FIRECA
Canadian Retirement Planner
When your retirement income exceeds the CRA threshold, the government claws back your OAS payments at 15 cents per dollar. Here's what you need to know for 2026.
The OAS recovery tax (commonly called the "clawback") is a mechanism that reduces your Old Age Security pension payments when your net income exceeds a CRA-set threshold. It's not technically a reduction to OAS — it's an additional tax you pay back on your OAS income when your overall income is high enough.
Unlike CPP, OAS is not based on your work history. It's funded by general tax revenues and based entirely on how long you've lived in Canada after age 18. You don't need to have ever worked to receive it.
| Residency After Age 18 | Eligibility | OAS Amount | Notes |
|---|---|---|---|
| Under 10 years | Not eligible | $0 | Unless social security agreement applies |
| 10–39 years (in Canada) | Partial OAS | Years ÷ 40 × maximum | Locked in at start date — doesn't increase later |
| 40+ years | Full OAS | $727.67/mo (65–74) | Maximum benefit |
| Living outside Canada | Need 20+ years | Partial or full | Must have been citizen/resident before leaving |
Canadians working abroad for Canadian employers (military, banks, etc.) may have that time counted as Canadian residency — provided they return within 6 months of ending employment or turn 65 while still working abroad.
If you've lived in a country with a social security agreement with Canada, those periods may count toward your Canadian residency requirement. Canada has agreements with over 50 countries including the US, UK, Australia, and most of Europe.
For the July 2026 – June 2027 period, based on your 2025 net world income:
| 2025 Net Income | Above Threshold | Clawback (15%) | OAS Kept |
|---|---|---|---|
| $90,000 | $0 (below threshold) | $0 | 100% |
| $100,000 | $6,546 | $982/yr | High |
| $110,000 | $16,546 | $2,482/yr | Partial |
| $130,000 | $36,546 | $5,482/yr | Reduced |
| $152,062+ | Full clawback | All OAS repaid | $0 |
The clawback is based on net world income — line 23600 of your tax return. This includes:
TFSA withdrawals don't count as income. The more you've built in TFSA, the more you can draw in retirement without triggering clawback.
Draw down RRSP in low-income early retirement years to reduce future RRIF minimums — the same minimums that often push income above the clawback threshold.
Delaying OAS to 70 increases monthly payments by 36%. But it also means higher payments that are more likely to be clawed back if income is high.
Pension income splitting with a spouse can reduce each partner's individual income, potentially keeping both below the clawback threshold.
Carefully ordering withdrawals from taxable vs tax-free accounts each year can optimize income to stay below the threshold.
Only 50% of capital gains count as income. Timing large asset sales or realizations away from high-OAS years reduces clawback exposure.
Canadians aged 75 and older receive a permanent 10% increase to their OAS payments, separate from any delay bonuses. This boost was introduced in July 2022 and applies automatically — you don't need to apply for it.
The higher payments at 75+ come with a slightly higher clawback threshold ($157,923 vs $152,062) to reflect the larger payment size.
FireCA estimates your OAS clawback year by year in retirement based on your modeled income sources — CPP, RRIF minimums, LIF withdrawals, and portfolio draws.