Taxes for people with noisy clocks

Nearly empty-nesting is weird. The kitchen, once a place for industrial ear protection (you think I’m joking…) is like a church basement on a Wednesday night after the janitor left.  There’s no pancake syrup on the door handles (which was secretly yummy).  No rice stuck to my socks, (not yummy) nor (vicious) Happy Meal toys killing the bottom of my feet. I can hear the cat snoring — from the other side of the house, and the kitchen clock thinks it’s late for something — clicking, persistently, a Dickens spirit riding the hour hand.

Our last remaining daughter, whatever her name is, tore herself away from her cats to join us for dinner tonight, which was very gracious of her. After stealing the last shrimp from the curry, she grabbed the massive furry hairball and said: “I know you’re fat and fluffy, but I still love you!”  

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Then, glancing at me she clarified: “Not you, dad, I was talking to the cat. I mean, I love you, but it’s a matter of priorities. There’s the cats, Mom, Sophie (her friend), and then all the other cats in the world. Then there’s all the kittens yet to be born, my art teacher, and then all the cats who have ever lived, then you, then dogs. So, you’re not last. And I still love you, but…” and then she skipped back downstairs.

And all I could hear was that stupid clock again. I think it’s probably time to update my photo for my brochure at work. False advertising rules and all.  

Old Age Security: 

OAS benefits are available to individuals who are age 65, and is determined by how long you’ve lived in Canada after age 18. You can postpone receiving your OAS payments for up to five years and in turn receive a higher OAS payment, but they stop paying you when you die, so...  

OAS is clawed back at a rate of $0.15 for every $1 of net income over $79,054 (this number moves up with inflation – like your age) and is fully clawed back once your net income reaches approximately $128,137. Prior year income is used to estimate your OAS clawback amount for the current tax year.  

If your income last year was uncharacteristically high due to a unique one-time taxable transaction (for example, a large severance payment after that unfortunate incident at the Christmas party we discussed last week), and your income this year should be substantially lower, you can submit a request to reduce the tax withheld on your future OAS pension payments. 

Canada Pension Plan (CPP):

If you’ve ever worked in Canada, you’re probably eligible to receive CPP. Payments are based on your past contributions and are not income-tested, although they are taxable. The default age to receive it is 65, but you can get a reduced amount as early as 60 or defer it to 70 and get a higher amount.  But again, it’s sort of a gamble against that old clock and as much a personal decision as financial. 

Pension income:

You may be entitled to receive a federal non-refundable pension income tax credit on the first $2,000 of eligible pension income you receive in the year. Eligible pension income includes, but is not limited to, life annuity payments from a pension plan and, (after age 65), withdrawals from your RRIF, LIF, RLIF, LRIF and Prescribed RRIF accounts.   

More next week. 

 

Mark Ryan is an Investment Advisor with RBC Dominion Securities Inc. (Member–Canadian Investor Protection Fund), and these are Mark’s views, and not those of RBC Dominion Securities. This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article. See Mark’s website at: http://dir.rbcinvestments.com/mark.ryan

 

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