OAS Basics
What is OAS?
| Feature |
Details |
| Type |
Monthly pension |
| Who |
Age 65+ |
| Based on |
Years in Canada |
| Income-tested |
High earners repay some/all |
2026 OAS Amounts
| Age |
Monthly Maximum |
| 65-74 |
~$727 |
| 75+ |
~$800 (10% more) |
OAS Clawback Explained
Recovery Tax
| Component |
Details |
| Official name |
OAS Recovery Tax |
| Threshold |
~$90,997 (indexed) |
| Rate |
15% of excess income |
| Full clawback |
~$148,000 income |
How It Works
| Your Income |
OAS Impact |
| Under ~$90,997 |
Keep full OAS |
| ~$90,997-$148,000 |
Partial clawback |
| Over ~$148,000 |
OAS fully clawed back |
Clawback Calculation
Clawback = (Net Income - Threshold) Γ 15%
Examples
| Net Income |
Above Threshold |
Clawback |
Monthly OAS Lost |
| $95,000 |
$4,003 |
$600 |
$50 |
| $100,000 |
$9,003 |
$1,350 |
$113 |
| $110,000 |
$19,003 |
$2,850 |
$238 |
| $120,000 |
$29,003 |
$4,350 |
$363 |
| $130,000 |
$39,003 |
$5,850 |
$488 |
| $148,725 |
$57,728 |
$8,659 |
Full OAS |
What Counts as Income
Included in Net Income
| Income Type |
Counts? |
| Employment income |
Yes |
| Pension income |
Yes |
| RRSP/RRIF withdrawals |
Yes |
| CPP benefits |
Yes |
| Investment income |
Yes |
| Rental income |
Yes |
| Capital gains |
Yes (taxable portion) |
| Foreign pension |
Yes |
Not Included
| Income Type |
Counts? |
| TFSA withdrawals |
No |
| OAS itself |
No |
| GIS |
No |
| Most tax credits |
No |
Strategies to Avoid Clawback
TFSA Strategy
| Approach |
Benefit |
| Use TFSA in retirement |
Withdrawals don’t count |
| Build TFSA before 65 |
Tax-free income source |
Example
| Scenario |
Net Income |
| $50K pension + $30K RRIF |
$80K (no clawback) |
| $50K pension + $30K TFSA |
$50K (no clawback) |
| Same cash, different tax |
TFSA wins |
Income Splitting with Spouse
| Method |
Benefit |
| Pension splitting |
Up to 50% |
| Lower spouse income |
Keep their OAS |
| Combined benefit |
Both get OAS |
Pension Splitting Example
| Without Splitting |
With Splitting |
| You: $120K |
You: $85K |
| Spouse: $30K |
Spouse: $65K |
| Clawback: $4,350 |
Clawback: $0 |
RRSP Timing
| Strategy |
Details |
| Draw down RRSP early |
Before age 65 |
| Convert to RRIF early |
Spread withdrawals |
| Reduce RRIF by 65 |
Lower OAS income |
Corporate Structures
| If Self-Employed |
Consider |
| Keep money in corp |
Draw salary slowly |
| Defer dividends |
Until need them |
| Capital dividends |
Tax-free |
GIS and Clawback
Guaranteed Income Supplement
| Feature |
Details |
| For |
Low-income seniors |
| Clawback starts |
Much lower (~$21,624) |
| More aggressive |
50-75% reduction |
GIS vs OAS Clawback
| Program |
Threshold |
Rate |
| OAS |
~$90,997 |
15% |
| GIS |
~$21,624 |
50-75% |
Tax Planning Timeline
Age 55-60
| Action |
Reason |
| Assess RRSP size |
Will it cause clawback? |
| Build TFSA |
Tax-free in retirement |
| Consider early RRSP |
Draw before OAS |
Age 60-65
| Action |
Reason |
| Meltdown RRSP |
If large balance |
| Maximize TFSA |
From RRSP withdrawals |
| Plan pension start |
Coordinate with OAS |
Age 65+
| Action |
Reason |
| Pension splitting |
If applicable |
| TFSA withdrawals |
For spending |
| Monitor income |
Stay below threshold |
Deferring OAS
Can Defer to Age 70
| Deferral |
Increase |
| Each month |
0.6% more |
| Each year |
7.2% more |
| To age 70 |
36% more total |
When Deferral Makes Sense
| Situation |
Consider Deferring |
| High income until 70 |
Yes |
| Clawback anyway |
Maybe defer |
| Need money at 65 |
Don’t defer |
| Good health |
Defer |
With Clawback
| If Income $120K at 65 |
Analysis |
| OAS clawed back anyway |
$4,350/year |
| Defer to 70 |
Higher OAS later |
| Lower income at 70 |
Keep more OAS |
Provincial Differences
Quebec Residents
| Feature |
Details |
| Same OAS |
Federal program |
| QPP instead of CPP |
Similar rules |
| Provincial benefits |
Additional for low income |
Calculating Your Situation
Estimate Your Clawback
| Step |
Action |
| 1 |
Estimate retirement income |
| 2 |
Subtract threshold |
| 3 |
Multiply by 15% |
| 4 |
Compare to OAS amount |
Example Retirement Budget
| Income Source |
Annual |
| Company pension |
$50,000 |
| CPP |
$15,000 |
| RRIF |
$35,000 |
| Total |
$100,000 |
| Above threshold |
$9,003 |
| Clawback |
$1,350 |
| OAS received |
~$7,370 |
Professional Advice
When to Get Help
| Situation |
Action |
| Large RRSP |
Tax planning essential |
| Corporation |
Complex planning |
| Multiple income sources |
Optimization opportunity |
| Spouse income differs |
Splitting strategies |