How to calculate OAS clawbacks
If your earnings are above a certain amount in a given year, you will have to pay some or all of your OAS. The recovery limit changes from year to year, but the figure remains the same: You pay 15% of the difference between your income and the annual limit.
For example, for the 2024 income year, the minimum amount to receive income is $90,997. If your total taxable income in 2024 was $120,000, your payment would be 15% of $29,003 (the difference between $120,000 and $90,997). That comes out to $4,350.45.
OAS clawbacks are paid in 12 monthly payments, beginning in July of the next tax year (in this case, 2025) and ending in the following June (2026, in this example). This period from July to June is called “return tax season.” Continuing our example: $4,350.45 divided by 12 is $362.54. How much will you pay every month from July 2024 to June 2025.
For the 2025 income year, the minimum income threshold will be $93,454. For taxpayers aged 65 to 74, i the highest the income limit (above which the full amount of OAS will be paid back) is $151,668, and for those age 75 and older, it is $157,490. Learn more about the tax limitations of OAS adoption.
How can I avoid OAS clawbacks?
With some planning, it may be possible to reduce or avoid OAS clawbacks. Another strategy is to split pension income with your spouse at a lower rate of tax. Another strategy is to base withdrawals from your registered retirement income fund (RRIF) on the age of the younger spouse—the minimum withdrawal may be lower. Remember that different types of investment income are taxed differently, too. (Read more about how income is tax-free.) Consider talking to a financial advisor or tax preparer about these and other strategies.
What is the Guaranteed Income Supplement (GIS)?
The Guaranteed Income Supplement (GIS) is a part of the OAS program that provides an additional, tax-free monthly payment to Canadian residents who receive OAS and whose previous year’s income is below a certain threshold. Like the OAS, the GIS is indexed to inflation.
The income limit changes every year. For example, from January to March 2025, the limit is $22,056 for a single person. If your 2024 salary was less than that, you may be eligible for GIS.
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