, and 11500): Most retirees receive Old Age Security (OAS) benefits as per T4A(OAS) slips, and this income goes on line 11300.
However, lower-income seniors may also receive GIS or Allowance benefits, which are adjuncts of OAS but must be entered on line 14600; GIS is not taxable, however, so this amount can be deducted afterwards on line 25000.
Canada/Quebec Pension Plan (CPP/QPP) retirement benefits go on line 11400, as per T4A(P) slips, while disability benefits go on line 11410. Income from private pensions is entered on line 11500, as is income from RRIFs or annuities once you are age 65 or older; younger recipients must enter RRIF/annuity income on line 13000.
This distinction is important because only income entered on line 11500 qualifies for the $2,000 annual pension credit on line 31400. In the case of pensions from a foreign country, refer to the CRA website for guidance on how this income should be declared.
You’re now allowed to split pension income with your spouse/common-law partner, but both of you must complete Form T1032. Then the person receiving the income must declare it on line 11500, while the contributor can deduct it on line 21000. (You can also share CPP/QPP retirement benefits, but you must complete the online CPP Pension Sharing form at My Account or get a copy of the Application for CPP Pension Sharing of Retirement Pension(s) (ISP1002) and take it to the nearest Service Canada outlet; Quebec pensioners should contact Retraite Québec for information.)
Investment income (lines 12000, 12010, 12100, and 12700): Most seniors receive investment income in various forms: interest, dividends, and capital gains. Again, you should be provided with information slips for each income source, and instructions are included in the tax return, although some additional calculations may be required.
There are two types of dividends (“eligible” and “other than eligible”). The amounts you actually receive must be “grossed up” to taxable income amounts, and then you’re accorded an offsetting dividend tax credit (DTC); the grossed-up and credit amounts differ for the two types. You do the calculations on the Federal Worksheet accompanying the return and then enter the amounts on lines 12000 and 12010; don’t forget to claim the DTC on line 40425.
Interest income is declared on line 12100 after you’ve completed the appropriate section of the Worksheet for the return. This line is also used for declaring foreign interest or dividends (which aren’t eligible for the DTC). Note that the declaration of interest on multi-year GICs, term deposits, and similar investments is based on anniversaries of the purchase date; if, for example, you purchased a two-year GIC on July 1, 2024, the first year’s income— through June 2025—would all be declared next April on your 2025 return rather than being split between 2024 and 2025 (ditto for following years).
Capital gains become taxable only when the underlying asset is sold, and generally only one-half of the gain is taxable. This amount must be entered on line 12700 after completing Schedule 3.
RRSP income (line 12900): If you withdrew money from an RRSP in 2024 (per T4RSP slips), this generally
must be reported on line 12900. If, however, the income stemmed from the death of a spouse/common-law partner, you may be able to claim a deduction for part or all of it—refer to Guide RC4177, Death of an RRSP Annuitant, for details.
Rental income (lines 12599 and 12600): As with employment income, CRA data show that increasing numbers of retirees are earning rental income. Refer to canada.ca for the required forms and information on completing them and then enter the gross and net income figures on these lines.
Self-employment income (lines 13499 through 14300): This income must be entered on the appropriate lines, depending on the type of business, after completing a statement of income and expenses and possibly additional forms—again, refer to the relevant line(s) at canada.ca for the forms and instructions.
Finally on page 3, you must enter certain payments, including social assistance on line 14500 and the GIS on line 14600, and add them together on line 14700 to arrive at a total carried forward to page 4 of the return.
Deductions From Total Income
After arriving at a total income figure on line 15000 and copying it to the top of page 4, you can deduct certain amounts to arrive at a net income figure on line 23600 and then a taxable income figure on line 26000 of page 5. The following are items that might be of relevance to retirees as well as to those still saving for their retirement:
• line 20700. If you made contributions to a pension plan or an RRSP in 2024, you can claim the amounts here (per T4 and/or T4A slips). You may also need to enter your pension adjustment and pooled registered pension plan (PRPP) employer contribution amounts on lines 20600 and 20810, respectively. Again, the necessary figures should be included on your information slips.
• line 20800. This is where you claim a deduction for contributions made to an RRSP. Note that you need not claim a deduction the same year you make a contribution; you can save the deduction for use in a future year if that is advantageous.
• line 21000. As noted for line 11500 above, if you are splitting pension income with a spouse/common-law partner, claim the amount here after completing Form T1032.
• line 21500. Disability supports deduction; complete Form T929.
• line 22100. If you incurred carrying charges, such as interest on investment loans or accounting fees for completing your tax return, you can claim them here.
• line 22200. This is where the self-employed can claim a deduction for their CPP/QPP contributions, after completing Schedule 8, or Form RC381 in the case of QPP.
• line 23500. You may be subject to a clawback of OAS and/ or other social benefits if your income is above certain thresholds; if so, you must complete the chart for line 23500 on the Federal Worksheet and then enter the resulting amount on that line and on line 42200 on page 7. Deduct this amount from line 23400 (net income before adjustments) to arrive at a net income figure on line 23600, which is carried to the top of page 5.
