Table of Contents
- The Age Amount Credit
- Pension Income Credit
- The Multigenerational Home Renovation Tax Credit (MHRTC) – Who Can Claim It?
- The Multigenerational Home Renovation Tax Credit – Qualifying Renovations
- Multigenerational Home Renovation Tax Credit – Understanding Schedule 12 and Eligibility
The Age Amount Credit
As Canadians reach their senior years, the tax system provides certain credits to help reduce the amount of income tax they owe. One of the most important of these is the Age Amount Credit — a non-refundable tax credit designed specifically for individuals aged 65 and over.
What Is the Age Amount Credit?
The Age Amount Credit is a federal non-refundable tax credit available to seniors who are 65 years old or older at the end of the tax year (December 31).
This credit gives seniors an additional tax break on top of the Basic Personal Amount (BPA) — the base amount of income that all taxpayers can earn without paying any federal tax.
So in simple terms:
- The Basic Personal Amount covers everyone.
- The Age Amount Credit gives an extra exemption-like benefit to seniors aged 65+.
Together, these two credits allow many seniors to earn around $20,000 of income (depending on the year and province) without paying any federal income tax.
Eligibility Requirements
To qualify for the Age Amount Credit:
- You must be 65 years of age or older on December 31 of the tax year.
- You must be a resident of Canada for tax purposes.
- Your net income must be below a certain threshold — the credit starts to decrease once income exceeds that threshold.
If all these conditions are met, you can claim the Age Amount Credit on your income tax return.
The Credit Amount (Approximate Values)
The maximum Age Amount changes slightly every year due to indexation for inflation.
For example:
- In recent years, the amount has been around $7,200–$7,300.
This means a senior could receive a non-refundable tax credit worth up to $7,300 × 15% = $1,095 in federal tax savings.
Remember: since it’s non-refundable, it can only reduce the tax you owe — it won’t generate a refund by itself.
How the Income Clawback Works
The Age Amount Credit is income-tested, meaning it reduces as your income increases.
Here’s how it works:
- Once your net income (Line 23600 of the tax return) exceeds approximately $36,000, the credit starts to phase out.
- The reduction rate is 15 cents for every $1 of income over that threshold.
- The credit is fully eliminated at an income level of around $85,000.
Example:
Let’s say a senior’s income is $50,000.
- The threshold is $36,000.
- The excess income is $50,000 – $36,000 = $14,000.
- Reduction: $14,000 × 15% = $2,100.
- If the maximum credit is $7,200, the remaining credit is $7,200 – $2,100 = $5,100.
So the taxpayer would still receive a reduced Age Amount Credit based on that calculation.
This ensures that the credit primarily benefits low- to middle-income seniors.
Can the Age Amount Be Transferred?
Yes.
If one spouse or common-law partner cannot use all or part of their Age Amount Credit (because their own income is too low to benefit), they can transfer the unused portion to their spouse or partner.
This helps couples optimize their tax benefits.
For example:
- If one senior spouse has low or no taxable income,
- And the other spouse has higher income and pays tax,
→ The higher-income spouse can use the transferred credit to reduce their taxes payable.
Transfers like this are reported on Schedule 2 – Federal Amounts Transferred from Your Spouse or Common-Law Partner.
How It Fits into the Bigger Picture
The Age Amount Credit is part of a group of tax benefits for seniors, which may also include:
- The Pension Income Amount (for eligible pension income),
- The Canada Caregiver Amount (if supporting a spouse or dependant with a disability),
- The Medical Expense Credit.
When combined, these credits can make a significant difference in reducing or even eliminating federal tax for seniors living on modest incomes.
Summary Table
| Feature | Details |
|---|---|
| Credit Type | Federal non-refundable tax credit |
| Eligibility | Must be 65 or older on December 31 of the tax year |
| Maximum Amount | Around $7,200–$7,300 (varies by year) |
| Clawback Range | Begins at ~$36,000 net income; eliminated at ~$85,000 |
| Reduction Rate | 15% of income above the threshold |
| Transferable? | Yes, to spouse or common-law partner |
| Where Claimed | Line 30100 of the federal tax return |
Key Takeaways
- The Age Amount Credit provides an additional tax break for individuals aged 65 and older.
