Although you have retired and may be done with work, you are not yet done with taxes. You may have gone from one source of income while working to several now that you are retired. In addition to your LAPP pension, you might have payments from Canada Pension Plan (CPP) , Old Age Security (OAS) and other retirement investment income. You might even return to work.
You can put your calculator away; taxes are already deducted from the monthly pension payment you receive. The income tax we deduct varies based on government requirements and what information you have provided, especially the Canadian province, territory, or country in which you reside. You can review the amount of tax deducted at mypensionplan.ca. You can read more below on how it is calculated.
When calculating your tax deductions, we assume that your only source of income is your LAPP pension and any other pensions administered by Alberta Pensions Services Corporation (APS), LAPP's pension administrator. We do not know what your other sources of income might be, and the tax withheld is based only on your pension income. Other income might push you into a new level.
We also assume that you qualify for the Basic Personal Exemption if you live in Canada, unless you tell us otherwise by submitting a form from Canada Revenue Agency (CRA). Government tax rates can change from time to time, and you can review the amount of tax deducted from your pension on mypensionplan.ca.
If you have any questions, we recommend you speak to an accountant, tax preparer, or CRA.
If you move out of province or country, please update your information via mypensionplan.ca or contact us as soon as you can, so your provincial or out-of-country tax rate can be adjusted if needed.
It is important to know that many countries have tax agreements with the Government of Canada, which means your income may be taxed at a lower rate. You can find a listing of these agreements and tax rates on the Government of Canada's Benefits for Canadians Living Abroad page. If the country you are moving to or live in does not have a tax treaty with Canada, your LAPP pension will be taxed at a standard 25% rate.
We will mail your T4A tax slip for any pensions you receive from the pensions APS administers. These will be sent to you every year by the end of February. The T4A you receive will be a summary of income from the pension plan(s) and is used when you file your taxes every year. If you need a duplicate, you can access it through mypensionplan.ca.
Additional Taxes Deducted
If you have income from other sources, such as government pensions or working during retirement, you may request that additional tax is taken off your LAPP pension payment to avoid owing at tax time. If you want to increase the tax deducted from your pension, contact us.
I'm receiving a large refund from the government at tax time. Can you deduct less tax from my pension?
If you receive a large refund, we may be deducting too much tax. We can reduce the amount deducted if you qualify to claim additional and eligible tax credits. Eligible tax credits could apply if you become disabled, turn age 65, support certain dependents, or go back to school.
To claim the tax credits, complete and send us the federal TD1 and the TD1 forms for the Canadian province you live in. A new form can be submitted at any time you want to change exemptions or how much tax is deducted.
You can also ask the CRA for permission to reduce the amount of income tax withheld from your pension for deductions and tax credits that you cannot claim on the TD1. These include large charitable donations, support payments required under a divorce or separation agreement, child care expenses, and allowable RRSP room (possibly carried forward from your working years).
In order to request a reduction, you must complete the T1213 form. If the CRA approves your request, you will receive a written authorization to deduct less tax, which you can then send to us.