What is OAS and what is the claw-back?
OAS or Old Age Security is a government benefit paid to seniors after the age of 65 who meet the legal status and resident requirements. It is based on the number of years a person has lived in Canada. In 2017 the maximum benefit, for people over the age of 65 who have lived in Canada for over 40 years was $578.53 per month. OAS is a taxable benefit.
The claw-back part is called the OAS Recovery Tax. If an individual's net world income exceeds the minimum threshold some or all of the OAS payment has to be repaid. This is done by a partial or complete reduction of your OAS benefit. The recovery tax year runs from July to the following June. The thresholds are shown below:
Recovery Tax Period
Minimum Income Threshold
Maximum Recovery Threshold (100% Recovered)
July 2016 –
July 2017 –
July 2018 –
This chart indicates if your net world income for 2017 was greater than $74,788 part of your OAS will begin to be clawed back in the payment year of July 2018 to June 2019. If your income in 2017 was greater than $121,314 all of your OAS payment will be recovered; meaning you won't receive any OAS from July 2018 to June 2019. This is reassessed each year. The claw-back amount is 15% of the difference between your earnings and the minimum. Contact our office if you would like more information on this calculation.
How can you limit the amount of OAS you have clawed-back? It all comes down to managing your income. Preserving and growing your wealth means taking advantage of tax, investment and estate planning strategies. While some strategies are available throughout your lifetime, others are available only after the age of 65. This checklist outlines financial planning considerations for seniors. All references to a spouse include a common-law partner.
- Pension Income Splitting
- Spousal RRSP Contributions
- Pension Sharing
Tax minimization strategies
- Forgotten RRSP Contribution
- Tax-Free Savings Account (TFSA) Contribution
- Use your spouse’s age for RRIF minimum benefits
- Tax credits
- In-kind donation of publicly traded securities
Click here to request the 2018 financial planning checklist.
This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article. You can contact Elizabeth here.