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The OAS clawback, in plain terms

Old Age Security (OAS) is not taxed the same way as other income. If your income gets high enough, the government starts taking some of it back. Here is how that works.

The basics

  • •OAS is a monthly payment from the federal government, available from age 65 (you can delay up to 70).
  • •Unlike CPP, OAS is not based on your work history — it is based on how long you have lived in Canada.
  • •OAS itself is taxable, and it is also subject to a separate "recovery tax" — the clawback.

How the clawback works

  • •Every year there is an income threshold (for 2025 it is about $93,454 of net world income).
  • •For every $1 of income above that threshold, the government claws back about 15 cents of your OAS.
  • •There is a second, higher cutoff (about $151,668 for 2025) where all of your OAS is gone.
  • •The clawback is calculated when you file your taxes — it is officially called the OAS recovery tax.

What counts as "income" for the clawback

  • •It is your net world income — basically line 23400 on your tax return, before most deductions.
  • •That includes CPP, pensions, RRSP/RRIF withdrawals, and most investment income.
  • •It does not include TFSA withdrawals, since TFSA income is tax-free and not reported.

Why it matters for planning

  • •A large RRSP/RRIF withdrawal in one year can push you over the threshold and quietly cost you OAS dollars.
  • •Spreading taxable withdrawals across several years — tax smoothing — can keep you under the clawback line.
  • •Drawing TFSA or non-registered money first can keep your reported income low while still funding spending.
  • •Deferring OAS to 70 raises your monthly payment by 7.2%/year and can also shift income timing to avoid the clawback in your 60s.

The timing — and why it can squeeze cashflow

  • •The clawback is based on your prior year's income, not the current year — the government looks back at the net income you reported on last year's tax return.
  • •The reduced payments typically start in July of the following year, once CRA has processed your previous year's return.
  • •So a high-income year can keep shrinking your OAS cheques well into the next year, even if your income has since dropped.
  • •That lag can strain cashflow: you may be living on less this year because of last year's income, while this year's lower income does not help your OAS until the July after you file.
  • •If your income has genuinely fallen, you can ask CRA to reduce or cancel the recovery-tax withholding using Form T1213 (OAS Return of Income) — so you are not waiting a full cycle to get relief.
  • •Planning takeaway: smooth taxable income across years so no single year spikes high enough to trigger a clawback that then haunts the next year's cashflow.

Good to know

  • •The threshold changes every year with inflation, so the numbers here are for 2025.
  • •If your income is clawed back, you may be able to appeal or voluntary repay in some cases, but most people simply receive less.
  • •The Income Sequencer shows the clawback as its own line in the yearly breakdown, so you can see exactly when it bites.

See the clawback in your plan

Open the Income Sequencer and watch the clawback line as you adjust withdrawals.

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