- Do you’ve every other income from it? Canadian Pension Plan (CPP)to? (Adding that to your salary puts you even further into the clawback zone.)
- How much Old Age Security (OAS) Are you able to lose?
- And does it make sense to postpone your CPP and OAS?
As a reminder, the quantity of clawback you face depends upon your net income from all sources (including worldwide) and the way far your income extends into the clawback zone. There isn’t any line within the sand beyond which you’ll lose your entire OAS pension. Instead, there’s a zone that starts at $90,997 in 2024 and also you slowly lose your OAS (OAS pension recapture tax) little by little when income reaches $148,451. The initial threshold increases every year with the inflation rate (Consumer Price Index or CPI).
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How much OAS do you lose once you work in retirement?
The rate at which you lose your OAS is $0.15 for each dollar of income over $90,997. This will make more sense if we undergo some examples.
For easy calculation, to illustrate you’ve a net income of $100,000, which implies you’re $9,003 ($100,000 minus $90,997) above the initial OAS threshold. The $8,752 OAS pension is subject to a rebate tax of $1,350 ($9,003 multiplied by 15%). That’s the pre-tax amount you will have to pay back, and your actual spending loss is about $945. This is the quantity received after taxes, assuming a marginal tax rate of 30%.
Depending in your plans, you may accept this loss.
How CPP (and other retirement income) can impact OAS
Now, what if you’ve other sources of income besides your salary? As a reminder, OAS recovery relies in your total net income, which incorporates things like CPP.
What happens in the event you forget so as to add your CPP and OAS to search out your net income? Remember that your net income includes CPP, OAS, pension income, rental income, dividends, interest and taxable capital gains, to call just a few. If your salary is $100,000 and also you receive $15,000 in CPP and $8,732 in OAS, your income is $123,732 and your OAS refund tax is $4,910.
This is the way it is calculated:
(($123,732 – $90,997) x 15%)
