The Cost of Senior Care

As we age, medical bills can become costly. But having the ability to claim the amounts that you haven’t been reimbursed for on your tax return can help defray those costs. You may not realize that you can claim various types of medical expenses including prescriptions, doctor appointments and even devices like CPAP machines and hearing aids. Always retain receipts as proof is needed for claims. Learn more with the CRA’s comprehensive list of medical costs to see which are deductible. 

Canadians who are 65 and older receive the Old Age Security (OAS) pension to make retirement easier financially. This monthly award sent from the government is determined by the amount of time you’ve lived in Canada during your adult years.  For older adults whose income is greater than a specific amount (in 2022, it was $81,761), they may need to pay back a portion of their OAS pension to the government. This threshold will change each year. This is considered the OAS Pension Recovery Tax  also known as the OAS Clawback.  

There are ways to decrease the amount needed to pay back including: 

• Steering clear of capital gains before retirement 
• Dividing pension with your spouse
• Using a TFSA for income generation that does not get taxed 

You are able to claim up to $2,000 as a credit when filing, if you’ve reported eligible pension income on: 

• Line 11500
• Line 11600
• Line 12900

Eligible income includes payments from an RRSP, pension, annuity income from a pension or superannuation plan or money from splitting your spouse or common-law pension. Consider sharing your pension with a spouse, as this ability to shift pension income allows families to pay lower tax. 

Those home improvements you’ve made to bring accessibility to your home will allow you to apply for the Home Accessibility Tax Credit (HATC). By adding wheelchair ramps, installing a stair lift or widening doorways, you can claim up to $10,000 in expenses for this non-refundable credit. Family members who have made these upgrades to their home to support a senior citizen who lives with them can claim this on their refund as well. 

When you’re in a situation where you’re earning the most money, RRSPs can help defer your income as the money you contribute and earn has protection from taxes until you withdraw it.  Pick the right options when establishing it to keep your tax expenses low and generate more money at the time of retirement.  Generating the optimum retirement income is dependent upon when you retire, how much your RRSP is valued and additional retirement income you anticipate.  You can convert your RRSP into income by:

• Taking money from the RRSP as needed
• Buying an annuity
• Establishing a Registered Retirement Income Fund (RRIF)

Seniors are able to utilize provincial tax credits based on lifestyle or ease of living improvements made this year.  It is important to know which ones you are entitled to, based on where you reside. 

The Seniors’ Home Safety Tax Credit is one such credit for households in Ontario with a resident aged 65 or older. This credit will help with purchases that enhance the safety of a home, including walk-in bathtubs, non-slip flooring, shower handrails and even automatic garage door openers. Those eligible can claim 25% of up to $10,000 in expenses purchased, with a cap at $2,500. 

If you have a property with a value assessed over $1,975,000 and an adjusted net income of $32,000 or less, including your shared-income partner’s income, may qualify for the Home Owners Grant for Seniors. 

For older adults in British Columbia, the Low Income Grant Supplements for seniors reduces how much an adult over 65 will pay toward property tax.   

Staying on top of the current tax credits that older adults are eligible for in Canada can help to ensure that valuable opportunities are not missed when filing annual tax returns.