- It adds to the Basic Personal Amount, meaning seniors can often earn around $20,000 tax-free (depending on year and province).
- It is income-dependent, phasing out between approximately $36,000 and $85,000 of net income.
- The unused portion can be transferred to a spouse to maximize the couple’s overall tax benefit.
- It is a non-refundable credit — it reduces taxes owed but doesn’t generate a refund by itself.
Example for Beginners
Let’s look at a simple scenario.
Case Study:
Mary turned 66 in 2025 and has a total income of $32,000 for the year.
She is eligible for:
- The Basic Personal Amount (~$15,000), and
- The Age Amount (~$7,300).
Because her income is below the $36,000 threshold, she can claim the full Age Amount Credit.
This gives her about $7,300 × 15% = $1,095 in tax savings, in addition to the savings from the basic personal amount.
Result: Mary will likely owe little to no federal tax.
In Summary
The Age Amount Credit is one of the simplest yet most valuable credits available to seniors.
If you’re 65 or older, it gives you an extra tax deduction-like benefit on top of your basic personal amount — but only if your income is below the upper threshold.
For lower-income seniors, this credit can eliminate federal tax entirely, and if you’re part of a couple, any unused portion can be transferred to your spouse to make sure no benefit is wasted.
Pension Income Credit
The Pension Income Credit is a non-refundable tax credit available to many seniors in Canada who receive certain types of pension income. It helps reduce the amount of income tax they owe, but it does not create a refund on its own — it can only reduce taxes payable to zero.
Who Can Claim the Credit?
Generally, this credit applies to individuals aged 65 or older who receive eligible pension income.
In some limited cases, individuals under 65 may also qualify if they receive pension income because of the death of a spouse or from a registered pension plan (RPP), but these situations are less common.
Eligible Types of Pension Income
Only specific types of pension income qualify for the pension income amount. Eligible income includes:
- Company or employer pension plans (registered pension plans or RPPs)
- Registered Retirement Income Fund (RRIF) payments — including income from a RRSP that has been converted to a RRIF
- Life annuities from registered plans
- Certain other superannuation or annuity payments (such as from an employer-funded retirement plan)
These types of income usually appear on a T4A or T4RIF slip from your employer, pension provider, or financial institution.
Ineligible Types of Income
Some common retirement-related incomes do not qualify for the Pension Income Credit. These include:
- Old Age Security (OAS)
- Canada Pension Plan (CPP) or Québec Pension Plan (QPP) benefits
- Retirement allowances (such as severance pay)
- Death benefits
- Transfers or withdrawals from an RRSP that are not regular pension-type payments
If all your retirement income comes from CPP and OAS only, unfortunately, you will not qualify for the credit.
How Much Is the Credit Worth?
The maximum amount of eligible pension income that qualifies for this credit is $2,000 per year.
This means:
- If your eligible pension income is $2,000 or more, you can claim the full credit.
- If your eligible pension income is less than $2,000, you can claim the credit only on the actual amount you received.
The credit amount is calculated as 15% of up to $2,000, which equals a maximum federal tax savings of $300 (15% × $2,000).
Provincial or territorial credits are also available, and their amounts vary depending on where you live.
Pension Income Splitting and the Credit
One useful planning opportunity for couples is pension income splitting.
If one spouse has eligible pension income and the other does not, they can elect to transfer up to 50% of eligible pension income to the other spouse on their tax return.
This can help both partners benefit from the Pension Income Credit.
For example:
- Suppose Francis receives $56,000 in eligible pension income, and James receives none.
- By transferring at least $2,000 of pension income to James, both Francis and James can each claim the $2,000 pension income credit.
- Even if both spouses are in similar tax brackets, this transfer can reduce the couple’s total combined tax bill.
