CASE STUDIES
Here are some real-life examples of the unfairness single seniors face under Canada's tax system.
A Tale of Two Women
This is the story of Susan and Jill, two women now in their mid-eighties, living in Toronto. They’ve been best friends for most of their adult lives, although when it comes to family and relationships, their lives followed different paths.
Susan took the usual route for women in the 1950s. At age 25, she married Jeff, a high school teacher, and after working for two years, started a family and became a stay-at-home mom. Predictably, she and Jeff bought a house once the two children arrived, and the family settled into a satisfying domestic life in a central part of the city. The house cost $18,000 in 1972, which amounted to two and a half years of Jeff’s salary.
As life progressed and the children reached their late teens, Susan looked for pastimes outside the home and decided to go back to part-time work. She worked two to three days a week at a job that gave her a modest salary – enough to indulge her passion for designer clothes which she would find while shopping downtown on one of her idle days. Her salary wasn’t needed to support the family, but did keep her happy with the extra coin she could spend as she wished.
The Sisters
Sarah and Anne are sisters who are both in their late seventies/early eighties. They’ve lived together and shared a home in Calgary and split all their expenses for the last fifty years. They’ve also shared in parenting Anne’s son, Carl.
As they plan for the future, they were disappointed to learn that they don’t get the same rights as couples, despite their shared living expenses. In particular, they’d like the same RRIF portfolio transfer rights as senior couples: that upon the death of the first sister, her RRIF portfolio can be transferred tax-free into the RRIF of the surviving sister. But the law says no. That’s only allowed if the housemate is a partner. Sisters don’t count.
Aryun and his dependents
Aryun, age 57, finds himself in a precarious position when he looks ahead to retirement. After graduating from York U, he spent ten years teaching Math in India, his birthplace. While there he married an Indian woman and had a son. Returning to Toronto with his son after his marriage broke up, he took jobs on contract and did private tutouring, until, at the age of 40, he secured a tenured position teaching Math at a community college. Throughout this time he supported his mother with rent and groceries, as well as his adult son who moved back into Aryun’s apartment once he was diagnosed with mental health issues. If Aryan retires at 65, he can expect a pension of $50,000 in today’s dollars. His family obligations have allowed him to save almost nothing, and he envisions working well into his 70s or beyond.
A Doctor's Retirement
Dr. Barrett is a family physician in Fredericton who has spent 40 years in the workforce. Now nearing age 70, she’s hoping to retire. As a single senior who has worked hard her whole life, she was shocked to learn that she’s paying so much more tax than her two married brothers. One has a hefty pension from work in a corporation and the other is a retired teacher, also with a hefty pension. Since they both can split their pensions with their spouses, they fall into a lower tax bracket. On top of this, they qualify for full OAS and Age Credit for themselves and their spouses. Dr. Barrett qualifies for neither.
Because the cost of living for a single person is 2/3 what it is for a couple, and because of her high taxes, Dr. Barrett has to save much more than her brothers. Under a tax system that favours couples, she feels penalized. As a self-employed woman who doesn’t have a pension, she pays over one-third of her income in taxes. “I guess it helps to support my brothers’ handouts.” she says, “but I do get fed up listening to them brag about income splitting.”
A Renter's Predicament
Edith is a single senior living in Montreal. After living in the same rent-controlled apartment for the last 25 years, her landlord has sold the building and she’s being forced to move out. But her search for a new place to live is disheartening.
Everything in her price range is poorly kept, out of town, or small basement units. Renting an apartment comparable in quality to her last place would cost her double, which she cannot afford on her small pension as a single person. A man she’s been seeing casually has suggested she move in with him. He’s 10 years older than Edith, which means she’ll likely end up being his caretaker. He owns his house and her living situation would dramatically improve, but she’s hesitant to move in with someone she doesn’t know very well. Unfortunately, Edith feels like it’s the only option.
A message
from a supporter
...in her own words
"I met with my Liberal MP this week and gave him a list of my concerns. I have just turned 67, I'm working full time and will never have access to the tax free GIS couples can exploit by postponing CPP, maxing out double the amount of TFSA and not having to include $1,252 in OAS payments, almost $25,000 in additional income and waived $10,000 in employment income, to receive the maximum amount. They can share RRSP deductions to put them in the lower tax bracket person’s account and claim one as a legal dependant.
I have two daughters still in school, one 17 and one just turned 20. No matter how I crunch the numbers, if I retire on a small amount of CPP and RRSPs I must pay tax on, I cannot afford to keep my house. The cost of accommodation and transportation is the same, couple or single. The tax breaks and government programs, completely different.
Not sure anything I said made a difference, but I do know my MP supports guaranteed income. I guess we will see if he raises any issues. Single seniors were completely ignored during the last two election campaigns. And with galloping inflation, things are only getting worse as we have almost no ability for tax writeoffs."
