For example, the edge for the 2023 income yr is $86,912. If your income in 2023 was $120,000, your refund could be 15% of $33,088 (the difference between $120,000 and $86,912), which is $4,963.20.
OAS reclaims are repaid in 12 monthly payments, starting in July of the next tax yr (on this case, 2024) and ending in the next June (in this instance, 2025). This period from July to June is named the “tax reclaim period.” To proceed our example, $4,963.20 divided by 12 equals $413.60. That’s the quantity you’ll repay every month from July 2024 to June 2025. (See the OAS reclaim thresholds for income years 2022 and 2024.)
How can I avoid OAS clawbacks?
With some planning, it could be possible to cut back or avoid OAS clawbacks. One strategy is to separate retirement income with a spouse who has a lower marginal tax rate. Another strategy is to base withdrawals out of your registered retirement income fund (RRIF) on the younger spouse’s age—your minimum withdrawals could also be lower. Keep in mind that various kinds of investment income are also taxed in another way. (Learn more about how passive income is taxed.) Consider speaking with a financial advisor or tax planner about these and other strategies.
What is the Guaranteed Income Supplement (GIS)?
The Guaranteed Income Supplement (GIS) is an element of the OAS program and provides an extra, tax-free monthly payment to Canadian residents receiving OAS whose income within the previous yr is below a certain threshold. Like OAS, the GIS is indexed to inflation.
The income limit changes annually. For example, from July to September 2024, the limit for a person is $21,768. If your income was below that in 2023, chances are you’ll be eligible for the GIS.
For couples, the utmost income limits for joint annual income in 2023 are:
- USD 28,752 in case your spouse/partner receives the complete OAS pension
- USD 52,176 in case your spouse/partner doesn’t receive OAS
- $40,272 in case your spouse/partner is Subsidy (a tax-free payment for Canadians aged 60 to 64 whose partner is eligible for the GIS and whose joint income is below the exemption limit)
If you don’t receive a letter from the federal government concerning the GIS, you possibly can submit an application through a My Service Canada account or by completing a paper form and submitting it to Service Canada. You can apply for OAS and the GIS at the identical time. Learn more about Application for the GIS.
