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.
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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).
Example:
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.
Related Articles
- OAS Rates And Clawback
- OAS Clawback And Your Spouses’ Income
- What Is Eligible Pension Income?
- Pension Income Splitting For Canadians
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The clawback $66,733 income is it before tax ,or after tax ?net
It is before tax and the amount reported on line 234 of your tax return is the line used to determine the clawback.
Is the clawback calculated on a year to year basis? If you make $50,000 one year and make $20,000 the next, will your OAS payments go back up?
OAS clawback is based on the calendar tax year.
I will earn over the limit for this year as I choose not to retire. If I retire after this year my income will be very limited, will I have to go through the year with my pension reduced until my taxes are calculated even though I will have less than $30k for that year?
Thank you.
You will repay this year’s pension and next years pension will be reduced. If the reduction causes financial hardship, you can ask the CRA to review your situation.
My Dad received a lump sum payment from WSIB in 2009 after having contracted mesotheloma from his workplace several years earlier. My Dad is currently 90 and has been retired for 25 years and was diagnosed about 3 years ago.
WSIB advised we would not pay tax on this money which we did not but on his 2009 tax return he had to repay his OAS for that year and as well was told he would not received his OAS for 2010 and 2011. We previously appealed the stop payment of the 2010 and 2011 OAS and this was reinstated.
We did call the tax office but were informed that we would not get back any of the OAS funds he had to pay back for 2009 the year the settlement was received. We had an Accountant do his income tax but we are not sure if he actually should have had to repay that money since this was a settlement and not income earned from working.
If you can offer any input or for a direction for us to go as far as finding out if he should have had to pay back this money it would be greatly appreciated.
The WSIB wold have been added to taxable income when received. If taxable income was above the OAS threshold for the tax year, it would be reduced.
I will start receiving OAS in October of 2012. My income for 2012 will be approximately $70,000. I plan on retiring on May 31,2013. My income for 2013 will be considerably less than the clawback ceiling of $66,000.
I will file my 2012 Income tax return by April 30, 2013 at which time CRA will see $70,000 for that year. Does that mean that the OAS will be reduced say in May, 2013 when I am retiring? What do I have to do to ensure that my OAS will not be reduced, as my income will drop immediately and need to continue receiving the same payment I will be receiving from October 2012? Thanking you in advance,
The OAS will be reduced the following year until you file again.
Thanks Dean,
Is there any way I can communicate with CRA/OAS people that I will only be in the higher income bracket from January, 2013 to May 2013 and inquire if they can defer the reduction?
Les,
You can call Service Canada and ask them to advise you as I don’t know the answer off the top. I do believe that the OAS is reduced until you file the next tax return. But it doesn’t hurt to ask.
Thanks Dean.
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