How to calculate your OAS clawback threshold
Old Age Security (OAS) is designed to support Canadians aged 65 and older, but higher-income recipients may have to repay part of their benefit. This repayment is commonly called the OAS clawback, although the official term is the OAS recovery tax.
The calculation is based on your annual net world income, not simply the amount of OAS you receive. Understanding the income threshold, the repayment rate, and the relevant payment period can help you estimate your potential liability before filing your tax return.
OAS rules can change with inflation and federal updates, so check the latest figures when preparing your estimate. N-Grid’s personal finance resources can also help you review related budgeting, tax, and benefit information.
What the OAS clawback threshold means
The OAS clawback threshold is the annual income level at which the recovery tax begins. If your income is at or below the threshold for a particular tax year, you generally do not repay OAS because of the recovery tax.
For the 2024 tax year, the threshold is $90,997. For the 2025 tax year, the threshold is $93,454. These amounts apply to the relevant annual income reported for each tax year and are indexed periodically.
The threshold is separate from the maximum OAS amount. A person can receive the full OAS pension and still have no recovery tax if their income remains below the applicable limit.
Which income is used in the calculation
The calculation uses net world income, which generally includes income from Canadian and foreign sources. Common examples include employment income, pension payments, registered retirement income, investment income, rental income, and taxable capital gains.
Your OAS pension itself is included in the income calculation. However, some payments are treated differently. The Guaranteed Income Supplement, or GIS, is generally excluded from the income used for the OAS recovery tax, although other taxable benefits or pension income may still affect the result.
The figure to review is usually line 23400 on your Canadian tax return, adjusted for specific items where required. Net income is different from taxable income, so deductions that reduce taxable income may not always reduce the income used for the OAS clawback.
The basic repayment formula
The standard estimate is straightforward:
OAS recovery tax = 15% × (net world income − applicable threshold)
For example, assume your 2024 net world income is $100,000. The amount above the $90,997 threshold is $9,003. Fifteen percent of that excess is $1,350.45, so your estimated recovery tax would be about $1,350.
The repayment cannot exceed the total OAS pension you received during the applicable recovery period. If your calculated repayment is larger than your OAS payments, the repayment is normally limited to the OAS amount available for recovery.
| Item | Example amount |
|---|---|
| Net world income | $100,000 |
| 2024 OAS threshold | $90,997 |
| Income above threshold | $9,003 |
| Recovery tax rate | 15% |
| Estimated clawback | $1,350.45 |
Why payment periods can cause confusion
The tax return determines the recovery tax using income from a calendar year, but the repayment is generally collected through OAS payments in the following July-to-June period. For example, income reported for 2024 can affect OAS payments from July 2025 through June 2026.
This timing means a change in income may not affect your OAS immediately. A large capital gain, a registered retirement fund withdrawal, or the sale of an investment in one year can produce a clawback later.
If your income falls after a high-income year because of retirement, job loss, or another major change, you may be able to request an estimate based on your expected current-year income. Service Canada may adjust recovery tax withholding when the required conditions are met.
Estimating your exposure before filing
Start by gathering all expected income for the tax year, including employment earnings, pensions, withdrawals, interest, dividends, rental income, and taxable capital gains. Add foreign income after converting it to Canadian dollars, even when no Canadian tax was withheld.
Next, determine the correct OAS threshold for that tax year and subtract it from your estimated net world income. If the result is zero or negative, the estimated recovery tax is generally zero. If the result is positive, multiply it by 15%.
Remember that income splitting, pension elections, deductions, and special tax rules can affect the final figure. A preliminary calculation is useful for planning, but the amount assessed by the Canada Revenue Agency may differ.
Ways to plan around a possible clawback
Careful income planning may help reduce a future recovery tax, although every strategy has tax and personal consequences. Consider these practical steps:
- Track withdrawals from RRSPs and registered retirement income funds before taking large lump sums.
- Spread taxable withdrawals across multiple years when this fits your retirement plan.
- Review the timing of investment sales and capital gains with a qualified tax professional.
- Keep records of foreign income, pension payments, and other amounts included in net world income.
- Recheck the annual OAS threshold because it is indexed and can change from year to year.
Families should also keep OAS planning separate from other benefits. For example, Canada Child Benefit payments depend on adjusted family net income and family size, so the Canada Child Benefit calculation follows different rules from the OAS recovery tax.
Use your latest notice of assessment, OAS payment information, and expected income figures to calculate a personal estimate. Revisit the numbers before major withdrawals or investment sales, and consult the CRA or a qualified adviser when your income situation is complex.