When to watch out for OAS clawbacks
Working in retirement? Beware clawbacks
How much money should I have saved by age 40?
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READ: When not to apply for OASBut since most income needs to at least be reported on your tax return, whether it is taxable will depend on your other income sources, tax deductions and credits for the year. It’s also important to note that Canadian residents are taxed on their worldwide income, so earning income in another country doesn’t exempt it from Canadian tax reporting requirements. Quite to the contrary, sometimes the requirements are even more strict for foreign income. Canada Pension Plan (CPP) and Old Age Security (OAS) are government pensions that you can receive in retirement. CPP starts as early as age 60 or as late as age 70 and is paid for life. OAS starts between 65 and 70 and is also a lifetime pension. You can work and receive both pensions. You can also earn other sources of income besides employment or self-employment income, Marcella. If you’re working while receiving CPP, and you’re under the age of 65, you still need to contribute to the CPP pension. You can opt out of contributions after the age of 65, but you need to file a form with CRA to do so. If you’re receiving OAS and your net income on line 236 of your tax return is more than $75,910 for 2018, you will be subject to OAS clawback. Clawback results in your OAS pension for the subsequent year, paid between July 2019 and June 2020, being reduced by 15 cents for every dollar your net income exceeds the $75,910 threshold. If you have a net income of $122,843 or more for 2018, your OAS is fully clawed back and reduced to zero.
If you are working and want to reduce your income, Marcella, you can always contribute to a Registered Retirement Savings Plan (RRSP) account if you or your spouse are under the age of 72.
Getting information online about your finances can be difficult. I do online financial research sometimes myself and even though I know what I’m looking for, I find it’s still difficult to know what is reliable and what is not. I’m partial, but I think you need to stick with personal finance sites like MoneySense.ca and other known Canadian media, bank or accounting firm websites. At least you know they’re somewhat vetted because of the experts who contribute and the readers who would correct an error if it were inadvertently published.
That said, there’s no promise online information is up-to-date, Marcella. So, look for recent articles or posts, as something that applied five years ago or even last year, for that matter, may no longer apply.
And if you have a few tax questions, consider paying a professional for their advice. I find there can be a real reluctance to do so when there’s so-called “free” advice on the internet. But if it’s free bad advice, maybe it ends up costing you more in the long run.
Few people would think to Google how to perform a root canal, let alone try it themselves. But lots of people try DIY tax and financial advice. If you don’t have an accountant, contact one and buy an hour of their time. Bring a list of questions or send them beforehand, so you can get an income tax “check-up.” It may be well worth it even if you only do it once in your life or at least once in a while, Marcella.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does not sell any financial products whatsoever.
Ask a Planner: Leave your question for Jason Heath »
MORE ABOUT OAS:
- What to expect when receiving OAS at 65
- How business owners should time CPP and OAS
- Key to ‘rich’ qualifying for GIS is large TFSA
- Do bonds still belong in an RRSP?
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Just Received payout for car accident in 2016
Collect cpp oas gis.
Am i losing above incomes due to payout
Got answer re phone consult. Thanks
I’m due OAS a year from now. Will this affect my retirement pension from Fed Gov.?
I noticed my OAS is lower this month then last month. I am low income senior and will miss that extra 166.00.
I cannot find an answers on this,
I am a low income senior and my OAS was deducted by $50.oo I would like to no why. This income is crucial to me as I live in an assisted living and do not have much income . Please reply
Response from the MoneySense editorial team:
Hello Betty, thanks for asking.
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected],
where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
I am 66 year old not working at this time if i go back to work how many hours can i work
If my wife and I are both 65 and both getting old age and me cpp and her under 100.00 a month cpp. Now l am still working and pay taxes and put into rrsp . Can we split our income ,how does that work ?
Thanks Garth
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
I’ve been semi retired for 2 yrs only working 3days consecutively a week, now all of a sudden my employer wants to screw around with my schedule by splitting my days as I believe it to be a ploy to get rid of me due to my age which I was advised by a lawyer could be the case. My question is can my days be split and still be under the allowed amount so I still get my full OAS that I receive now? As I was advised by Service Canada upon applying for OAS not to split my days.
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with a qualified advisor.
my wife has a Bed And Breakfast. Claims it on her income tax, we are wondering how much she is allowed to make before loosing her supliment.
Thank you.
Do you still have to wait til age 67 to get CPP if you were born in 1960 or did that get changed? (I read that somewhere quite awhile ago but can no longer find it)
Thanks