Every person in Canada over the age of 65 is entitled to deduct from their annual tax bill a federal tax credit that is equal to 16% of the pension income actually received, or $1,000, whichever is the lesser amount. This federal tax credit is further enhanced by provincial tax credits. The amount of the provincial tax credit available to you will vary by the province in which you reside, and can range from 6.05% in Ontario and B.C. to 20% for residents of Quebec. For example, a provincial tax credit of 10% would increase the amount of tax saved from $160 (16% x $1,000) to $260. To claim the tax credit, you must be receiving qualified sources of income as defined by the CRA.