This election is made by completing Form T1032 – Joint Election to Split Pension Income when filing the return.
Key Points to Remember
- The Pension Income Credit is available only on eligible pension income (not CPP or OAS).
- The maximum eligible amount is $2,000.
- It is a non-refundable credit, meaning it reduces taxes owed but does not produce a refund if you owe no tax.
- Pension splitting can allow both spouses to claim the credit, even if only one has pension income.
- The credit is claimed on line 31400 of your tax return (formerly line 314).
Example
Let’s look at a simple case:
Example:
Mary, age 68, receives $1,500 from her former employer’s pension plan and $7,200 in CPP and OAS benefits.
Since only her employer pension qualifies, she can claim the Pension Income Credit on $1,500 (not on the CPP or OAS).
If her pension income were $2,500, she could claim the maximum $2,000 credit.
Summary
The Pension Income Credit may be small, but it’s valuable — especially when combined with pension income splitting. Seniors who receive eligible pension income should always ensure they claim it on their tax return to reduce their taxable income and take advantage of available savings.
The Multigenerational Home Renovation Tax Credit (MHRTC) – Who Can Claim It?
The Multigenerational Home Renovation Tax Credit (MHRTC) is a refundable tax credit designed to help families make their homes more accessible and comfortable for seniors or adults with disabilities who want to live with family members.
This credit encourages multigenerational living — when two or more generations live together — by helping offset renovation costs needed to create a separate living space for an eligible family member.
What Does “Refundable Tax Credit” Mean?
A refundable tax credit means that even if you don’t owe any tax, you can still receive money back from the government.
So, unlike non-refundable credits that only reduce the tax you owe, refundable credits can result in an actual refund.
What the Credit Offers
The MHRTC allows you to claim 15% of eligible renovation costs, up to a maximum of $50,000 per qualifying renovation.
That means the maximum credit you can receive is:
15% × $50,000 = $7,500
If your total renovation costs are less than $50,000, your credit will be 15% of your actual expenses.
Purpose of the Credit
The credit applies when a renovation is done to create a secondary unit within a home — a separate living area that provides a private space for a senior or an adult with a disability.
Examples include:
- Adding a self-contained suite in a basement or above a garage
- Modifying part of a home to include a kitchen, bathroom, and sleeping area
- Building an addition for a family member with mobility challenges
The goal is to allow seniors and persons with disabilities to live more independently while staying close to family support.
Who Is an “Eligible Individual”?
An eligible individual is the person for whom the renovation is being made. They must be one of the following:
- A senior – someone who is 65 years of age or older at the end of the tax year that includes the renovation period; or
- An adult with a disability – someone 18 years or older who qualifies for the Disability Tax Credit (DTC).
What Is a “Qualifying Relation”?
A qualifying relation refers to the family member who owns the home where the eligible individual will live.
This includes:
- Parents and grandparents
- Children and grandchildren
- Brothers and sisters
- Aunts, uncles, nieces, and nephews
- Spouses or common-law partners of any of the above
In simple terms, the eligible person must be moving in with a close family member (or into a home owned by one).
For example:
- A 70-year-old parent moving into their daughter’s home
- A 25-year-old adult with a disability moving into their uncle’s home
Both would meet the qualifying relationship test.
Who Can Claim the Credit?
There is flexibility in who can actually claim the MHRTC on the tax return.
It can be claimed by any of the following people:
- The eligible individual (the senior or person with a disability)
- Their spouse or common-law partner
- A qualifying relation who owns the home where the renovation takes place
This means that if several people share in the renovation expenses, they can decide who will claim the credit — or split it among multiple people — as long as the total combined claim does not exceed $50,000 in eligible expenses.
Example – Splitting the Credit
Let’s look at a simple example:
- A senior named Rita (age 70) moves into her son David’s home.
- David spends $50,000 renovating the basement to create a separate suite for Rita.
- Rita and David decide to share the credit.
