TaxTips.ca - Pension income tax credit - what is eligible income?

TaxTips.ca Canadian Tax and Financial Information	Eligible Pension Income	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. Copyright © 2012
Looking for US tax information? See USTaxTips.net

List your firm for free in the TaxTips.ca Business Directory.

Need an accounting, tax or financial advisor? Look in the TaxTips.ca Business Directory.

Filing Your Return -> Pension income tax credit -> Eligible pension income and qualified pension income

Income Tax Act s. 118(3), 118(7)

What income qualifies as eligible pension income for purposes of the pension income tax credit?

For taxpayers who are 65 or older in the year (pension income):

	life annuity payments from a superannuation or pension plan, including life income funds (LIFs) and locked-in retirement income funds (LRIFs)
	payments from a RRIF, which includes life income funds (LIFs) and locked-in retirement income funds (LRIFs)
	annuity payments from an RRSP or from a deferred profit sharing plan (DPSP)
	certain payments on the termination or winding-up of a DPSP
	regular annuities and income averaging annuity contracts (IAAC) reported in box 24 of a T4A or box 19 of a T5

For taxpayers who are less than 65 for the entire year (qualified pension income):

	life annuity payments from a superannuation or pension plan
	payments from a RRIF, or annuity payments from an RRSP or from a DPSP, which have been received as a result of the death of a spouse or common-law partner.

Foreign pensions which are reported on line 115 of your tax return may qualify as pension income, except

the portion of foreign pension which is tax exempt due to a tax treaty, and can be deducted from income on line 256 of the tax return

see the Canada Revenue Agency topic Line 256 - Income exempt under a tax treaty, and the web page on Tax treaties.

income from a U.S. individual retirement account

Tax Tip: If you have pension or annuity income which is reported on line 115 or 129 of your tax return, it may qualify for the pension income tax credit and, starting in 2007, for pension splitting with your spouse.

Income that does not qualify as pension income for the pension income tax credit:

	Old Age Security or Canada Pension Plan benefits
	Quebec Pension Plan or Saskatchewan Pension Plan benefits
	death benefits
	retiring allowances
	RRSP withdrawals other than annuity payments
	payments from salary deferral arrangements, retirement compensation arrangements, employee benefit plans, or employee trusts

Also see the Canada Revenue Agency (CRA) web page on Line 314 Pension income amount, which includes a section where you can answer questions to determine if you are eligible to claim the pension income tax credit.

Back to Pension Income Tax Credit

Revised: February 02, 2012

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.
See our Business Directory for tax, accounting and finance-related firms in your area.
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.