Provincial and territorial tax credits

Himani Ediriweera

Every year when you prepare your taxes, you are responsible for calculating and paying provincial or territorial income tax as well as federal taxes. Always remember to claim all provincial and territorial tax credits to reduce your payable income tax. Much like their corresponding federal tax credits, these credits allow for significant savings.

Provincial and territorial tax credits are collected by the Canada Revenue Agency (CRA), except in Quebec, where it is collected by Revenu Quebec. You can easily find tax credit information, applicable to your location, through the CRA website. It provides you with a comprehensive breakdown of what you can claim. Each province and territory has its own tax form, so it’s critical you select the one that applies to you.

Below we will discuss some of the common provincial and territorial tax credits available to seniors.

Age Amount

Much like its federal counterpart, the Age Amount tax credit is a non-refundable credit available to individuals 65 years and older. It provides some tax relief for low- and middle-income seniors.

The income limit varies across Canada from as low as $52,600 in Manitoba to as high as $97,707 in Nunavut.

Pension Income Amount

If you reported eligible pension, superannuation or annuity payments, you might be able to claim the Pension Income tax credit. This non-refundable tax credit will help you reduce or eliminate a balance owing when it comes to income tax. The amount you can claim varies across Canada. Eligible income includes:

  • superannuation or pension funds
  • foreign pensions
  • a Registered Retirement Income Fund (RRIF)
  • annuity payments from a Registered Retirement Savings Plan (RRSP) 
  • a Deferred Profit Sharing Plan (DPSP)

Amounts Transferred

Transferring funds to the spouse or partner with the lower income can often help reduce or eliminate income tax owing. By sharing some, or all, of your non-refundable amounts, you can reduce your payable taxes. No funds are actually transferred — this just happens on paper.

Disability Amount (for self)

If you are eligible for the Federal Disability Amount (Self) you can claim it on your provincial or territorial worksheet. To be eligible for this credit, you must have a mental or physical impairment and be approved by a qualified physician.

Medical Expenses

As a rule, if you claimed Medical Expenses on line 330 of your federal return, you can also claim them on your provincial or territorial form. You can claim these expenses for you, your spouse or common-in-law partner or dependants. Medical Expenses are a non-refundable tax credit that help reduce or eliminate your income tax owing.

Make sure you carefully review all tax credits available in your province or territory. While similar to their corresponding federal credits, these have unique calculations and limits. Claiming these tax credits will help you save significantly on your taxes.