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OAS clawback (recovery tax)

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The OAS clawback, officially the OAS pension recovery tax, applies when your net income is above a yearly threshold. For 2025 income, the threshold is $93,454. You repay 15% of every dollar above it, up to the full amount of your OAS pension.

Check if you qualify

Key facts

Clawback threshold, 2025 income
$93,454 (recovered July 2026 to June 2027)
Clawback threshold, 2026 income
$95,323 (recovered July 2027 to June 2028)
Repayment rate
15% of net income above the threshold
OAS fully clawed back, 2025 income
$152,062 or more (age 65 to 74); $157,923 or more (age 75 and over)
Maximum OAS pension
$762.50 a month (age 65 to 74); $838.75 a month (age 75 and over), October to December 2026

What is the OAS clawback?

The OAS clawback is a tax that takes back part or all of your Old Age Security pension when your income is high. The government calls it the OAS pension recovery tax.

It is based on your own net income, not your household income. A couple can have a high combined income and pay no clawback at all, as long as each person stays under the threshold. If you live outside Canada, the test uses your net world income.

The clawback reduces your OAS pension only. It does not touch your Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) payments. The Guaranteed Income Supplement (GIS) has its own, much lower, income limits.

OAS clawback thresholds for 2025 and 2026

Each income year has its own threshold. The tax for that year is then withheld from your monthly OAS during a 12-month recovery period that runs from July to June.

The upper limit is higher from age 75 because your OAS pension rises by 10% at that age, so there is more pension to take back.

How is the OAS clawback calculated?

You repay 15% of the amount by which your net income is above the threshold. Here is how it works for someone with net income of $100,000 in 2025.

  1. Subtract the 2025 threshold from your net income: $100,000 minus $93,454 leaves $6,546.
  2. Multiply that amount by 15%: $6,546 x 0.15 = $981.90.
  3. That $981.90 is the OAS you repay for 2025.
  4. Spread over the July 2026 to June 2027 recovery period, that works out to about $81.83 withheld from each monthly OAS payment.

The same method works for 2026. With net income of $110,000, you are $14,677 over the $95,323 threshold, so the repayment would be $2,201.55.

How the recovery tax is collected and reported

Service Canada withholds recovery tax from each monthly OAS payment, based on your income from an earlier year. The total withheld appears in box 22 of your T4A(OAS) slip.

When you file your return, you work out what you really owe for that year using the chart for line 23500 in the Federal Worksheet. Tax software does this for you. The repayment goes on line 42200, and the same amount is deducted on line 23500. Claim the recovery tax already withheld (box 22) on line 43700, not line 23200. If too much was withheld, the difference comes back to you in your refund. If too little was withheld, you owe the rest.

If you live outside Canada and receive OAS, you must file an Old Age Security Return of Income each year. Send it by April 30 so your payments are not interrupted in July.

How to avoid or reduce the OAS clawback legally

The clawback follows your net income, so anything that lowers your net income can lower the amount you repay. These are the main options.

Pension income splitting. If you have a spouse or common-law partner, the two of you can choose to move up to 50% of your eligible pension income to the lower-income spouse on Form T1032. Your net income goes down and theirs goes up. CPP is not part of this election; it has separate sharing rules. Before you split, check that the extra income does not push your spouse into the clawback or reduce their GIS or other income-tested benefits.

Tax-Free Savings Account (TFSA). Income earned inside a TFSA, and money you take out of it, is not taxable. It does not reduce your OAS or GIS. Holding savings in a TFSA rather than a regular account can keep investment income off your return.

Timing RRSP and RRIF withdrawals. Every dollar you take from an RRSP or RRIF is taxable income. Taking smaller amounts over more years, rather than a large sum in one year, can keep you under the threshold. In the year you turn 71, your RRSP must be cashed in, moved to a RRIF or used to buy an annuity, so it helps to plan ahead.

Delaying OAS. You can put off starting OAS until age 70. If you are still working or have high income in your late 60s, there is no OAS to claw back in those years, and each later payment is larger.

One-time income. Selling investments at a large gain, or making a big RRSP withdrawal, can push a single year over the threshold. Spreading these over two or more years may reduce the clawback.

My income dropped. How do I stop the OAS clawback deductions?

Because withholding is based on an earlier year, you may still have recovery tax taken off after your income falls, for example after you retire. You can ask for less to be withheld.

  1. Get Form T1213(OAS), Request to Reduce Old Age Security Recovery Tax at Source, from the Canada Revenue Agency (CRA) website.
  2. Fill in the income you expect for this year and explain why it is lower.
  3. Send the completed form to the CRA.
  4. If repaying would cause you financial hardship, you can also ask the CRA to review your situation.

Things people miss

The clawback only takes 15% of the income above the threshold. Earning a little more than the threshold costs you a little OAS, not all of it.

Recovery tax withheld is not lost. If your real income for the year turns out lower, the extra is returned when you file.

Pension splitting is a joint choice made for each tax year on Form T1032. You and your spouse both sign it and file it by the filing due date. It does not carry over to the next year on its own.

Who to contact

Common questions

What is the OAS clawback threshold for 2026?

For 2026 income, the threshold is $95,323. Recovery tax based on 2026 income is withheld from July 2027 to June 2028.

At what income do you lose all of your OAS?

For 2025 income, OAS is fully clawed back at $152,062 if you are 65 to 74, or $157,923 if you are 75 or over.

Is the OAS clawback based on household income?

No. It is based on your own net income. Your spouse's income does not count toward your threshold.

Does CPP count toward the OAS clawback?

Yes. CPP is taxable income and is part of your net income. The clawback itself only reduces OAS, not CPP.

Do TFSA withdrawals affect OAS?

No. TFSA income and withdrawals are not taxable and do not reduce OAS or GIS.

Can pension splitting reduce the OAS clawback?

It can. Moving eligible pension income to your spouse lowers your net income. Check the effect on your spouse's taxes and benefits too.

How do I get OAS recovery tax deductions reduced?

Send Form T1213(OAS) to the CRA if you expect your income this year to be lower than the income used to set your withholding.

Where do I report the OAS repayment on my tax return?

Work it out with the line 23500 chart in the Federal Worksheet. Enter the repayment on line 42200 and the deduction on line 23500. Claim tax already withheld from box 22 of your T4A(OAS) on line 43700.

Sources

  1. Old Age Security pension recovery tax (Government of Canada)
  2. Old Age Security payment amounts (Government of Canada)
  3. Old Age Security: How much you could receive (Government of Canada)
  4. Line 23500 – Social benefits repayment (Canada Revenue Agency)
  5. T1213(OAS) Request to Reduce Old Age Security Recovery Tax at Source (Canada Revenue Agency)
  6. Line 21000 – Deduction for elected split-pension amount (Canada Revenue Agency)
  7. RC4466 Tax-Free Savings Account (TFSA), Guide for Individuals (Canada Revenue Agency)
  8. Options for your own RRSPs (Canada Revenue Agency)
  9. Old Age Security: When to start your pension (Government of Canada)
  10. Contact Old Age Security (Government of Canada)
  11. CRA contact information (Canada Revenue Agency)

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