Taxes when you retire or turn 65 years old

Types of income you may receive when you retire or turn 65 years old

Here are the most common types of income you may start to receive and have to include on your tax return. This list is not exhaustive.

Most common types of income
Type of income How to include it on your tax return Details
Old age security (OAS) pension Line 11300 – Old age security (OAS) pension The OAS pension is a monthly payment available to most Canadians age 65 or older.
Canada Pension Plan (CPP) or Québec Pension Plan (QPP) benefits Line 11400 – CPP or QPP benefits CPP or QPP provides you or your family with partial replacement of earnings when you retire.
Retiring allowance

Line 13000 – Other Income: Retiring allowance

Retiring allowance is an amount you may receive, for example, on or after retirement from office or employment in recognition of long service.
Other pensions and superannuation Line 11500 – Other pensions and superannuation You may get a pension from a Canadian or foreign pension plan.
Registered retirement savings plan (RRSP) income Line 12900 – Registered retirement savings plan (RRSP) income You may have to include the payments or transfers from a plan on your tax return.
Registered retirement income fund (RRIF) 

Line 11500 – Other pensions and superannuation: Payments from annuities, pooled registered pension plan (PRPP), and registered retirement income fund (RRIF), including life income funds

Line 13000 – Other income: Other kinds of income

You may have to include the payments or transfers from a plan on your tax return.
Annuity payments Line 11500 – Other pensions and superannuation: Payments from annuities, pooled registered pension plan (PRPP), and registered retirement income fund (RRIF), including life income funds An annuity is a plan that makes payments to you on a regular basis. It might be a general annuity, a payment from a RRIF, or a variable pension payment.
Pooled registered pension plan (PRPP) payments

Line 11500 – Other pensions and superannuation: Payments from annuities, pooled registered pension plan (PRPP), and registered retirement income fund (RRIF), including life income fund

Line 13000 – Other income: Other kinds of income

How to include this payment on your tax return depends on your situation. For example, PRPP payments may only be considered pension income if you are 65 or over.
Retroactive lump-sum payments Line 13000 – Other income: Lump-sum payments
You may receive lump sum payments from another source, such as benefits from a superannuation or pension plan. You can ask the Canada Revenue Agency (CRA) to tax the parts for previous years as if you received them in those years.
Other kinds of income Line 13000 – Other income: Other kinds of income This can include payments from a trust or amounts from a retirement compensation arrangement.

How to pay income tax or other additional tax

There are several ways to pay your income tax or other additional tax:

  • Tax withheld at source – Generally, taxes are withheld from your pension income, but you may have to pay additional tax when you file your tax return. You can request additional taxes be withheld at source to lower the tax you owe when filing your tax return. For more information, see Do you end up having to pay income tax when you file your tax return every year?
  • Paying your income tax by instalments – If you receive investment, rental, or self-employment income, or certain pension payments, you may need to pay your income tax by instalments. For more information, see Required tax instalments for individuals
  • Social benefits repayment – You may have to repay all or a part of your old age security (OAS) pension (line 11300) or net federal supplements (line 14600) when you file your tax return if your income exceeds a yearly threshold. If that is the case, a recovery tax will be deducted by Service Canada from your OAS benefits. You can request a waiver from the CRA to have Service Canada reduce your income tax withheld at source if you estimate that your income for the current year will be substantially lower than the previous year. For more information, see Line 23500 – Social benefits repayment: Old age security (OAS) benefits repayment

How to reduce the tax you owe

You may be able to reduce your tax payable by taking advantage of a number of deductions or tax credits that may be available to you:

  • Pension income splitting – You and your spouse or common-law partner can choose to split your eligible pension or superannuation income
  • Line 22100 – Carrying charges, interest expenses, and other expenses – You can claim carrying charges and interest you paid to earn income from investments
  • Registered retirement savings plan (RRSP) – Deductible RRSP contributions can be used to reduce the tax you owe
  • Excess registered pension plan (RPP) contributions between 1976 and 1985 – If you made current service contributions exceeding $3,500 in one or more years from 1976 to 1985 that you could not deduct, call the CRA at 1-800-959-8281 to help you calculate your deduction and claim these amounts
  • Non-refundable tax credits, such as the age amount, the pension income amount, and the amounts transferred from your spouse or common-law partner reduce the amount of income tax you owe. For more information, see Non-refundable and refundable tax credits
  • Provincial and territorial deductions and tax credits – You may be able to claim deductions and tax credits that are specific to your province or territory. For more information, see Provincial and territorial tax and credits for individuals

How your taxes are affected when living abroad

Find out the different tax obligations regarding retirees and seniors who live outside of Canada.

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