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Eligible Pension Income

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Filing Your Return -> Pension income tax credit -> Eligible Pension Income and Qualified Pension Income
Income Tax Act s. 118(3), 118(7)

Eligible and Qualified Pension Income for the Pension Tax Credit

Eligible Pension Income

For taxpayers who are 65 or older in the year:

bullet life annuity payments from a superannuation or pension plan, including life income funds (LIFs) and locked-in retirement income funds (LRIFs)
bullet payments from a RRIF (non just minimum withdrawals), which includes life income funds (LIFs) and locked-in retirement income funds (LRIFs)
bullet annuity payments from an RRSP or from a deferred profit sharing plan (DPSP)
bullet certain payments on the termination or winding-up of a DPSP
bullet regular annuities and income averaging annuity contracts (IAAC) reported in box 24 of a T4A or box 19 of a T5
bulletsince tax year 2010, annuity payments from the Saskatchewan Pension Plan (SPP)

Qualified Pension Income

For taxpayers who are less than 65 for the entire year:

bulletlife annuity payments from a superannuation or pension plan
bullet 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
bulletsince tax year 2010, annuity payments from the SPP

The June 4, 2014 Quebec Budget announced that taxpayers under 65 would no longer be able to split pension income for provincial income tax purposes, as of January 1, 2014.

Foreign Pension Income

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

bullet 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
bullet see the Canada Revenue Agency topic Line 256 - Income exempt under a tax treaty, and the web page on Tax treaties.
bullet 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, since 2007, for pension splitting with your spouse.

Income Not Eligible for Pension Tax Credit

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

bullet Old Age Security or Canada Pension Plan benefits
bullet Quebec Pension Plan benefits
bullet death benefits
bullet retiring allowances
bullet RRSP withdrawals other than annuity payments
bullet 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: March 01, 2016

 

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