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The Companion Advisor:
Taxes & EstatesNew tax breaks for seniors Provided by The Institute of Chartered Accountants of
Ontario If you were 65 years of age or older on December 31, 2006, you may be eligible for new tax breaks. As of January 1, 2006, the maximum federal age amount credit increased from $4,066 to $5,066, says Bill Hyde, CA, a Partner with Millard, Rouse and Rosebrugh LLP in Brantford. "If your net income for 2006 was less than $64,043 you can claim some portion of this amount; if your net income was less than $30,270 you can claim the full $5,066." The federal pension income credit has also increased. "Before 2006, you were able to claim a credit on the first $1,000 of eligible pension or annuity income," explains Anne Chun, CA, of North York. "Under proposed legislation, the maximum amount of eligible pension income that can be used to calculate the credit has doubled to $2,000." Another tax change that will benefit some seniors is the new non-refundable federal tax credit for transit users. "You can claim the cost of monthly transit passes purchased after June 30, 2006," says Chun. "You can also claim passes of longer duration, such as an annual pass." The Ontario pension and age credits were not increased for 2006 (except to meet the cost of inflation), and Ontario did not introduce a transit pass credit. Tax planning is important, but it's not the only type of financial planning to consider. Before you become a senior you should undertake a comprehensive review of your finances to see if your retirement plans are realistic," advises Hyde. "Too often, people tend to overestimate their retirement income and underestimate the amount of capital required to support their lifestyle, their longevity and the cost of health care required to deal with a catastrophic event." Seniors should also have wills, keep them up to date and appoint a power of attorney for their finances and for personal care. Seniors who are widowed or who go through other major life events often don't review their situation to see what changes should be made to wills and other documents and plans," says Chun. Investments should also be reviewed on a regular basis. "Seniors often fail to adjust their investment strategies over time," says Hyde. "They can get lulled into chasing returns or tax savings that are contrary to prudent investing principles." If you are a senior, a Chartered Accountant can help you in a variety of ways. Some seniors with modest or low incomes think they don't need to have a plan, but they need one as much as or more than seniors with higher incomes," says Chun. "A CA can work with you and your family to develop a plan, no matter what your circumstances." Notice:
Fiscal Agents Financial Services Group are not engaged in rendering tax, accounting
or legal professional services or advice. The comments in this article are not
intended, nor should they be relied upon, to replace specific professional advice.
Before acting on material contained herein. Readers should seek advice that
is appropriate to their personal circumstances from a professional advisor.
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, Fiscal Agents Money Management Newsletter
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