Accounting for retirees & pre-retirees.

Questions worth getting ahead of

• Knowing which pension income is eligible for the pension income amount
• Deciding whether pension income splitting helps your household
• Estimating whether OAS recovery tax could apply
• Reporting the sale of a home or investments correctly
• Understanding how RRIF and RRSP income appears on your slips

Check which retirement income counts as eligible pension income

Not every retirement payment qualifies for the pension income amount. The CRA lists lifetime pension benefits from a registered pension plan and certain annuity payments among those that can qualify. Canada Pension Plan and Old Age Security benefits, retiring allowances and death benefits do not. RRIF income generally qualifies only once you are 65 or older, unless it was received because your spouse or common-law partner died. For 2025 the CRA shows the federal claim as the lesser of $2,000 and your eligible pension income. Bring your T4A, T4RIF and T4RSP slips so each amount can be matched to the right line.

Weigh pension income splitting as a household decision

If you and your spouse or common-law partner both lived in Canada at the end of the year, you may be able to elect to split eligible pension income by completing Form T1032. The CRA says only one joint election can be made for a tax year, the information on both forms must match, and the form must be filed by the filing due date. Whether splitting helps depends on both incomes, other credits and benefits that depend on net income, and which of you receives the pension. Bring both spouses’ expected income for the year so options can be compared before filing.

Estimate OAS recovery tax before the slip arrives

If your net income after certain adjustments is above the repayment threshold, you may have to repay part or all of your Old Age Security pension. For 2025 the CRA shows that threshold as $93,454 on the line 23500 page. Any recovery tax withheld appears in box 22 of your T4A(OAS) slip and is claimed on the return rather than deducted as a repayment. If you expect much lower income next year, Form T1213(OAS) lets you ask the CRA to reduce the amount withheld at source. A large RRIF withdrawal or a taxable gain can push income over the line, so raise those plans early.

Report the sale of a home or investments carefully

When you sell your home, the CRA says that if it was solely your principal residence for every year you owned it, you do not pay tax on the gain. You still report a sale of a property that was ever your principal residence on Schedule 3, with Form T2091(IND). Gains on investments and second properties are reported on Schedule 3 as well. The CRA’s what’s new page notes that the proposed increase in the capital gains inclusion rate, from one-half to two-thirds, was cancelled. Keep purchase records, renovation invoices and your adjusted cost base calculations, and bring the sale dates to a conversation about timing.

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