With rising student debt and a strained housing market, many young Canadians are not in the same financial position as their 35-year-old counterparts.Isabella Falsetti/The Globe and Mail
Canada begins taxing people as adults once they earn their first paycheque. But step onto a college campus, into a basement apartment or a parent’s guest room, and it quickly becomes clear this no longer reflects reality.
Economic independence rarely starts during the teenage years today. Education lasts longer, job stability comes later and many young people rely on family or shared support well into their mid-20s. That’s why I propose a simple change: Make the minimum taxable age 25.
With rising student debt and a strained housing market, many young Canadians are not in the same financial position as their 35-year-old counterparts, making a one-size-fits-all tax approach increasingly obsolete.
Retirement is different in today’s landscape too. Seniors face a tangled mix of credits, clawbacks and income-tested benefits that make planning for finances tough.
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A better approach would be a flat 15 per cent federal income tax for all Canadians 65 and over – applied to all income sources. This would replace today’s patchwork with a clear, predictable system that’s easier to navigate and administer. It also respects the reality that essential costs such as housing, utilities and health care don’t decline with age, even when income does.
The current government has co-ordinated with provinces on health care and housing, and could do the same for senior taxation, creating consistency nationwide.
Finally, we need to modernize our definition of dependents. Most tax credits still assume a nuclear family: Two parents, minor children, living in one household. However, nearly 30 per cent of Canadian households are single-person, and many more are shared, blended or multigenerational. The system doesn’t reflect that.
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Instead of assigning benefits based on outdated family structures, let’s define dependency by financial support. If someone under 25 is still financially dependent – living at home, attending school full-time or relying on others for essentials – they shouldn’t be taxed as fully independent adults. The Basic Personal Amount – the tax credit that shields income from federal tax – should instead be transferred to the person or people truly supporting them.
The dependent credit could be claimed by one or two adults, regardless of their marital or legal relationship, with the determining question set as: who’s paying the bills?
The system would be simpler and fairer. No more outdated rules or hidden advantages for those with the right paperwork. Just a straightforward acknowledgment of who’s carrying the financial load.
Together, these three proposals – delaying taxation until 25, a flat senior rate at 65 and redefining dependency based on financial support – would move our tax system toward something it hasn’t been in a long time: modern, honest and fair.
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Most importantly, these proposals wouldn’t reward particular lifestyles over others – they would simply reflect people’s actual stages in life and their ability to contribute. The changes would simplify income tax without affecting protections including the Canada Pension Plan, Employment Insurance and Old Age Security, which would remain untouched.
Likewise, targeted programs such as the Guaranteed Income Supplement would continue providing essential support to low-income seniors, ensuring no one is left behind.
Canada’s demographics are changing. Our tax policy must catch up. It’s time to build a tax system that recognizes the challenges of coming of age and the realities of the golden years. It’s time our tax system recognized the many different ways Canadians live and support each other.
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