Health & Wellness

About the OAS “Clawback”

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.