One area that I spend a great deal of time on with my clients is identifying situations where their Old Age Security (OAS) may be reduced,  and implementing strategies to help avoid OAS Clawback.  As of December 31, 2018, if your net income before adjustments exceeds $75,910, part of the entire OAS pension amount may need to be repaid.  The repayment amount is equal to 15% of the amount an individual’s net income exceeds the threshold up to the full OAS payment.  Repayment amounts are normally deducted on a monthly basis as a recovery tax and the full OAS payment is eliminated when a pensioner’s net income is $123,386 and above.

There are a few strategies you can implement to reduce clawback amounts:

  • Split your pension with your spouse (CPP or private pension).  If your spouse has a lower income, you can split up to 50% with your spouse which should reduce your overall income.  This also applies to Registered Retirement Savings Plan (after age 65) and annuity income.


  • Use your RRSPs before age 65.  RRSPs are only a tax deferral which means the tax on the income will have to be paid eventually.  At age 71 your RRSP must be converted to a RRIF and during the age of 72 a mandatory amount of income must be withdrawn – 5.28%.  If you have a sizeable RRSP, e.g. $250,000, your mandatory amount would be $13,200 which his 100% taxable.  If you have income from a private pension and CPP this may put your income above $75,910.


  • Interest on funds borrowed to earn investment income can be ducted and will reduce your net income.


  • As always, we recommend working with a professional financial planner to help identify a potential clawback situation and look at strategies to help mitigate these risks.


  • Use your TFSA to generate investment income which is non-taxable and therefore would not count towards our net income.


  • Watch for capital gains.  If you are planning to sell an asset with a large, unrealized capital gain consider doing so before age 65.


Be well advised.

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