For policyholders who are age 65 and over, accrued income (up to $2,000) is eligible for the pension tax credit. To be eligible for the pension tax credit the accrued income must be reported as pension income on the T1-Individual Tax Return. The provincial tax payable will be reduced as well.
If the policyholder is purchasing a non-registered deferred annuity to use the accrued income for the pension tax credit, remember there is no accrued income reported in the year of purchase. The first reporting of accrued income is in the year following the year of issue.
