OAS Benefits & Clawback Guide

OAS Eligibility

Basic Requirements

• Age 65 or older
• Canadian citizen or legal resident
• 10 years of residence after age 18 (if in Canada)
• 20 years residence (if outside Canada)

2024 Benefit Amounts

Partial OAS

• If less than 40 years residence
• Receive 1/40 per year of residence
• Minimum 10 years required

OAS Clawback (Recovery Tax)

2024 Thresholds

• Clawback starts: $90,997 net income
• Full clawback: ~$148,000+ (no OAS)
• Recovery rate: 15% of excess income

How Clawback Works

• For every $1 over threshold, lose 15¢ of OAS
• $10,000 over = $1,500 clawback
• Effective marginal rate increased
• Calculated based on Line 23400 net income

Clawback Timing

• Based on previous year's tax return
• Applies to benefits July-June
• Adjusted at source if known
• Reconciled on next year's return

Delaying OAS

Deferral Benefits

• Can delay OAS up to age 70
• Increase of 0.6% per month delayed
• Maximum 36% increase at age 70
• Permanently higher payments

When Deferral Makes Sense

• High income until 70 (would be clawed back)
• Good health, expect longevity
• Don't need the money immediately
• Break-even around age 82

When to Start at 65

• Need the income now
• Health concerns
• Income under clawback threshold
• Lower life expectancy

Guaranteed Income Supplement (GIS)

Eligibility

• Receive OAS
• Low income (under ~$21,624 single)
• Canadian resident
• Must apply annually

Tax Treatment

• GIS is not taxable
• Doesn't appear on T4A(OAS)
• Still affects benefit calculations

GIS Clawback

• Reduced by 50% of income over threshold
• Very high effective tax rate
• Income planning critical

Strategies to Minimize Clawback

Income Splitting

• Pension income splitting (up to 50%)
• Split RRIF income with spouse
• Reduce higher earner's income below threshold

TFSA Strategy

• Maximize TFSA contributions before retirement
• TFSA withdrawals don't trigger clawback
• Shift income from RRIF to TFSA earlier

RRSP Meltdown

• Withdraw from RRSP before 65
• When income is lower
• Reduce RRIF minimum amounts later
• Less income in OAS years

Timing Capital Gains

• Capital gains add to net income
• Realize gains in years under threshold
• Or after age 70 if delaying OAS

Corporate Retained Earnings

• For business owners
• Leave money in corporation
• Withdraw strategically in retirement

What Counts Toward Clawback

Included in Net Income

• Employment income
• Pension income (RPP, RRIF)
• CPP/QPP benefits
• Investment income (interest, dividends, capital gains)
• Rental income
• Foreign pension income

NOT Included

• TFSA withdrawals
• GIS payments
• Gifts and inheritances
• Tax-free portion of capital gains (principal residence)

Reporting OAS on Tax Return

T4A(OAS) Slip

• Box 18: OAS pension
• Box 22: Tax withheld

Where to Report

• Line 11300: OAS pension
• Line 23500: Social benefits repayment (clawback)

OAS at Death

Survivor Benefits

• No survivor OAS (it's individual)
• Allowance for Survivor (if eligible)
• Payment stops at death

Final Return

• Report OAS received to date of death
• May affect clawback calculation

Non-Residents

OAS Outside Canada

• Can receive OAS if 20+ years residence
• Subject to 25% non-resident withholding
• Tax treaties may reduce rate
• No GIS if non-resident

2024 Key Numbers