Retirement makes your return more complicated, not less.

How this works, practically

A good deal of accounting has moved online, and much of the time that suits people. It does not suit everyone, and preferring to do things another way is a preference rather than a problem to be solved.

Some other things worth saying out loud, because people ask and are sometimes embarrassed to:

• The telephone is a perfectly good way to reach me. You do not have to email, and you will not be routed through a form
• Signatures can be on paper. Electronic signing is available and is not required
• You do not need a CRA online account. There are other ways to authorize me, and I can explain them without you registering for anything. See CRA authorization
• You will deal with the same person each year. Not a different name every spring, and not somebody who has to be told your situation again from the beginning
• Nothing is rushed. If an explanation needs to happen twice, it happens twice. That is the job rather than an imposition on it
• An adult child can be part of the conversation if you want them there, with your permission, and can be left out if you do not

What actually changes about your taxes

The common assumption is that retirement simplifies things. Usually it does the opposite for a few years.

• More sources, less coordination. CPP, Old Age Security, a company pension, RRIF withdrawals and investment income each get taxed as though they were your only income. Individually the withholding looks about right. Added together it can be well short, and the shortfall arrives as a bill in April
• Instalments. Owing more than a threshold two years running generally brings you into quarterly instalments, which surprises people who have never paid tax outside a paycheque in their lives
• Income splitting becomes possible. Eligible pension income can be split with a spouse on your returns, which can move thousands of dollars into a lower bracket and can protect Old Age Security from clawback. It is an election made annually and is easy to miss
• New credits appear. The age amount and the pension income amount both arrive with age, and both have conditions
• Timing becomes a decision. When to start CPP, whether to defer Old Age Security, when to convert an RRSP. These interact with each other and with the clawback, and they are worth thinking about together rather than one at a time. See CPP, OAS and turning savings into income

Can I actually live on this?

The question underneath most of the others, and the one people are least likely to ask out loud.

The usual advice is a rule of thumb, some percentage of what you earned before. That is a starting point for someone with no information and worse than useless for someone who has thirty years of bank statements. Start from what you actually spend, which you can find, rather than from a fraction of what you used to earn.

Two adjustments make that number a retirement number:

• Things that stop. CPP and EI contributions, RRSP contributions, commuting, work clothing, and often a mortgage. For many people this is a larger reduction than expected
• Things that start or grow. Health and dental costs once an employer plan ends, prescriptions, travel in the early years, and paying for jobs around the house you used to do yourself

Three further points that a percentage rule cannot capture:

• Spending is not flat. It tends to be higher in the first active years, settle in the middle, and rise again later where care is needed. Planning a single constant figure for thirty years misdescribes all three phases
• Work in after-tax terms. CPP, Old Age Security, pensions and RRIF withdrawals are taxable. A $60,000 income is not $60,000 of spending, and the difference is exactly what the rest of this page is about
• Separate the guaranteed from the rest. CPP, OAS and a defined benefit pension arrive whatever happens and are indexed or partly indexed. If those cover the essentials, savings become flexibility rather than survival, which is a materially different position to be in and worth knowing

Inflation over a retirement that may run thirty years does more damage than most projections assume, and planning to live to 90 rather than to average life expectancy is the prudent asymmetry. Running out at 88 is a worse outcome than dying with money.

For the mechanics of tracking spending and setting a budget, see personal finance. For what the income sources will actually pay, see CPP, OAS and RRIFs.

When someone contacts you claiming to be the CRA

Fraud aimed at older people is a real and growing business, and the operations behind it are professional. They are not obvious, they do not sound like the badly written emails of fifteen years ago, and the people they succeed against are not careless. Anyone can be caught by a convincing story arriving at a bad moment.

The rule that covers all of it

Hang up, then call back on a number you already had. Not a number the caller gave you, not a number in the email, not the one on the screen. A number from a previous letter, a statement, or the phone book.

Anyone genuine will be perfectly happy for you to do that. Anyone who objects, applies pressure, or explains why there is no time has just told you what they are.