They could choose:
- Rita claims $20,000 of the renovation expenses → $3,000 credit (15% × $20,000)
- David claims $30,000 → $4,500 credit (15% × $30,000)
Together, they claim the full $50,000 of eligible expenses, and the CRA allows this as long as their total doesn’t exceed the maximum.
Important Notes About Claiming
- Only one qualifying renovation can be claimed for the same home during a tax year.
- The renovation period must end within the tax year for which the credit is claimed.
- The credit can be split among multiple eligible claimants, but the total claimed amount cannot exceed $50,000.
- If more than one person tries to claim more than the limit and there’s a disagreement, the CRA will decide how to allocate the credit among the claimants.
Summary
The Multigenerational Home Renovation Tax Credit helps families make homes more inclusive and accessible for seniors or adults with disabilities.
Here’s a quick summary:
| Category | Details |
|---|---|
| Type of Credit | Refundable |
| Maximum Eligible Expenses | $50,000 |
| Credit Rate | 15% |
| Maximum Refund | $7,500 |
| Who Can Claim | The eligible individual, their spouse/common-law partner, or a qualifying family member |
| Eligible Individuals | Seniors (65+) or adults with disabilities (18+ and DTC-eligible) |
| Purpose | To build or renovate a secondary unit for multigenerational living |
Example in Real Life
Imagine a family building a small in-law suite for their 70-year-old mother in their basement. The renovation cost is $40,000.
They can claim 15% of that cost:
15% × $40,000 = $6,000 refund.
Even if the mother doesn’t pay any income tax, she could still benefit because it’s refundable — meaning the CRA would issue her a payment.
The Multigenerational Home Renovation Tax Credit – Qualifying Renovations
The Multigenerational Home Renovation Tax Credit (MHRTC) is a refundable federal tax credit that supports families who renovate their homes to create a secondary living unit for a senior (65+) or an adult with a disability.
This section explains what types of renovations qualify, what documentation is needed, and what expenses can or cannot be claimed.
1. The Eligible Dwelling
To qualify for this credit, the renovation must be done on an eligible dwelling, which means:
- The home must be owned by one of the following:
- The eligible individual (senior or person with a disability),
- Their spouse or common-law partner, or
- The qualifying relation (for example, their child, grandchild, sibling, or other close family member).
- The home must be occupied by the eligible person, or they must intend to move in within 12 months after the renovation period ends.
In short, the property must be a principal residence, not a rental or vacation property, and it must be the place where the eligible individual will live.
2. What Counts as a “Qualifying Renovation”
The most important condition of the MHRTC is that the renovation must create a secondary, self-contained unit within the home.
This means the new or renovated space must be:
- A separate living area with:
- A private entrance
- Its own kitchen
- A bathroom
- A sleeping area
The goal is to build an independent living space — for example:
- Converting a basement into an apartment for an elderly parent
- Adding an extension or suite for an adult child with a disability
This is not meant for general home improvements like painting, adding ramps, or widening doors — those types of renovations may fall under other credits like the Home Accessibility Tax Credit (HATC) or Medical Expense Credit, but not this one.
3. No “Double-Dipping”
You cannot claim the same renovation for more than one tax credit.
For example, if part of the renovation could also qualify under the Home Accessibility Tax Credit or the Medical Expense Tax Credit, you must choose only one credit to claim.
The CRA will not allow you to claim the same expenses twice.
4. Building Permit Requirement
A building permit is mandatory to qualify for the MHRTC.
This is one of the key legal requirements — the renovation must be properly authorized by your municipality as a project that creates a secondary unit.
The CRA will not accept claims if:
- No building permit was issued, or
- The work was done without notifying the city.
In addition, the project must pass a final inspection once the construction is complete.
5. The Renovation Period
The renovation period defines when the project starts and ends for tax purposes:
- It begins on the date the building permit application is submitted.
- It ends when the final inspection is completed and approved by the local authorities.
You can only claim the MHRTC in the tax year that includes the end of the renovation period.
For example, if the final inspection happens in 2024, the credit will be claimed on the 2024 tax return.
