Many seniors today receive Old Age Security (OAS) and are fearful of the OAS Clawback. However, anyone in a clawback situation should not generally be concerned but rather be proud of their ability to be self-sufficient.
What is OAS?
Old Age Security (OAS) is a federal government pension available to Canadians over age 65 who has been in Canada 10 years or more. The average monthly OAS pension for 2010 was $490.30 and the maximum pension available was $521.62.
What is the OAS Clawback?
Service Canada now calls the OAS Clawback the OAS Repayment. In simple terms, anyone who reported income in excess of $66,733 (for 2010) must repay their OAS pension at a rate of $0.15 for each dollar of income above $66,733.
OAS is fully eliminated when net income reported on line 235 of the income tax return is $108,090 (for 2010).
Sharon reported $75,000 on line 235 of her 2008 income tax return.
Sharon’s OAS Clawback will be ($75,000 – $66,733) x $0.15 or $1,240.05.
In 2009, 1/12th of the clawback will be deducted from her OAS pension payments.
No Fear Needed
While income can have an impact your OAS payments as you near the $66,733 threshold, for many seniors the clawback is not an issue. In fact, the average income of a single senior in Canada is approximately $30,000 per year, which is well below the $66,733 threshold.