Retirement would possibly appear to be a time to lastly loosen up and benefit from the fruits of your labour. However relating to your funds, you’ll nonetheless need to maintain one eye open, as a result of the Canada Income Company (CRA) definitely is. Whether or not you’re accumulating pensions, cashing in investments, or incomes slightly additional on the facet, not all retirement earnings is created equal within the eyes of the CRA.
Listed here are the primary retirement earnings sources the CRA watches intently, and what you should know to keep away from any surprises at tax time.
Pensions
Let’s begin with the obvious one: your Canada Pension Plan (CPP) and Outdated Age Safety (OAS). Each are taxable. So for those who’re additionally pulling in cash from different sources, say from a registered retirement earnings fund (RRIF) or a part-time gig, you possibly can find yourself in the next tax bracket than anticipated. Even worse, in case your web earnings goes above $93,454 in 2025, the federal government begins clawing again your OAS at a charge of 15 cents on the greenback. That alone makes managing your complete earnings essential.
Subsequent up, Registered Retirement Financial savings Plans (RRSP) turning into Registered Retirement Earnings Funds (RRIF). If you convert your RRRSP into an RRIF by the top of the yr you flip 71, you’re required to start out withdrawing a minimal quantity annually. And each greenback counts as taxable earnings. The CRA screens these withdrawals to make sure you’re hitting the minimal, whereas additionally paying the correct quantity of tax. Taking out greater than the minimal? That’s wonderful, but it surely may push you into the next bracket or scale back advantages like OAS or the Assured Earnings Complement (GIS).
Investments
Dividend earnings is one other space to concentrate to. In case you maintain dividend-paying shares in a non-registered account, you’ll obtain a T5 slip annually. Dividends are grossed up and taxed at your marginal charge, although you do get a dividend tax credit score. Nonetheless, giant dividend earnings could cause OAS clawbacks or make you ineligible for GIS. It’s a superb cause to carry these shares in a Tax-Free Financial savings Account (TFSA) or RRSP if attainable.
Capital positive factors from promoting shares or property also can set off tax points. Solely 50% of a capital achieve is taxable, however giant positive factors, like promoting a cottage or a giant funding, can bump up your taxable earnings in a rush. The CRA receives T5008 slips from monetary establishments and T3 slips from mutual funds and trusts, so gross sales are by no means as quiet as they might appear.
Facet hustles
Rental earnings is one other widespread retirement stream. Whether or not it’s a former house, a basement unit, or a cottage, all rental earnings have to be reported in full. The CRA watches this intently, particularly whenever you’re claiming deductions like repairs, mortgage curiosity, or property taxes. Inflated or undocumented bills are one of many best methods to set off an audit.
Don’t overlook part-time or freelance work. Extra retirees are choosing up facet gigs. However even when it’s only a few thousand {dollars} a yr, it counts as taxable earnings. In case you make over $30,000 in gross income, you might also have to register for GST/HST. The CRA has centered extra on gig work lately, so it’s greatest to maintain issues clear.
Backside line
The underside line? The CRA isn’t out to get retirees — it’s simply doing its job. However understanding how every sort of earnings is taxed may help you make smarter selections and keep away from dropping advantages you’ve earned. It is perhaps tempting to “overlook” a few small stream of money, however that may backfire quick.
In case you’re seeking to keep away from the stress of unpredictable earnings, contemplate a dependable dividend inventory like Canadian Pure Sources Ltd. (TSX:CNQ). As of October 2025, CNQ gives a 4.5% dividend yield and has raised its dividend for 23 straight years. Its constant free money move from oil manufacturing helps steady payouts — even in risky markets. If held in a TFSA, these dividends are utterly tax-free, serving to you keep off the CRA’s radar whereas nonetheless producing dependable earnings.
A chat with a tax advisor earlier than or throughout retirement can go a good distance. Retirement must be about peace of thoughts — not paperwork and penalties.
