64 What is the OAS tax credit? What is the Claw back? How is it calculated? Why does it exist?

The Old Age Security (OAS) tax credit is a monthly payment available to Canadians aged 65 or older. It is funded from the general tax revenues of the Government of Canada (you do not pay directly into it) and exists to assist low-income seniors. To qualify, you must be:

• 65 or older
• A Canadian citizen or legal resident when your application is approved
• A Canadian citizen or legal resident on the day prior to leaving Canada, if you no longer live in the country
• Have lived in Canada for at least 10 years since your 18^th birthday to receive OAS in Canada
• Have lived in Canada for at least 20 years since your 18^th birthday to receive OAS outside of Canada

From January to March 2020, the OAS maximum monthly payment amount regardless of your marital status is $613.53. Further details regarding the payments can be found at: Article – “Old Age Security payment amounts” (Author: Government of Canada)

OAS Claw back

If your worldwide income exceeds the minimum threshold amount (see table below), you must repay either a portion of your OAS pension, or the entire amount. After the maximum threshold amount, you are no longer eligible to receive the OAS pension.

To calculate the claw back amount, you take the difference between your income and the minimum threshold and multiply this amount by 15%.

For example:

If your income in 2019 was $90,000, the claw back amount would be:

Income – Minimum Threshold = Difference, Difference x 15% = Claw Back Amount

$90,000 – $77,580 = $12,420, $12,420 x 15% = $1,863

You are required to pay back $1,863 of your OAS pension.

Interactive content (Author: Sarbjot Jainpuri, January 2020)

Interactive content (Author: Jasmeen Kaur, February 2020)

References and Resources:

• ITA 180.2
• Article – “Old Age Security – Overview (Author: Government of Canada)
• Article – “Old Age Security payment amounts” (Author: Government of Canada)
• Article – “Old Age Security pension recovery tax” (Author: Government of Canada)

January 2020