By Olev Edur
Next year, I’ll turn 65, and I’ve been approved for my Old Age Security (OAS) pension. However, I’ve learned that if my income is more than about $85,000 this year, my OAS will be reduced. I am a self-employed plumber and just wrapping up a major project that will result in this year’s income being higher than it will be next year when I retire and stop earning work income. Will this pension reduction be permanent or for just the one year?
The OAS “clawback” is based on the previous year’s earnings; if your income is abnormally high for only one year, your benefits will be clawed back in only one year. The clawback threshold for 2023 is $86,912, and this amount is indexed to inflation, so it will be a bit higher each quarter. The rate of the clawback is 15 per cent of each dollar in excess of that threshold.
After you file your 2023 tax return, you’ll receive a notice from the Canada Revenue Agency (CRA) stating that your OAS benefits for the period from July 2024 to June 2025 will be reduced. A CRA representative told Good Times, however, that if this income spike is likely to be a one-time event, you might be able to reduce the amount of the clawback by sending CRA a completed Form T1213OAS with a letter explaining that 2023 was an exceptional year and asking for some relief.
