Q&A: Pension tax credit
Question: I have a question about the $2,000 pension deduction. Do you have to be 65 to claim it, or can a 55-year-old claim it? – Eric W.
Gordon Pape answers: To be clear, it is not a deduction but a tax credit. The maximum “pension income amount” is $2,000, for which you get a tax credit of 15% ($300) at the federal level plus the applicable provincial/territorial credit. The rules are somewhat complex so for the answer I referred to Essential Tax Facts by Evelyn Jacks, a book that anyone who does their own return should own.
Basically, you can claim the credit at any age “if you are in receipt of periodic pensions as part of a life annuity or taxable portions of foreign social security payments”. So, for example, if you took early retirement from your employment and are receiving payments from the pension plan, they qualify for the credit.