Old Age Security benefit (OAS) is received by individuals who are 65 years old, are a Canadian citizen or legal resident and have lived in Canada for at least 10 years since the age of 18.

Currently the monthly OAS payment is approximately $600. The OAS benefits are clawed back at the rate of 15% for every dollar of income over $79K and benefit is stopped entirely once income reaches approximately $128K

Here are 3 ways that can help you to reduce the clawback from your OAS benefits:

  1. Split pension income: You can split your pension income with your spouse to reduce your taxable income for the year which will help to minimize the clawback.
  2. TFSA Investments: If you earn significant investment income, a good way to minimize your taxable income is by making the investments through TFSA. Earnings on TFSA investments is tax free, therefore the earnings are not included as part of your income on your tax return.
  3. Defer your RRSP Deduction: If you contribute to your RRSP, you can consider deferring your RRSP deduction. You can claim the deduction in the upcoming years when you decide to reduce your income for minimizing the clawback for that year.

For more details contact one of our tax experts at SJ Chartered accountants serving Mississauga, Etobicoke, Toronto & other surrounding areas in the GTA.