Here’s how tax planning changes once you retire

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She says Canadians need to be more strategic in the decumulation stage of life to minimize their taxes not just from year to year but for the longer term, while also factoring in tax changes. An example is the increase in the capital gains inclusion rate, proposed in the latest federal budget, which could impact business owners and people selling investment properties and businesses.

“Your tax picture changes depending on your age, what income phase you’re in, and your income sources,” he says.Many Canadians who retire before 65 receive income from workplace pensions, RRSPs and non-registered accounts . “Even though we’re technically triggering more taxes today, more strategic planning can help lower your overall lifetime tax bill. A little forward-thinking planning will help later on.”

“Our general advice is if you can defer, you should,” Mr. Golombek says, noting that CPP benefits are also taxable and need to be factored into the decision of what income to take when in retirement.The age amount tax credit is a non-refundable tax credit available to individuals 65 and older. The federal age amount for 2023 is up to $8,396, which, combined with the pension tax credit, is about $10,000 a year, or roughly $1,500 in reduced taxes, Mr. Winkelmolen says.

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