6. Eligible Expenses
You can claim the cost of materials, labour, and professional services directly related to creating the secondary unit.
Eligible expenses include:
- Construction materials (e.g., lumber, drywall, insulation, wiring, flooring)
- Labour costs for plumbers, electricians, carpenters, and other tradespeople
- Professional services (e.g., architect, engineer, or designer fees)
- Fixtures permanently attached to the unit (e.g., built-in cabinets, lighting, plumbing fixtures)
These costs must relate directly to building the secondary unit and be enduring in nature — meaning they are permanent improvements that become part of the home.
7. Ineligible Expenses
Certain expenses do not qualify under the MHRTC. These include:
- Furniture (e.g., beds, couches, tables, chairs)
- Appliances (e.g., refrigerators, ovens, washers, dryers)
- Electronics (e.g., TVs, audio systems)
- Decorative items (e.g., curtains, artwork, carpets)
- Tools or construction equipment (e.g., hammers, ladders, power tools)
- Ongoing maintenance or repairs (e.g., repainting, roof repairs, landscaping, or yard work)
- Mortgage interest or property taxes
Only the hard construction costs that create or convert the secondary unit are eligible.
8. Using Family Members for Construction
If a family member helps with the renovation, their labour cannot be claimed unless they are a registered contractor under the GST/HST system (i.e., they have a valid business number and issue proper invoices).
Casual help from relatives or friends — even if they do the work for free or at a discount — does not count toward the credit.
9. Keep All Documentation
Because this credit can be worth up to $7,500, the CRA will expect solid proof of all expenses and permits.
Keep the following records safely:
- Building permits and final inspection reports
- Contracts with contractors and builders
- Receipts and invoices showing the amount paid, including GST/HST
- Proof of payment (e.g., cancelled cheques, bank statements)
Without proper documentation, the CRA can deny the claim.
10. One-Time Credit
The MHRTC can only be claimed once per lifetime for a qualifying renovation.
That means you can’t claim it again if you make another secondary unit in the future.
Example: Basement Apartment for a Parent
Let’s look at a simple example.
- Scenario:
Sarah wants to build a small basement apartment for her 70-year-old mother to move in.
She obtains a building permit and hires a contractor to complete the renovation.
The total cost is $45,000, including materials and labour. - Result:
Sarah’s renovation meets all requirements — it created a separate, self-contained unit.
She can claim 15% of $45,000 = $6,750 as the Multigenerational Home Renovation Tax Credit on her tax return for the year the final inspection was completed.
Summary
| Category | Details |
|---|---|
| Type of Credit | Refundable |
| Maximum Eligible Expenses | $50,000 |
| Credit Rate | 15% |
| Maximum Refund | $7,500 |
| Purpose | To build or renovate a secondary, self-contained unit for a senior or adult with a disability |
| Building Permit Required? | Yes |
| When to Claim | In the tax year that includes the final inspection |
| Eligible Expenses | Materials, labour, and professional services |
| Ineligible Expenses | Furniture, appliances, electronics, maintenance, tools |
| One-Time Claim | Yes, only once per lifetime |
Key Takeaway
The MHRTC is not a general home renovation credit.
It applies only when you create a separate, livable unit for a qualifying senior or adult with a disability — complete with its own kitchen, bathroom, and entrance.
To qualify, always:
- Get a building permit,
- Keep detailed receipts, and
- Ensure the work meets municipal and CRA requirements.
Multigenerational Home Renovation Tax Credit – Understanding Schedule 12 and Eligibility
The Multigenerational Home Renovation Tax Credit (MHRTC) is a relatively new refundable tax credit that helps families offset the cost of creating a secondary suite in their home so that a qualifying relative—such as a senior parent or a person with a disability—can live with them.
In this section, we’ll focus on how to determine eligibility for the credit using the government’s official form — Schedule 12, which is used when filing the tax return.
