Easing the Burden of Taxes - December 2005

With old age comes wisdom, though this may not apply to all subjects. Knowing what can and cannot be claimed on your income taxes takes a lot of research. While you may be receiving deductions on some of the more common claim categories, there are some income tax amounts for those over 65 (or more likely to apply to seniors) which you may not be taking full advantage of.

Income Splitting
This is applicable to couples with a large discrepancy between incomes earned in retirement. If one spouse is earning considerably less than the other, transferring a portion of income from the higher earner to the lower, enters the donor into a lower tax bracket. This is a simple way to reduce tax rates when one spouse had not previously been claiming any annual income.

Charitable Donations
By donating funds to a registered Canadian charity, you receive tax credits. While it is a good idea to donate regardless of tax credits, keep in mind that donating more than $200 to your charity of choice, you are eligible for more tax credits - 29% of your donation as opposed to only 16% when donating less than $200. Though the maximum donation amount is 75% of your income, the allowance for the year of and year preceding death is 100% of income - a good option if you'd like to protect your beneficiaries from paying taxes on large estate amounts.

Old Age Security Pension
Canadians over the age of 65 can apply to receive these payments. Requirements for eligibility are listed below from the Canadian Department of Social Development:

	People living in Canada
			You are 65 years of age or older
			You live in Canada and are a Canadian citizen or a legal
			resident at the time your pension is approved
			You lived in Canada for at least 10 years after reaching age
			18

	People living outside Canada
			You are 65 or older
			You left the country and you were a Canadian citizen or a
			legal resident of Canada when you left
			You lived in Canada for at least 20 years after reaching age
			18

If you do not fall into either of these two categories, you may still qualify for a pension since Canada has social security agreements with many countries. To see if you do qualify, contact your Rice Financial branch associate.

Disability Tax Credit
While you may be solid in mind and spirit, your back and legs may not be quite what they used to be. To help those who have difficulty performing everyday tasks either through physical or mental difficulty, there is a tax credit available. A T2201 Tax Credit Certificate form must be filled out before claiming the credit and the disability must be certified by a medical doctor. However, if the full disability credit cannot be claimed by one individual, the remaining credit can be passed to a spouse or common law partner.

Tax Credits for a Dependent Grandchild
The world works in mysterious ways and while you may have been a parent in your thirties, it is not uncommon to find children being raised by their grandparents who are well into their sixties. Though not applicable to a couple raising a child, there is a tax credit available to those who are individually raising their underage grandchild or an eligible dependent. There are a few conditions for entitlement to this particular credit, so speak with your Rice Financial associate to see if you qualify.

Though it is sometimes difficult to welcome aging with open arms and an open mind, you should take advantage of this time. There are perks. Specific tax credits and deductions are available now to you that would not have been applicable before. Pass on something more to your family than memories and heirlooms-show them how to successfully manage their estate