The Canada Pension Plan (CPP) is a crucial source of retirement income for millions of Canadians. Once you turn 60, you can start collecting your monthly CPP payments, which provide a stable income well into retirement. If you’re collecting those benefits, there’s one thing to always keep in mind: the Canada Revenue Agency (CRA) is watching.
Not because you’ve done anything wrong, just because it’s their job. The CRA makes sure CPP payments go where they should and are reported properly. That’s why it’s helpful to know what red flags the CRA looks for. This way, you can avoid any unexpected audits or problems. If you’re managing your retirement income through a bank like Royal Bank of Canada (TSX: RY), you’re starting strong. But even so, there are a few warning signs to stay aware of.
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What to watch
One of the first red flags the CRA watches for is unreported income. Let’s say you start taking CPP at age 60 but continue doing some part-time consulting or freelance work on the side. If you’re earning extra income and don’t report it properly on your tax return, it could trigger a review. The CRA uses information to cross-reference income reported on T4s, T5s, and your CPP. If something doesn’t add up, you might get a letter asking for clarification or proof. Even innocent mistakes, like forgetting to report interest from a savings account, can lead to problems.
Another red flag comes from overpayments or payments made in error. The CRA keeps a close eye on accounts where CPP payments continue after a person’s death or disability status changes. This happens more often than you’d expect, especially when families forget to inform the CRA of a loved one’s passing. If the direct deposit keeps flowing into a joint account or a single account still active with a bank, the CRA can freeze funds or reclaim the overpayment. It’s important to remember that CPP stops the month after a person dies. Therefore, the estate is not entitled to keep any payments made after that date.
The third major red flag is benefit misuse. This could involve someone collecting benefits that belong to another person or continuing to access an account that should be closed. While this is rare, it can happen in cases of shared banking credentials or not being updated after someone’s death or loss of capacity. Unusual transfers, sudden spikes in withdrawals, or frequent changes to deposit accounts can prompt a deeper look. If you’re managing someone else’s benefits, having a power of attorney properly filed and documented is key.
Royal Bank works
Now, let’s shift briefly to Royal Bank. Its most recent earnings report, released in May 2025, showed strength despite economic headwinds. It reported revenue of $13.74 billion and net income of $4.45 billion. That was an increase from $13.45 billion and $3.95 billion, respectively, in the same quarter last year. Its earnings per share came in at $3.17, beating the $2.89 estimate. This kind of solid performance reinforces why many retirees and CPP recipients trust Royal Bank as a financial partner. It’s reliable, well-regulated, and has the tools in place to make CPP management easy and secure.
Royal Bank of Canada is one of the country’s most trusted institutions. It’s not just the largest bank in Canada by market cap. It’s also where millions of Canadians keep their retirement savings, pay bills, and manage direct deposits, including government benefits like CPP. If you’re banking with Royal Bank and receiving CPP, it means your income is flowing through one of the most well-connected financial systems in the country. But this also means that the CRA can easily verify your deposits and track any discrepancies between your reported income and your actual bank activity.