1. What Schedule 12 Is For
Schedule 12 is the form you must complete to claim the MHRTC. It asks a series of questions and requires key details about:
- Who is claiming the credit,
- Who the renovation is for,
- The type of renovation that was done,
- The total eligible expenses.
The purpose of the form is to ensure that all of the eligibility conditions for the credit are met before the amount is calculated.
2. Eligibility Conditions for the Credit
To qualify for the Multigenerational Home Renovation Tax Credit, all the following must be true:
✅ 1. The renovation was completed in the tax year
The renovation must have been finished in the year you are claiming the credit. It doesn’t matter when it started, but it must have passed final inspection before the year ended.
✅ 2. The renovation created a secondary unit
The renovation must result in a self-contained, separate living space within the home.
That means the new unit must have:
- A private entrance
- A kitchen
- A bathroom
- A sleeping area
This is what makes it a secondary suite. Simply remodeling a room or improving accessibility does not qualify—it must be a livable, independent unit.
✅ 3. Only one claim per lifetime
Each qualifying individual can only be the reason for one MHRTC claim in their lifetime. For example, if a family creates a suite for their mother and claims the credit, they cannot claim it again for another renovation for her later.
✅ 4. The person claiming is an “eligible individual”
This is usually the homeowner (or their spouse/common-law partner) who pays for the renovation. They must:
- Be a resident of Canada at the end of the year, and
- Be 18 years or older.
✅ 5. The person moving in is a “qualifying individual”
The MHRTC is meant to help certain relatives live together. A “qualifying individual” is someone who is:
- A senior aged 65 or older, or
- An adult (18+) eligible for the disability tax credit (DTC).
They must be a close relative of the homeowner, such as a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece, or nephew.
If the person moving in is not related (for example, a family friend), the credit cannot be claimed.
✅ 6. The taxpayer and relative intend to live in the home
The eligible individual or qualifying relative must ordinarily reside (or intend to reside) in the home within 12 months after the renovation is completed.
3. Example: James and His Mother
Let’s look at a simple example to understand how this works:
- James owns a house in Canada.
- In 2023, he spent $90,000 renovating his basement to create a self-contained apartment for his mother, who is over 65 years old.
- The renovation included a private entrance, a kitchen, a bathroom, and a bedroom—making it a proper secondary unit.
- James obtained the necessary building permit and passed the final inspection.
In this situation:
- James is the eligible individual (the homeowner and taxpayer).
- His mother is the qualifying individual (a senior parent).
- The renovation qualifies as a secondary unit.
- The work was completed in 2023 and approved by the city.
James can therefore claim the Multigenerational Home Renovation Tax Credit for 2023.
He can include eligible expenses up to $50,000, resulting in a refundable tax credit of 15% × $50,000 = $7,500.
4. What Happens If the Criteria Aren’t Met
If any of the conditions are not met—for example:
- The relative is not related by blood, marriage, or common-law,
- The renovation does not create a separate, self-contained unit,
- The renovation was not completed during the tax year,
—then the CRA will deny the claim.
This is why it’s important to carefully review the eligibility checklist on Schedule 12 before including the expenses on the tax return.
5. Documentation to Keep
When claiming this credit, the CRA may ask for proof. Tax preparers should ensure that their clients keep:
- The building permit and final inspection report,
- Detailed invoices showing labor and material costs,
- Receipts from qualified contractors (not family or friends unless registered for GST/HST), and
- Any contracts related to the renovation.
Keeping this paperwork is essential, as the CRA is expected to review many claims due to the size of the potential refund.
6. Key Takeaway
The Multigenerational Home Renovation Tax Credit provides valuable financial support for families building a space for elderly or disabled relatives.
However, it’s not a general home improvement credit — it only applies to renovations that create a self-contained secondary unit and meet all the eligibility conditions set out on Schedule 12.
For new tax preparers, always review:
- Who the renovation is for,
- Whether it creates a livable secondary unit, and
- Whether proper permits and receipts are available.
Once these are confirmed, you can confidently claim the MHRTC on your client’s tax return.
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