news&views Winter 2023 | Page 31

Ray Hoger | Chair , Pension & Financial Wellness Committee , ARTA

One of my favourite financial websites is Boomer & Echo , which provides financial information for all ages and stages . A guest post in February 2023 by Mark McGrath , a financial advisor in British Columbia , provided ways to save taxes in retirement . Here are five of his suggestions .

The easiest way to save on taxes is to claim the pension income tax credit , assuming you have a pension income and are over the age of 65 ( or under 65 and receive an annuity because of the death of your spouse ). Pension income excludes your Registered Retirement Income Fund ( RRIF ), foreign source pension income , Canada Pension Plan ( CPP ) benefits , Old Age Security ( OAS ), and retiring allowances . Your accountant or tax professional can provide the specifics .

If you have a Registered Retirement Savings Plan ( RRSP ), you will convert it to a RRIF by the age of 71 . You must take out a minimum amount from the RRIF each year : four per cent of its value at age 65 but 5.4 per cent at age 72 ( the percentage increases until age 95 ). You can use the younger spouse ’ s age to calculate the minimum withdrawal to extend the life of the RRIF , but once you select the age for withdrawal purposes , you can ’ t change it .

Pension income splitting with a spouse is another area of potential savings . If one spouse has a significantly higher pension than the other , you can move up to fifty per cent of eligible pension income to the lower income spouse . ( The split amount can be different every year .)

CPP benefits can ’ t be split , but they can be shared . To qualify , you must be living with your spouse and one of you must be receiving CPP . If only one of you contributed to CPP , you can share one pension . If you both contributed to CPP , you both may receive a share of both pensions , based on the number of months you lived together during your joint contributory period . This is not a simple tax form adjustment , and the information is deeply buried in the Canada . ca website ( see link in circle ).

Apply to share CPP benefits using your My Service Canada Account or by sending certified copies of the CPP Sharing form to Service Canada . If you are eligible , the sharing begins . The amounts revert to previous values on request , divorce , or the death of one spouse .

Either spouse may claim the family ’ s medical expenses . ( Remember , ARTA benefit plan premiums are considered a medical expense .) You can claim the total eligible expenses minus the lesser of $ 2,479 ( for 2022 ) or three per cent of your net income . The spouse with the lower net income should claim all medical expenses , since three per cent of a lesser amount would result in a larger tax credit .

Seek professional advice from a tax specialist to legally minimize your taxes . Some of these ideas might be a surprise , but a tax professional can tell you if they apply to your situation .

Ray Hoger is quick to remind you that he is a retired professional teacher with an interest in financial issues , not a financial expert !

To learn more about

CPP Sharing , visit :

bit . ly / 49rAyeH

Young RRIF Recipes

Pension Splitting Soups

CPP Sharing Snacks news & views WINTER 2023 | 31