How to avoid OAS clawbacks and other tax traps in retirement
BNN Bloomberg
Old Age Security (OAS) clawbacks are usually the last thing younger retirement investors think about, but according to Statistics Canada, more than 500,000 seniors or 8.3 per cent of total OAS recipients have been touched by the claw from Ottawa.
Its official name is the Old Age Security pension recovery tax and it starts to kick in when the annual taxable income of a recipient reaches a certain threshold. In 2024, that threshold is $90,997 but it changes each year.
If your income exceeds the threshold amount, you must repay part of your entire OAS pension according to a preset formula from the Canada Revenue Agency (CRA). The more your income exceeds the threshold, the bigger the clawback.
OAS clawbacks are normally the result of contributing too much to your registered retirement savings plan (RRSP), having those investments grow more than expected, or a combination of both.
