Recent Changes Affect Seniors in 2006 and 2007

Winnipeg, MB.

In its October 31, 2006 press release the Department of Finance announced that the Age Amount for 2006 was increased by $1,000 to $5,066. As a result of this increase, the Age Amount is not fully clawed back until net income reaches $64,043.

Also on that date, it was announced that a taxpayer will be allowed to split qualifying pension income with a spouse or common-law partner, starting in 2007. Qualifying pension income is income that would qualify for the $2,000 Pension Amount credit. While the amount that any particular couple will save as a result of this change will depend on their respective incomes, it is clear that this provision will save tax for low- and moderate-income seniors.

The decision of how much pension income to split (up to half is permitted) is to be made annually, and will require the consent of both spouses.

This changes are being made to compensate seniors, in part, for the impact of the change in the taxation of SIFT’s on their retirement incomes and on the values of their retirement portfolios.