On page 5, you’re allowed certain further deductions to arrive at a taxable income figure on line 26000. Generally, these deductions would likely apply to only a limited number of seniors, but you should read through them before moving on to the next step.
Federal Tax, Non-Refundable Credits, and Net Federal Tax
Once you have a taxable income figure, you must perform the calculations in Part A of Step 5 to determine your federal tax and carry this figure over to line 116 on page 7 of the return. Then coming back to page 5 (Part B), you can claim a variety of federal non-refundable “amounts,” which are multiplied in most cases by 15 per cent to determine your credit total. (“Non-refundable” simply means the credits can’t be used to generate a cash refund once your tax bill reaches zero.) You may, however, be able to transfer unused portions of certain amounts to a spouse or other family members—see below and refer to canada.ca for further details.
Every tax filer is entitled to the basic personal amount (line 30000) of up to $15,705 depending on income; high earners may need to use the Federal Worksheet to calculate a lesser amount. If you were age 65 or older at the end of 2024, you can also claim the age amount (line 30100) of up to $8,790. Complete the relevant calculation on the Worksheet to determine your entitlement.
On line 30300, you can also claim a basic amount of up to $15,705 for a spouse/common-law partner you supported, plus $2,616 if your partner was disabled, after completing the relevant section in Schedule 5. Similarly, if you have an eligible dependant, you may be able to claim $15,705, plus $2,616 if they were disabled, on line 30400 as per Schedule 5.
In addition to the above $2,616 disability add-on and the caregiver deduction on line 21500, numerous credits are related to disabilities, medical expenses, and caregiver costs, including:
• Canada Caregiver amount (applicable to lines 30300, 30400, 30425, 30450, and 30500)
• Canada Caregiver amount for a spouse or common-law partner or an eligible dependant age 18 or older (line 30425, after completing Schedule 5)
• Canada Caregiver amount for other infirm dependants age 18 or older (line 30450)
• Canada Caregiver amount for infirm children under 18 years of age (lines 30499 through 30500)
• Disability amount for self (line 31600) of $9,428, subject to a Disability Tax Credit Certificate from a medical practitioner
• Disability amount transferred from a dependant (line 31800); complete the relevant part of the Worksheet
• Medical expenses for self, spouse or common-law partner and dependent children born in 2003 or later (line 33099)
• Allowable amount of medical expenses for other dependants (line 33199)
You may also be able to claim a refundable medical expense supplement (line 45200 on page 8 of the return). The interrelated rules for claiming medical, caregiver, and disability credits can be extremely complex, so you’ll need to refer to the appropriate lines at canada.ca to ascertain your entitlements for each of these items. Professional advice can be particularly valuable here, because many thousands of dollars could be at stake.
Other non-refundable credits of possible relevance to retirees:
• Home-accessibility expenses (line 31285) of up to $20,000 can be claimed on the cost of modifications to make your home more accessible and livable.
• Pension income amount (line 31400). You can claim up to $2,000 of any income that appears on line 11500.
• On line 32600, you can claim all or part of certain amounts for which your spouse/common-law partner qualified but didn’t need in order to reduce their federal tax to zero, after completing Schedule 2. Qualifying amounts include the Canada Caregiver (line 30500), age (line 30100), pension income (line 31400), disability (line 31600), and tuition (line 32300) amounts.
All these amounts are tallied up on line 33500 and then multiplied by 15 per cent to arrive at a credit subtotal on line 33800. Then if you made any charitable donations or gifts in 2024 (or in the preceding five years but haven’t yet claimed a credit for them), complete Schedule 9 and enter the resulting credit on line 34900. Add the two totals together to arrive at a credit total on line 35000 and transfer that to line 121 on page 7 of the return.
If you declared any dividend income on line 12000 or 12010, you can claim a dividend tax credit on line 40425 after completing the relevant section of the Federal Worksheet. Then come several other tax and credit items of possible relevance to some retirees, including the claim for advanced Canada Workers Benefit (line 41500, after completing Schedule 6), and you end up with a net federal tax figure on line 42000.
Refund or Balance Owing
Once you have a net income figure, you must add in EI and CPP premiums—lines 42100 and 42120, respectively—if you were self-employed in 2024, as well as social-benefits repayments from line 23500 on line 42400, and then complete your provincial/territorial return and enter the resulting tax figure on line 42800. (This is where a software program can be particularly valuable, because these returns can be almost as complex as the federal return, although they do use many of the federal figures.)
At this point, you’ll arrive at a total payable figure on line 43500, which is copied to line 148 of page 8. Tally up the amounts you’ve already paid (line 43700), along with certain other deductions such as the refundable medical expense supplement (line 45200), Canada Workers Benefit if applicable (line 45300), the Multigenerational Home Renovation Tax Credit (line 45355), tax already paid by instalment (line 47600), and provincial/territorial credits (line 47900). Then deduct the total of these items from your taxes and you arrive at the bottom line—a refund or balance owing figure on line 164.
Finally, make sure you sign and date the form, send it off, and you’re done for another year!
