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The deadline for filing taxes in Canada for 2026 is April 30. As the big day approaches, Globe Advisor and Globe Investor have teamed up to offer advice on how to maximize returns, find credits and avoid an audit. The full series can be found here.
Tax season is under way, and for Canadians transitioning into retirement, it can mark a significant shift in how their income is taxed. The Globe and Mail spoke with experts about how retirees can make the most of their tax returns this year.
Key changes
Before diving into strategies specific to retirees, a few broader changes are affecting all taxpayers this year.
The Carney government lowered the bottom marginal tax rate from 15 per cent to 14 per cent as of July last year. Because the reduction took effect midway through the year, the effective full-year rate for 2025 will be 14.5 per cent.
Since the lowest marginal rate is also used to calculate most non-refundable tax credits, some Canadians could see the value of those credits decline by more than they save from the rate cut. To offset that, the government introduced a temporary top-up that maintains the 15-per-cent rate for applicable non-refundable credits claimed above the lowest tax-bracket threshold. The measure will apply from the 2025 through 2030 tax years.
Split your pension
If one spouse or common-law partner earns considerably more than the other, up to 50 per cent of eligible pension income can be allocated to the lower-income partner, potentially reducing a household’s overall tax bill, said Faisal Karmali, senior wealth adviser at Popowich Karmali Advisory Group.
Eligible income may include payments from a registered retirement income fund (RRIF), an annuity, or other pension sources.
This can also help seniors avoid the Old Age Security (OAS) recovery tax, commonly known as the clawback. In 2025, retirees with an income above $93,454 are required to repay part of their OAS, with benefits reduced by 15 cents for every dollar earned over that threshold. For instance, if one partner earns $100,000 and the other earns $60,000, shifting $20,000 of pension income could bring both incomes to $80,000, below the clawback range.
Share your pension
Canada Pension Plan (CPP) benefits can also be shared between spouses or common-law partner. Similar to pension splitting, this allows couples receiving different benefit amounts to redistribute income. The Canada Revenue Agency determines the eligible portion based on how long the couple lived together during their working years, Mr. Karmali said.
Single seniors
Retirees without a spouse or partner don’t have access to the same income-splitting strategies, but they may still be eligible for a range of credits and deductions, including the disability tax credit and the home accessibility tax credit. Lower-income seniors may also qualify for the GST/HST credit, as well as provincial supports.
Turning an RRSP into an RRIF
Canadians must decide what to do with their registered retirement savings plans by the end of the year they turn 71, said John Waters, vice-president of tax consulting services at RBC Wealth Management.
Withdrawing funds directly from an RRSP can result in a substantial tax hit. To manage this, many retirees convert their RRSP into a RRIF instead.
RRIFs require minimum annual withdrawals, whether or not the income is needed. Because those withdrawals are considered pension income, up to 50 per cent may be split with a spouse or partner for tax purposes.
Pension income amount credit
Canadians aged 65 and older who receive eligible pension income may qualify for a federal tax credit on up to $2,000 of that income, said Daniel Dwyer, a tax partner at KPMG Canada. This can translate into as much as $300 in federal tax savings.
Those who do not yet receive pension income may consider converting a portion of their RRSP into a RRIF and withdrawing at least $2,000 annually in order to qualify for the credit.
Age amount credit
Individuals who were 65 or older at the end of 2025 and have a net income below $105,709 may be eligible to claim the age amount tax credit, Mr. Dwyer said. The amount available depends on income level. For those earning $45,522 or less, the maximum federal credit is $9,028.
Any unused portion of the credit may be transferred to a spouse or common-law partner. For example, if you only need $4,000 to reduce your own tax payable, the remainder could be applied to your partner’s return.
Claim medical and disability expenses
Medical expenses exceeding the lesser of 3 per cent of net income or $2,834 can be claimed, making it important to retain receipts for eligible costs.
Seniors may also be able to claim the home accessibility tax credit for renovations that improve mobility or safety, such as installing handrails or walk-in bathtubs. Up to $20,000 in qualifying expenses may be claimed.
For the 2025 tax year, you can “double dip” on these tax credits and claim one expense under both. For example, if you install a wheelchair ramp for a parent who is eligible for the disability tax credit, you can claim that expense as a home accessibility expense and a medical expense. However, starting in the 2026 tax year, you will no longer be able to claim the same expenses under both credits.
Those renovating to create a secondary unit for a senior or an adult with a disability could also qualify for the multigenerational home renovation tax credit, which covers up to $7,250 in eligible costs, Mr. Dwyer said.
The federal disability tax credit can further help individuals with disabilities, or their supporting family members, reduce the amount of tax owed, Mr. Karmali added.
Foreign pension income
Retirees receiving pension income from another country should review whether a tax treaty exists between Canada and that jurisdiction that may allow for a reduced withholding rate or exemption, Mr. Dwyer said. A foreign tax credit may also be available for taxes paid abroad.
Looking ahead
Once this year’s return is filed, retirees should already be thinking ahead, Mr. Karmali said.
“The biggest mistake I see is people waiting until tax season to start planning,” he said. “Canadians are planning for 2025 in 2026, when they should really be planning for 2026 now.”