The others worth recognising

• The emergency call from a family member. A grandchild in trouble, in hospital or in custody, needing money urgently and asking you not to tell their parents. The secrecy is the tell. Voice cloning has made these considerably more convincing than they used to be, so a familiar voice is no longer confirmation. Hang up and call that person on their own number
• The bank investigator. Someone claiming to be from your bank or the police, asking you to help catch a fraudster by withdrawing money or transferring it to a "safe account". No bank or police force has ever needed this
• Investment opportunities promising returns that sound good, particularly ones with urgency attached or requiring cryptocurrency. Anything genuine will still be there next week after somebody else has looked at it
• Computer support calls or pop-ups warning of a virus and offering to fix it remotely. See cyber security
• Door-to-door home repairs and utility upgrades, especially where a contract is put in front of you on the doorstep

Two things worth saying plainly. There is nothing embarrassing about being targeted, and the reason these operations persist is that they work against capable, careful people. And if money has already gone, speed matters enormously: contact the bank immediately, then the police, then report it. Being reluctant to tell anyone is understandable and it is the thing that turns a recoverable loss into a permanent one.

The house

For most people this is the largest financial decision of the decade, and the tax side is more involved than expected.

Selling your home has to be reported even when no tax is owed. Since 2016 a sale of a principal residence goes on the return with a designation, and failing to report it can attract a penalty despite the gain being fully exempt. People who sold and told nobody because "there is no tax on your house" are the ones this catches.

Beyond that:

• Downsizing is usually straightforward, but a property that was rented out at some point, used partly for a business, or sat on more than half a hectare of land can be less so
• Moving into a retirement residence while keeping the house raises the question of what happens to the exemption, and renting it out changes its character. There is an election that can help in some circumstances and it has to be filed
• A cottage owned alongside a home means choosing which gets the exemption for which years, and the arithmetic is rarely obvious
• Adding a child to the title to simplify things later is common, well-intentioned and frequently creates a trust and a tax event nobody wanted. See bare trusts

Medical expenses, and a credit that is often missed

Medical expenses become significant later in life and the rules are more generous than most people use.

• The claim covers a twelve month period ending in the year rather than the calendar year, so the window can be chosen to capture the most
• Attendant care and nursing home costs can be claimable, sometimes substantially, and the rules interact with the disability tax credit in ways that reward getting the combination right
• Expenses can generally be claimed by the spouse with lower income, which usually produces a larger credit
• Travel for medical treatment not available locally can count, including mileage and sometimes accommodation

The disability tax credit deserves separate mention. It is not only for people who would describe themselves as disabled, and the criteria include markedly restricted walking, dressing, feeding, hearing, and mental functions. Certification comes from a medical practitioner.

The part worth knowing: where it is approved with an earlier onset date, prior years can be adjusted, and refunds going back several years are common. It also opens the door to other measures. If it has never been considered, it is worth considering.

Helping a parent with their affairs

Often the person reading this is not the taxpayer. Sorting out a parent's return, or taking it over entirely, is a common reason people call.

The practical points:

• Authorization is separate from a power of attorney. Holding a POA does not by itself mean the CRA will speak to you, and the CRA has its own process. It is worth getting in place while your parent can readily deal with it
• Several years may be outstanding, which is normal and fixable. Late returns can be filed, and where refunds or credits were missed they can often still be claimed
• Benefits may be going unclaimed. The Guaranteed Income Supplement and several credits depend on a return being filed, so a person with little income who stopped filing may be leaving money behind every year
• Do it before it is urgent. Everything above is straightforward with time and difficult during a health crisis

Tidying up while it is easy

A recurring theme in estate work is an executor spending months on things that would have taken an afternoon earlier.

• Dormant corporations that still file returns every year and hold nothing. Winding one up properly is a job worth doing rather than leaving
• Accounts scattered across institutions, some forgotten. Consolidation makes both the annual return and the eventual estate considerably simpler
• Records for property. What the cottage cost, what was spent improving it, and when. Nobody else will ever be able to find this
• A list of what exists and where, which sounds trivial and is the single most useful document an executor can be left. See estates and final returns

What to bring for a return

Most of the year this is a tax job, so here is what tends to be needed. Bring what you have. Anything missing can usually be pulled from the CRA once you have authorized me, and nothing here needs to be sorted or listed beforehand.

Two notes. Slips arrive at different times, and the ones for investments and trusts are often the last, so a return that seems ready in early March may still be waiting on something. And the medical receipts are worth keeping even when they seem small, because the twelve month window and the ability to claim on the lower-income spouse's return frequently turn a pile of modest receipts into a real credit.

Questions