Don’t Fear The OAS Clawback

by Tax Guy - Burlington Accountant on June 23, 2009 Print This Post Print This Post

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.

old-lady-scared-pension

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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.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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