Salaried employment beyond retirement age has never been financially beneficial. But there is a way to do better, according to a study by the Research Chair in Taxation at the University of Sherbrooke’s School of Management (UDS).
Posted on July 14
“Several hard-line ideas received have led many to mistakenly believe that earning extra income from work once you retire pays you little. However, analysis of several model cases shows that the share withheld from earned work income is greater than many expect,” Luke Goodbot wrote. and Susie Saint Cerny, professor and researcher in tax and public finance at UDS. , in their analysis report.
” some [retraités] They argue that they will have to pay more taxes or contributions if they work, or that the work gives them [fera] Loss of public pension benefits or other tax actions. Even if they are not entirely wrong, they underestimate the fact that governments, both federal and Quebec, have reacted in recent years to increase the incentive to work for experienced workers. »
Increase your standard of living by 33%
The federal government has changed the GIS [supplément de revenu garanti] To exempt a greater portion of earned work income. On the Quebec side, adding work income has the advantage of allowing the use of the career extension tax credit as well as the work income tax credit,” noted researchers Luc Godbout and Suzie St Cerny.
Thus, “despite popular belief, it is often for senior taxpayers with lower retirement income that overtime income has the greatest impact. [haussier] on the standard of living.”
Luc Godbout and Suzie St-Cerny cite the example of a large, low-income taxpayer who receives only public pensions (PSV and Federal SRG, Quebec RRQ), and who earns an income from work of $10,000 annually.
“It just won’t come close [des] Three-quarters of that work income, but he’ll also see his standard of living go up by about 33%, which is no small feat in the case of low incomes,” they explain.
PHOTO IVANOH DEMERS, PRESS
Luke Goodbot, Professor of Taxation and Public Finance at the University of Sherbrooke
However, all is not well with regard to taxes and financial benefits for seniors and still-paid retirees, as Luke Goodbot and Susie St. Cerny emphasized in their study.
Strengthening certain tax measures would make it possible to enhance the financial attractiveness of continuing paid work among the elderly in retirement age.
winning suggestions
This is how researchers formulate four proposals for governments regarding taxation and public financing in order to allow older workers to “increase the retained portion of their employment income after retirement.”
Make voluntary contributions to the Quebec Pension Plan (QPP) after age 65
“Like a Canadian pension plan [RPC, hors Québec], QP must offer a contributing worker 65 years of age or older the option to stop or continue contributing to the plan on his or her income from employment. On the other hand, if there are no more QPP contributions, the paid work will not lead to the right to a supplemental pension. »
Make the Quebec tax credit for job extension refundable
“Since its implementation, and subsequent reinforcements, the Quebec Tax Credit for Job Extension has increased the employment rate for people aged 60 or over. Making this credit refundable would add a financial incentive to lower-income senior workers who are subject to little tax or non-existent.”
Introducing a federal tax credit for career extension
“In its 2021 election platform, the Canadian Liberal Party is committed to implementing a similar tax credit (CPTC) to that of Quebec. With these same parameters as the Quebec credit, the addition of the federal CPTC will increase the retention rate. [de revenu après impôt et cotisations] Older workers are in the range of 4.8% to 6.9%, depending on their income level. »
Exclusion of employment income in a federal PSV (old-age security pension) recovery account
The idea here is to adjust the OAS refund rate for Canadians 65 or older so that they are less penalized when they earn a job income after they qualify for public pensions. For example, excluding from the OAS reimbursement account for up to $35,000 in employment income, one would end up with a level of qualifying employment income that would be similar to the employment extension tax credit. »
