Retirement Library

Money Wise Library

Taxes, RRSPs and RRIFs, pension splitting and savings.

• A TFSA after 60: withdrawals that GIS and the OAS recovery tax do not count
  Money taken out of a Tax-Free Savings Account (TFSA) is not taxed and is not counted as income for the Guaranteed Income Supplement or the OAS recovery tax. A TFSA has no upper age limit and no required yearly withdrawal. The 2026 contribution limit is $7,000, and amounts withdrawn are added back to contribution room on January 1 of the next year.
• Pension income splitting: what moves, what never can, and how it affects OAS and the GIS
  Spouses and common-law partners can report up to 50% of one person's eligible pension income on the other person's tax return, using Form T1032 each year. What counts depends on the age of the person giving the income, and OAS and CPP never count. The split changes each person's net income, which can change the OAS recovery tax, while the GIS for a couple looks at combined income.
• Selling the family home after 60: the exemption, the cottage, and what the GIS and OAS see
  A gain on the sale of a home that was the family's principal residence for every year it was owned is usually exempt from tax, but the sale still has to be reported on Schedule 3 and Form T2091. A family can designate only one home for each year, so a cottage or a former rental can leave part of a gain taxable. A taxable gain counts as income for the GIS and the OAS recovery tax, while an exempt gain does not.
• The age amount: a tax credit for people 65 and over that shrinks long before the OAS clawback
  The federal age amount is a tax credit for people who are 65 or older by December 31. For the 2026 tax year it is up to $9,208, and it shrinks by 15% of net income above $46,432. That is less than half the income at which the OAS clawback starts, so a RRIF withdrawal or a pension split can change it.
• Turning 71 with an RRSP: the RRIF minimum, a younger spouse, and what counts as income
  An RRSP has to be cashed out, moved to a RRIF, or used to buy an annuity by December 31 of the year its owner turns 71. A RRIF then pays a yearly minimum set by a CRA table, starting at 5.28% of the balance at age 71. Every dollar taken out of a RRIF counts as income for the Guaranteed Income Supplement and the OAS recovery tax.