The age tax credit in Quebec is a non-refundable tax credit designed to assist individuals aged 65 and over. It offers a reduction in taxes for those with modest incomes. Learn more about how it works, the eligibility conditions, and the amount you could be entitled to.
What is the age tax credit?
The age tax credit is designed to reduce the tax burden on seniors with low or middle incomes. It aims to provide financial support to the elderly, considering their income and financial situation. Its goal is to enhance the economic well-being of seniors by allowing them to retain a larger portion of their income.
Am I eligible for this tax credit?
To be eligible for the age tax credit, you must:
- Be 65 or older by December 31 of the tax year,
- Be a resident of Quebec,
- Your eligibility for the credit, as well as the amount you are entitled to, depends on your net income. This credit is reduced as net income exceeds a certain threshold.
What is the amount of this tax credit?
The age tax credit is based on a fixed amount that is adjusted annually. For 2023, the base amount was $2,379. The credit is gradually reduced if your net income exceeds a certain threshold. For 2023, this threshold was $39,780. The credit is reduced by 18.75% for every dollar above this threshold. Therefore, the amount may be partially or fully reduced depending on income.
The age tax credit is also capped. If your net income is too high (above a certain ceiling), you will likely not be eligible. This ceiling is around $67,000, but this figure may vary each year.
How to claim the age tax credit in Quebec?
The age tax credit is claimed when filing your income tax return. It is automatically calculated by Revenu Québec based on the information you provide regarding your net income and age.
The credit typically appears on Schedule B of your income tax return (Non-Refundable Tax Credits).
Transfer of the tax credit
If you do not have enough taxes payable to use the entire age tax credit, you can transfer the unused balance to your spouse. This can be especially useful to maximize the tax benefits within a couple.
Interaction with other tax credits
The age tax credit is often used in combination with other non-refundable tax credits, such as the basic personal amount and the pension income credit, to further reduce taxes payable.
It may also affect benefits such as the Guaranteed Income Supplement (GIS), a federal benefit for low-income seniors, by reducing the taxes payable on already modest incomes.
Some practical examples
- Senior with modest income:
A 70-year-old person with a net income of $30,000 would benefit from the full age tax credit of $2,379. Since their income is below the reduction threshold of $39,780, their tax credit would not be reduced, significantly lowering their taxes payable.
- Senior with average income:
A senior with a net income of $50,000 would see a reduction in the credit. The income exceeding the threshold of $39,780 is $10,220. Applying the reduction rate of 18.75%, this represents a reduction of about $1,917. The tax credit would thus be reduced to $462 ($2,379 – $1,917).
- Senior with high income:
If the senior has a net income of $60,000, the amount above the threshold is $20,220. At 18.75%, this would result in a reduction of $3,791, which exceeds the maximum credit amount of $2,379. Therefore, this senior would not be eligible for the tax credit, as it would be entirely eliminated.
Get help with your tax planning
As you can see, the age tax credit in Quebec is an important tool for reducing taxes for individuals aged 65 and over. The amount depends on your net income, and it can be transferred to a spouse if not fully used.
By understanding how this credit works and incorporating it into a broader tax strategy, seniors can ensure they maximize the benefits offered by Quebec’s tax system.
If your financial situation is complex, do not hesitate to consult a tax advisor to optimize the use of this tax credit and coordinate it with other deductions or credits.
