An unwritten rule in our tax system is that senior couples should pay less tax than singles. A group called Single Seniors for Tax Fairness is trying to change things by lobbying the federal government. To find out what single seniors are up against and what can be done to help them, I invited SSTF director Elizabeth Brown to do a Q&A for this newsletter. Here’s an edited version of our Q&A by e-mail:
Q: Elizabeth, can you tell us a bit about your background?
A: I am a lifelong single in my early 60s who worked as an information technology consultant before retirement. I read about Single Seniors for Tax Fairness and the founder, Jane Robertson, in the newspaper several years ago. I contacted her and sent a donation. Through Jane, I learned about the unequal tax treatment of single seniors so volunteered to help her raise awareness with MPs, the media and the public. I became director when Jane retired.
Q: How many single seniors are there in Canada, and what are some specific ways they’re discriminated against from a taxation point of view?
A: Based on the 2021 census, almost 40 per cent of people 65-plus are single, and almost 70 per cent of them live alone. About 70 per cent of single seniors living alone have an income less than $50,000. Senior couples can use pension income splitting and the transfer of non-refundable tax credits to reduce their taxable income. This not only reduces the income tax they pay, it also minimizes or eliminates the clawback of Old Age Security. As a result, single seniors with the same income pay much higher tax and can lose all of their OAS. For example, a single senior with an income of $50,000 pays $6,521 in tax while a couple with the same total income pays only $1,172 in tax. That’s more than five times as much. Please note that SSTF isn’t advocating to take benefits away from couples. We just want a fairer, more equitable, tax system for single seniors.
Q: I recently did a Q&A with the author of a new book called The Pink Tax, which is based on the idea that the financial system works to keep women broke. Do you see the plight of single senior women through this same lens?
A: Not directly, no. Our concerns relate to inequalities in taxation for all single seniors, women and men. It’s true there are more single senior women than men because women tend to live longer. That means that women are subject to the unequal tax treatment for more years than men.
Q: For everyday living costs, how much of an advantage is it to be part of a couple rather than single?
A: It’s a huge advantage. Financial planners have concluded that single seniors require up to 70 per cent of the income of a couple to maintain the same lifestyle. For example, unavoidable expenses like rent, mortgage payments, property taxes, condo fees, property insurance, maintenance, utilities, etc. cost the same whether one person or a couple lives in a home.
Q: What stories have you heard lately about single seniors struggling financially as a result of big increases in the cost of living?
A: We’ve heard of single seniors facing hardships due to financial insecurity, rising costs and unexpected life events. They are much more likely to have to reduce their expenses to meet the basic necessities compared to a couple. Single seniors have a lot less disposable after-tax income compared to a couple with the same total income.
Q: Let’s say you have the attention of the prime minister and the finance minister. What’s on your ask list?
A: Single seniors don’t mind paying taxes, but we want to be taxed fairly, not based on our marital status, which is one of the prohibited grounds for discrimination according to the Canadian Human Rights Act. I’d ask the prime minister and finance minister to implement the recommendations in our latest prebudget submission, including a tax provision for single seniors to offset the considerable tax reduction from pension income splitting by couples
Q: Any final thoughts for us?
A: Current provisions of the Income Tax Act transfer the tax load from senior couples to senior singles through the inequalities that I’ve mentioned. In effect, single seniors are subsidizing couples.
Daycare relief
The cost of daycare is crushing, but that’s slowly changing. We’re looking to speak with parents who have seen their daycare costs drop to $10/day. How much the reduction helped your household budget? To share your story, e-mail reporter saira@peesker.ca
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
A tax hike you never expected
Toronto is exploring the idea of a 1 per cent municipal sales tax to address city budget shortfalls. At all government levels, expect a reckoning on spending and taxation in the years ahead. Hard to see how we end up with lower taxes.
Home décor a la Dollarama
What a $40 home kitchen upgrade looks like when you do your buying at Dollarama.
GICs and the CRA
A guide to taxation of guaranteed investment certificates, which have been popular in the past 18 months because interest rates are high. A 5-per-cent GIC in a tax-free savings account sounds pretty good to me.
Protect your electronics
A list of appliances you should never plug into a power strip, even those with a surge protector.
Today’s financial tool
A bank by bank look at 24-hour, seven-day and 30-day limits on the amount of money clients can send by e-transfer. You should be able to adjust your limit online or by contacting your bank.
The money-free zone
Darrell Banks was a rising soul singer who was killed in a fight in 1970 and then pretty much forgotten. His song Open the Door to Your Heart was a hit, but I really like Love Is Not An Easy Thing. The twangy backing guitar makes it.
Listen to this
A discussion of what’s happened with the pandemic pet boom, and where the pet industry is headed. I note this CBC report on how more people are surrendering pets to shelters.
Spotted on social media
An insolvency trustee on the Number One question asked by people about to file for insolvency.
ICYMI
What I’ve been writing about
- The new rule of GIC investing: Don’t settle for 5 per cent
- Sorry to spoil the party, Swifties. Can you really afford that Eras Tour ticket?
- A new take on buying a home versus renting, based on controlling risk to your finances
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be child-free or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money – you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home down payment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
Rob Carrick