For instance, for revenue yr 2023, the edge quantity is $86,912. In case your revenue in 2023 was $120,000, then your compensation could be 15% of $33,088 (the distinction between $120,000 and $86,912). That comes out to $4,963.20.
OAS clawbacks are paid off in 12 month-to-month funds, beginning in July of the next tax yr (on this case, 2024) and ending the following June (2025, on this instance). This July-through-June interval known as the “restoration tax interval.” Persevering with our instance: $4,963.20 divided by 12 is $413.60. That’s how a lot you’ll repay every month from July 2024 to June 2025. (See the OAS restoration tax thresholds for revenue years 2022 and 2024.)
How can I keep away from OAS clawbacks?
With some planning, it might be potential to scale back or keep away from OAS clawbacks. One technique is splitting pension revenue with a partner who has a decrease marginal tax charge. One other technique is to base withdrawals out of your registered retirement revenue fund (RRIF) on the youthful partner’s age—your minimal withdrawals could also be decrease. Understand that completely different sorts of funding revenue are taxed otherwise, too. (Be taught extra about how passive revenue is taxed.) Think about talking to a monetary advisor or tax planner about these and different methods.
What’s the Assured Earnings Complement (GIS)?
The Assured Earnings Complement (GIS) is part of the OAS program that gives an extra, non-taxable month-to-month fee to Canadian residents who obtain the OAS and whose previous-year revenue is beneath a sure threshold. Like OAS, the GIS is listed to inflation.
The revenue threshold adjustments yearly. For instance, from July to September in 2024, the edge is $21,768 for a single individual. In case your 2023 revenue was lower than that, it’s possible you’ll qualify for the GIS.
For {couples}, the utmost revenue thresholds for mixed annual revenue in 2023 are:
- $28,752 in case your partner/common-law accomplice receives the total OAS pension
- $52,176 in case your partner/common-law accomplice doesn’t obtain OAS
- $40,272 in case your partner/common-law accomplice receives the Allowance profit (a non-taxable fee for Canadians aged 60 to 64 whose accomplice is eligible for the GIS and your mixed revenue is beneath the edge for the Allowance)
For those who don’t obtain a letter from the federal government concerning the GIS, you’ll be able to submit an software by way of a My Service Canada Account or by filling out a paper type and submitting it to Service Canada. You possibly can apply for OAS and the GIS on the similar time. Be taught extra about making use of for the GIS.