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In 2015, the federal Liberal platform committed the party to reversing a Conservative plan to gradually raise the retirement age (or at least the eligibility age for Old Age Security payments) to 67 from 65, arguing that seniors needed the money more than Ottawa.

The party kept that promise, increasing the growth pressure of what the federal budget indelicately calls “elderly benefits.” Besides the effect on Ottawa’s finances, the move also removed one incentive for workers to delay retirement. If you’re able to get OAS payments at 65, presumably that makes you a little more likely to stop working sooner rather than later.

There are other incentives, including personal motivations. And even with the eligibility age of 65, there are still incentives built into the OAS, since individuals can choose to defer the start date of their payments by up to five years in return for higher monthly payments that start later. A full deferral of OAS benefits to 70 results in a major boost to monthly payments, by 36 per cent. (Individuals can also choose both not to work and to defer OAS benefits.)

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The federal Liberals made that incentive a little more alluring with their most recent additions to the OAS, which will boost regular payments by 10 per cent as of next July. (They also have accelerated the growth in elderly benefits.)

Younger seniors won’t get that payment, initially. That means the incentive to defer the OAS and keep on working (at least until 70) remains intact. The government has noted that older seniors are less likely to have work income to supplement their support payments.

The Liberals did indeed roll back the change that would have been the biggest disincentive to retirement at 65. But their other policy moves are, perhaps less obviously, acting in the same way by offering benefits to those who delay retirement, and focusing enhanced payments on older seniors.

The latest change to OAS adds to that incentive. The Finance department said the 10-per-cent increase announced in the budget will be applied on top of higher monthly payments resulting from deferral. And that means deferring the OAS just got a little more lucrative.

Taxing questions

As the April 30 deadline for filing taxes neared last week, there was a flurry of last-minute pleas for an extension, including from accounting professionals. Some commenters worried about the financial stresses of having to pay taxes owing even as several provinces combat a third wave of the coronavirus.

Lost sometimes in the discussion is a key fact: The April 30 deadline was for filing, not for full payment. Even in a normal year, tax bills don’t have to be paid immediately (although interest will be charged on amounts owing).

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For the 2020 tax year, Ottawa has provided an interest-free extension for payment. That leniency is limited to those with taxable income – note, taxable – of $75,000 or less, and who received at least one pandemic benefit in 2020. And who filed on time.

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Caveat on CERB: Tax lawyer Bhuvana Rai dissects some of the misleading claims being made about the supposedly unexpected tax burden of those who received Canada Emergency Response Benefit payments in 2020. In an informative Twitter thread, Ms. Rai takes aim at the contention that impoverished CERB recipients face huge tax bills. “If someone you know owes thousands in tax ‘because of CERB,’ they earned other income and aren’t telling you (or are fudging the numbers),” she writes.

Caveat on corporate taxes: The headlines on the Parliamentary Budget Officer’s report on a corporate windfall tax made it seem like a painless way to raise billions – $7.9-billion to be precise. The federal NDP requested the study of the effects of a 15-per-cent tax on businesses with at least $10-million in gross revenue in 2020 and with profit higher than it would have been had their 2020 profit margin been the same as their average profit margins from 2014 to 2019.

But the coverage of the report missed a critical fact: The NDP asked the PBO to assume that the government would take whatever steps necessary to rejig tax laws so that companies could not reduce their tax bill. That would mean, among other major shakeups, at least limiting the ability of companies to use carry-forward losses. So, yes, $7.9-billion is possible – given an unprecedented rewriting of tax law.

Follow me on Twitter, @PatrickBrethour or ask your Taxing Question here.

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