Question
We have two children who earned income in 2001 but will not be paying income tax. Should I file an income tax return for each of them?

Answer
If your children had income in 2001, especially if it qualifies for RRSP purposes, you should file an income tax return for each of them even if there is no income tax payable. The major benefit is that the children will begin to accumulate RRSP room, which they can use in the future when they have taxable income.

Question
Can you explain the $1,000 pension income credit?

Answer
If you receive pension income as part of an annuity, you may be entitled to tax credits for up to $1,000 of pension income. However, note that CPP, QPP and OAS do not qualify for this credit.

Taxpayers age 65 or older can create qualifying income for this credit by converting some of the RRSP into a RRIF or life annuity. They may also use an annuity payment from a Deferred Profit Sharing Plan, or purchase a simple life annuity with other available capital.

Taxpayers under age 65 must receive pension plan payments in the form of annuities, or an annuity payment if your spouse became deceased. Speak to your professional advisor for a complete list of qualifying pension incomes.

Question
When do I have to file a tax return?

Answer
You have to file a tax return if any of the following applies:

• You have to pay income tax.
  
• Canada Customs and Revenue Agency sent you a request to file a tax return.
  
• You have a taxable capital gain or sold a property.
  
• You claimed a capital gains reserve on your return last year.
  
• You have to pay back any of your Old Age Security or Employment Insurance benefits.
  
• You have not repaid all of the amounts you withdrew from your RRSP under the Home Buyers' Plan or the Lifelong Learning Plan.
  
• You have to contribute to CPP. This can apply if the total of your net self-employment income and pensionable employment income is more than $3,500.
  

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.