This calculator estimates the share of work income kept by a pensioner who resumes employment.
The calculator facilitates enlightened financial decision‑making. It indicates disposable income before and after the resumption of employment. This overview considers:
The calculator estimates:
The Québec and Canadian taxation systems contain measures that seek to protect from taxation certain work income, in order to:
Many of these measures (e.g., deduction for workers) apply to all workers. Other measures (e.g., tax credit for career extension) apply only to experienced workers.
The calculator indicates the impact of such measures on the tax payable of retired taxpayers who are employed.
Let us take the example of a 65‑year‑old pensioner. Each year, this individual receives a retirement pension of $10 000 from the Québec Pension Plan (QPP) and withdraws $20 000 from their RRSP. This person wants to estimate the net gain that $15 000 in annual work income would provide.
With this additional work income, the individual would be subject to withholdings totalling $6 369, that is, $5 327 in additional taxes and contributions and $1 042 in reduced government assistance.
However, this individual can save $610 by no longer contributing to the QPP. They also benefit from a $1 050 tax cut through the tax credit for career extension, as well as an additional contribution of $358 through:
Accordingly, the employment incentives reduce tax payable by $2 018.
The pensioner’s net gain from work income will therefore be $10 649. This corresponds to a retention rate of work income of 71.0%.
The calculator estimates the additional disposable income of a pensioner when the latter’s potential work income is considered. The calculations are based on assumptions that reflect the most common situations. The calculator merely seeks to provide a realistic estimate of this amount. However, the exact amount of the tax payable and various required contributions payable can differ depending on the households and their specific situations.