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. At the time of writing, the average monthly OAS pension was $489.54 and the maximum pension available was $516.96.
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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 $66,335 must repay their OAS pension at a rate of $0.15 for each dollar of income above $66,335.
OAS is fully eliminated when net income reported on line 235 of the income tax return is $107,692.
Example:
Sharon reported $75,000 on line 235 of her 2008 income tax return.
Sharon’s OAS Clawback will be ($75,000 – $66,335) x $0.15 or $1,299.75.
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 $66,335 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 $66,335 threshold.
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{ 5 comments… read them below or add one }
What does it say about the Canadian psyche that everyone is looking for a handout from the government. The government is there to help those that can’t help themselves. If someone is earning over $66000, they shouldn’t have to worry about another $400 or so a month. If the government is going to give that money away, why not to someone who really needs it?
@ B:
I guess you could say the OAS clawback is a good thing.
I plan on working for a few years after iam 65. Would it be best to take my company pension and my Canada Pension during the time that iam working . Could i put the money from my pension income back into spousal and regular rrsp for myself . As i have not contributed the maximum alloable amounts to rrsps over the years how do i figure out how much i can contribute. I will be 65 in march 2010 and my wife will be 62 .She is a homemaker and iam the only one with income .Is there any kind of income splitteing we can do to save taxes, what about pension income splitting. What is my best opportunity to save tax dollars if i work for two or three years after iam 65.
@ Ray:
There are too many unknown variables in your question for an accurate response. I suggest you contact me directly using the contact form.
Generally, you can contribute to an RRSP or spousal RRSP until you turn age 71 and any income drawn from your pension, or RRIF can be split 50/50 with your wife.
clawback might be acceptable for anyone who does have an income
over 66.000,however what about 30.000/year senior,receives
suddenly wsib/wsiat award,waiting for it past seven year,wsib is not
taxable it contain only 85% of previous wages,tax already
taken of,if it was an income,same senior lived 7 years in poverty
accumulated debts,living on 1.000/month,sudenly his income baloon to 82.000,on one line,substraction of wsib award bring him to where he
suppose to be,yet he needs his oas to pay his debts accumulated
in period of 7 years as explained above,but cra considers all as income
therefore takes it off his oas 430.00 for 6 month.
seriously hampering his ability to repay what he owes,thefore
leaving only one way out of this dilema,a bankruptcy proceedings.
forced by cra.
pold.