Limited income but owe tax

Here is a real-life case.

A couple without children with household income just above $55K are not eligible for GST credits and Ontario Trillium Benefits because they are not considered as low-income by the government. One of them just started to receive CPP payment because he just turned 65 the year before 2022. He kept working in a retail store because they need the money. His employer did deduct income tax from his pay, but government didn’t withhold income tax from his CPP payment.

It turned out that he owed more than $1.6K tax. The deadline to pay tax was yesterday. There is interest on tax owed if it passes due date. There is also penalty for late filing if there is tax owed. Not even sure that he has any extra cash or emergency fund to pay for this right away.

They rent an apartment in downtown Toronto. The rend and living expenses are getting more and more expensive. Some might say they should move away. What if they are from LGBTQ community and feel more comfortable living in a neighborhood where they feel welcome? Big city is more diverse. It is not easy to move away from the place they have lived for a long time and already established roots.

$55K annual income is quite limited for a couple especially in downtown Toronto. They definitely will not be eligible for the new grocery rebate or most social assistance. Both are older than 65. Just rely on CPP and OAS. Probably many seniors are in this financial situation. If they are fortunate, they can get on subsidized housing. Otherwise, they have to take a job.

Some people might say why didn’t they save enough for retirement. Many people do want but they can’t because they have been living paycheque to paycheque most their lives. Or something unfortunate happened to them.

Hope you have your tax affairs all sorted out. The deadline to file tax or pay tax was yesterday.

Published by Worthfy

Financial literacy and counselling

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