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Seniors -> Old Age Security Pension

Old Age Security Pension (OAS)

2021 One-Time Payment Taxable on Line 13000 Other Income

The Federal 2021 Budget provided for a one-time payment of $500 which was paid during the week of August 16, 2021 to OAS pensioners who were 75 or over as of June 2022.  This payment is taxable, and you will receive a separate T4A for this - it won't be included on your T4A(OAS).  The $500 will be in box 205 of a T4A, which is reported on line 13000 other income on the tax return. It should not be included in any other box on the T4A slip.

Because the $500 is not categorized as OAS, it will not be clawed back.  However, it increases net income for tax purposes, so will increase the OAS clawback for those with income over the threshold.

10% Increase to OAS Payments Starting July 2022 For Age 75+

The 2022 budget also introduced legislation to increase regular OAS payments for pensioners 75 and over by 10% on an ongoing basis as of July 2022.

2020 Tax-Free Payments For OAS Recipients

On May 12, 2020, the Prime Minister announced a one-time tax-free payment of $300 for seniors eligible for the Old Age Security pension, with an additional $200 for seniors eligible for the GIS.  This means, of course, that high-income seniors also received the $300 additional OAS payment.  Seniors eligible to receive the OAS or GIS in June 2020 received the tax-free payment, during the week of July 6th.

Age of Eligibility For OAS & GIS Still 65

The Federal 2016 Budget cancelled the provisions in the Old Age Security Act that increased the age of eligibility for OAS and GIS benefits from 65 to 67 and Allowance benefits from 60 to 62 over the 2023 to 2029 period.  The Budget also announced that the Government is looking at how a new Seniors Price Index that reflects the cost of living faced by seniors could be developed to be used as the index for increasing the OAS and GIS.

Old Age Security Pension Eligibility

The Canadian Old Age Security Pension is available to Canadian citizens or legal residents age 65 or older, who have lived in Canada for at least 10 years after age 18 until the month before they start receiving their OAS.  If you spent time outside Canada working for a Canadian employer, this may still count toward your time lived in Canada.

Service Canada also provides the ability for recipients of OAS or CPP benefits to view and update their personal information online.

Canada has social security agreements with many other countries, so those not qualifying for the OAS as above may still qualify for some type of pension.  See the Lived or Living Outside Canada - Pensions and Benefits information on the Service Canada website for further information.

Applying for the OAS

Proactive enrolment was implemented in a phased-in approach starting in 2013, eliminating the need for many seniors to apply for OAS and GIS.  Service Canada sends a notification letter to those who can be automatically enrolled.  The letter is sent the month after you turn 64.  See Automatic Enrollment for Old Age Security Pension on the Government of Canada website.

Service Canada has an Old Age Security program toolkit - Your complete guide to Canada's Old Age Security program.  The "interactive" option is a pdf file which you'll download.  You can click the links to get to different sections.  On page 6 you can click Yes or No to questions which will help determine if you are eligible for OAS, and if you are, you can carry on to the next page, which determines if you are eligible for the Guaranteed Income Supplement (GIS).

For contact numbers or application forms to apply for the OAS, see  Old Age Security Pension on the Government of Canada website, and scroll down to "How do I apply?".

How Much OAS Will I Receive?

If you are eligible for OAS, and have lived in Canada for at least 40 years after turning age 18 until the month before you start receiving your OAS, you will receive the full OAS pension.

Canadian Seniors Living Outside Canada

For Canadian seniors living outside Canada, the OAS is still available for those who were Canadian citizens or legal residents at the time they left the country, as long as they lived at least 20 years in Canada after age 18.  If you have lived in Canada for 40 years after age 18, you should be eligible to receive the maximum pension.  Any increases for voluntary deferral will still apply if you are eligible for the OAS and have become a non-resident.

Residency in Canada Less Than 40 Years

If you haven't resided in Canada for the full 40 years, the OAS amount is calculated at 2.5% (1/40th) of the full OAS pension for each complete year of residence in Canada after age 18, until the month before you start receiving your OAS.  You can delay your first payment up to 5 years to get the OAS voluntary deferral increase.

There are other complications to the calculation for those not always resident in Canada - see How much could you receive on the Government of Canada website.

OAS Indexation

OAS monthly payments are adjusted quarterly, based on changes in the Consumer Price Index.  For current average and maximum payment amounts, see the Old Age Security Payment Amounts on the Government of Canada website.

OAS Taxation

OAS payments are considered taxable income.  If your income exceeds the threshold, some or all of your OAS may be "clawed back".  See our article on the OAS Clawback.

OAS Voluntary Deferral

Old Age Security Act s. 7.1

Since July 1, 2013, the Government allows for the voluntary deferral of the OAS pension, for up to 5 years, to receive a higher, actuarially adjusted, annual pension.  The OAS pension will be increased by 0.6% for each month that it is deferred past the usual starting age of 65.  This is 7.2% for each full year that it is deferred.  If it is deferred for the maximum length of time, to age 70, it will be increased by 36%.  See Deferring Your Old Age Security Pension (scroll down) on the Government of Canada website.  This may be a good thing to do if your income will still be in the clawback range past age 65.

If you are already receiving your OAS pension and decide that you should cancel it in order to defer it, you can request this if you've been receiving it for less than six months.  See Federal Court decision Pike v. Canada (Attorney General) 2019 FC 135 re a person who waited too long to request this.

OAS Voluntary Withholding Tax

You can request that tax be deducted from your OAS payments, by visiting the My Service Canada Account (MSCA), or by completing the Request for Voluntary Federal Income Tax Deductions form (ISP 3520).  If you previously requested voluntary tax deductions, you can also change or stop the deduction amount using one of these methods.  These methods apply to voluntary tax deductions from Canada Pension Plan (CPP) payments as well, but there is another method to change tax deductions related to the OAS clawback/recovery tax, which is not voluntary.

TaxTips.ca Resources

OAS Clawback / Recovery tax

Guaranteed Income Supplement (GIS) for Canadian Seniors, the Allowance, and Allowance for Survivors

Government of Canada Resources

Payment Dates for CPP, OAS, and other government payments

Contact Old Age Security

How is my pension calculated?  Check to see if you will receive the maximum OAS.

OAS GIS and CPP Monthly Maximum Rates

Old Age Security Act and Regulations

Ontario Guaranteed Annual Income System (GAINS) benefit rates - includes OAS and GIS, in Excel format

Revised: April 19, 2022

 

 

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