Ads
keep this website free for you. TaxTips.ca does
not research or endorse any product or service appearing in
ads on this site.
Before making a major financial decision you
should consult a qualified professional.
The age amount tax credit is a non-refundable tax
credit, claimed on line 30100 of the personal income tax return. This tax credit
is available to individuals who are,
at the end of the taxation year, aged 65 or older. The federal age amount
for 2023 is $8,396 ($8,790 for 2024).
The tax credit is calculated using the lowest tax rate (15%
federally), so the maximum federal tax
credit for 2023 is $1,259 ($1,319 for 2024).
Provincial Age Amount Tax
Credits
Each province except Quebec has an age amount tax credit
which is calculated in the same manner as the federal age amount tax credit
The Quebec tax credit
calculation is similar to the federal calculation, but combines the credits for taxpayer and spouse in
the same calculation, and uses family income in the calculation. The
Quebec tax credit is calculated on Schedule B. The age amount, amount for a person living alone, and amount for retirement income are calculated on this form.
The clawback for these combined tax credits is calculated based on family income. All or part of the net amount of the tax credit can be claimed on the spouse’s tax return.
Age Amount Clawback
The age amount is reduced (clawed
back) by 15% of
income (net income from line 23600 (line 236 prior to 2019) of your tax return) exceeding a threshold amount of
$42,335 for 2023 ($44,325 for 2024),
and is eliminated when income exceeds $98,308 for 2023 ($102,925 for 2024).
Each province has different thresholds for calculating the age amount
clawback. See the tables of
most non-refundable personal tax credits for applicable
clawback thresholds for each province and territory except Quebec.
We'll do an example of the age amount tax credit calculation
for someone earning in excess of the threshold amount, for the federal and
Ontario tax credits. Keep in mind that the maximum tax credit for 2023 is
$1,259 federally, $293 for Ontario.
Year
2023 Federal
2023 Ontario
Age amount
$8,396
$5,793
Net income for tax purposes (line 236)
$50,000
$50,000
Less threshold
42,335
43,127
Excess
7,665
6,873
Deduct 15% of excess
1,149.75
1,030.95
Age amount
$7,246.25
$4,762.05
Federal 15% tax credit / Ontario 5.05%
$ 1,086.94
$ 240.48
If the individual claiming this credit cannot utilize the
entire amount before reducing taxes to zero, the unclaimed amount can be
transferred to the spouse. This is done by completing Schedule 2 of the
tax return. This would happen automatically if using tax software.
Capital Losses Carried Forward Don't Reduce Clawbacks
Note that an age amount clawback (as well as an OAS
clawback) can be triggered by capital gains, even if the capital
gains are offset by capital losses carried forward. This is because the
age amount tax credit is based on line 23600 (line 236 prior to 2019) of the tax return, net income for
tax purposes. Losses carried forward are deducted after this on the tax
return. See our article on how to calculate Total
Income For Tax Purposes, Net Income For Tax Purposes, and Taxable Income.
Taxpayer Death in Year of 65th Birthday
If an individual dies before their birthday
in the tax year in which they would have turned 65, no age amount tax
credit can be claimed on their behalf.
Gain From Surrender of Property to Creditor
If an individual who is eligible for the age amount tax
credit has income from a gain from a surrender of property to a creditor
regarding settlement of debt on certain foreclosures, repossessions and
similar transactions (Income Tax Act s. 79), then
that income is excluded from net income for tax purposes in the age amount
calculation. This is complicated, so a tax professional should be
consulted.
Facebook
| Twitter
| See What’s New, stay
connected with TaxTips.ca by RSS or Email
The information on this site is not intended to be a
substitute for professional advice. Each person's situation differs, and
a professional advisor can assist you in using the information on this web
site to your best advantage.
Please see our legal
disclaimer regarding the use of information on our site, and our Privacy
Policy regarding information that may be collected from visitors to our
site.