Canada Pension Income Amount – Who is Eligible and How Can You Receive CAD 2000 Pension Income Amount?

If you reported qualified pension, superannuation, or annuity payments on your return, you may be eligible to claim up to CAD 2,000 of your federal pension income amount. This non-refundable tax credit allows you to lower your tax liability. Pension Income Amount is not available for benefits like Old Age Security (OAS) or the Canada Pension Plan (CPP).

Even though there are not many tax benefits from the credit, being qualified for it affects some tax-saving options, such pension income splitting. As more couples choose this technique, their tax planning centers around the amount of pension income. So check this page for Pension Income Amount, What is Pension Income Amount? and Who is Eligible for CAD 2000 Pension Income Amount.

Canada Pension Income Amount

There are some tax credits that we may apply for once we turn 65 in Canada. Although the amount of tax savings from these credits varies, they generally assist in reducing the income tax owed by those over 65 and can be particularly beneficial in lowering retirement-related taxes. You can apply for the Pension Income Tax credit if you are 55 years of age or older. In essence, it allows you to deduct a tax credit equivalent to the lesser of CAD 2,000.00 or your pension income from the taxes that must be paid.

Depending on the province in which you reside, this converts into annual real tax savings of $440 to $720. The pension income tax credit cannot be carried over annually and is not refundable. The highest federal tax savings attainable is CAD 300 per year, given the federal tax credit rate of 15%. Additionally, there are pension income levels for provinces. Only if you are in the lowest tax category will you be able to claim the first CAD 2,000 of your pension income tax-free.

OAS Changes in 2024

Canada Pension Increase 2024

OAS Increase 2024

CPP Benefits Increase 2024

Who is Eligible for CAD 2000 Pension Income Amount

For taxpayers who are 65 or more:

  • Income from a pension or SP
  • Benefits of a Registered Retirement Plan (RPP) for life
  • Income from a Registered Retirement Income Fund (RRIF)
  • Income from the Deferred Profit Sharing Plan (DPSP)
  • Income from a Registered Retirement Plan (RRSP)
  • Benefits of the Employee Benefit Plan (EBP)
  • Regular annuities and ESPI
  • Pension benefits that change
  • Foreign pension income, unless it comes from a United States individual retirement account or is tax-free in Canada due to a tax treaty

For taxpayers who are less than 65:

  • Payments from a superannuation or pension plan for life annuities
    payments received as a consequence of the death of a spouse or common-law partner
  • since tax year 2010 annuity payments from the Saskatchewan Pension Plan (SPP) or payments from an RRIF, or annuity payments from an RRSP or from a DPSP
Canada Pension Income Amount - Who is Eligible and How Can You Receive CAD 2000 Pension Income Amount?

PIA: Eligible Pension and Annuity Income?

Income Slip/FormLine Number
Regular annuities and IAACT5Line 11500
RPP lifetime retirement benefitsT3Line 11500
ESPIForm T1032Line 11600
Variable pension benefitsT4ALine 11500
DPSP incomeT4ALine 11500
RPP lifetime retirement benefitsT4ALine 11500
RRSP incomeT4RSPLine 12900
Regular annuities and IAACT4ALine 11500
RRIF incomeT4RIFLine 11500
EBP benefitsT4ALine 11500
Foreign pensionsLine 11500

How to Calculate Pension Income Amount

You will use a worksheet to fill out Line 31400, Pension income amount, to determine how much of the pension income amount you may claim. Then, on line 31400 of your T1 return, you will put the amount on line A or CAD 2,000, whichever is smaller. You will be entitled to the Pension Income Amount in the event that you are able to share it.

With the exception of the Retirement Compensation Arrangement (RCA), which is issued in the form of a T4A-RCA slip, you may often share your pension income with your spouse or common-law partner when completing your tax return if you get annuity payments (periodic payments).

CPP Payment 2024 Dates

CRA Payment Dates December 2023

CPP Inflation Increase 2024

CPP Payment Increase 2024

How much can you claim?

  • There is a 15% federal tax credit rate.
  • The most that may be saved on federal taxes is CAD 300. This is predicated on the capped rate of CRA 2,000 × 15%.
    Additionally, there are pension income levels for provinces.
  • Lower tax bracket: If a client is in the lowest tax bracket, they are eligible to claim and receive the first CAD 2,000 of their pension income tax-free.
  • Higher tax bracket: They will pay a lower rate of tax on their pension income if they are in a higher tax bracket.

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