Changes to your 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 pension (OAS) 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 – Retiring allowance (severance pay)

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 from a plan on your tax return.
Annuity payments Line 11500 – Annuity, pooled registered pension plan (PRPP), and registered retirement income fund (RRIF), including life income fund payments An annuity is a plan that makes payments to you on a regular basis. It might be a general annuity, a payment from a registered retirement income fund (RRIF), or a variable pension payment.
Pooled registered pension plan (PRPP) payments

Line 13000 – Other kinds of income

Line 11500 – Annuity, pooled registered pension plan (PRPP), and registered retirement income fund (RRIF), including life income fund payments

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 Form T1198, Statement of Qualifying Retroactive Lump-Sum Payment 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 kinds of income This can include payments from a trust or amounts from a retirement compensation arrangement.
Registered retirement income fund (RRIF)  Receiving income from a RRIF Earnings in a RRIF are tax-free and amounts paid out of a RRIF are taxable when you receive them. 

How to pay income tax or other additional tax

When you retire, you will have to pay tax with any of the following:

  • Tax withheld at source – If your main source of income is from a pension, you can have enough tax withheld at source to pay the tax you owe.
  • Paying your income tax by instalments – If you receive investment, rental, self-employment income, or certain pension payments, you may need to pay your income tax by instalments.
  • 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 may request a waiver from the CRA so that Service Canada could reduce the tax withheld at source.

How to reduce or defer the tax you owe

You may be able to reduce or defer some of the taxes you owe with any of the following:

  • Pension income splitting – You and your spouse or common-law partner can choose to split your eligible pension or superannuation income.
  • Carrying charges and interest expenses – You can claim carrying charges and interest you paid to earn income from investments.
  • Registered retirement savings plan (RRSP) – Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan.
  • Excess registered pension plan (RPP) contributions between 1976 and 1985 – You may have made current service contributions exceeding $3,500 in one or more years from 1976 to 1985 and you could not have fully deducted these excess contributions. Call the CRA at 1-800-959-8281 to help you calculate your deduction and claim these amounts.
  • Federal deductions, credits, and expenses – 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.
  • Provincial or territorial credits – You may be able to claim credits that are specific to your province or territory.

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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