Comments on: Don’t Fear The OAS Clawback

By: Tax Guy

Tax Guy — Thu, 17 Mar 2011 14:05:39 +0000

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.

By: Julie L.

Julie L. — Thu, 17 Mar 2011 05:29:48 +0000

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.

By: Tax Guy

Tax Guy — Fri, 04 Mar 2011 19:45:50 +0000

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.

By: Edale

Edale — Fri, 04 Mar 2011 13:15:46 +0000

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.

By: Tax Guy

Tax Guy — Wed, 02 Feb 2011 19:44:24 +0000

OAS clawback is based on the calendar tax year.

By: Liz

Liz — Wed, 02 Feb 2011 18:54:16 +0000

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?

By: Tax Guy

Tax Guy — Wed, 26 Jan 2011 20:44:18 +0000

It is before tax and the amount reported on line 234 of your tax return is the line used to determine the clawback.

By: miche mccann

miche mccann — Wed, 26 Jan 2011 20:22:20 +0000

The clawback $66,733 income is it before tax ,or after tax ?net

By: Jeff

Jeff — Tue, 21 Dec 2010 13:34:52 +0000

Thanks for the confirmation and the link. Much appreciated.

By: Tax Guy

Tax Guy — Tue, 21 Dec 2010 13:19:42 +0000

Jeff,
It’s not a stupid question at all! The pension income splitting provisions allow you to move income to your spouse and remove it from your income tax return. This shift will lower your income, and if the shift causes your income to be below the $66,733 OAS clawback threshold.

Unfortunately, the shift may also affect other tax credits you and your spouse receive: Including the spousal amount and the age credit. You have to be careful how much you allocate.

There is no calculators available to help assess the right amount, but you can try and use the Walter Harder T1 Income Tax estimator and play around with moving pension income from you and your spouse to estimate the best ratio to move to lower your combined tax bill and reduce OAS clawback: It’s not easy but is all that is available right now.