Old Age Security Pension Clawback
Income Tax Act s. 180.2
Higher income seniors must pay back all or a portion of their OAS if their annual income exceeds a certain amount. If 2015 net income before adjustments is greater than $72,809 ($71,592 for 2014) then you will have to repay 15% of the excess over this amount, to a maximum of the total amount of OAS received
TAX TIP: If so, you may want to consider some investment disposals in order to trigger the capital gains prior to the year you will start collecting your OAS.
Once you turn 65, if you have current year capital losses, and also have some unrealized gains, it would be wise to realize some of those capital gains to offset the losses in the same year.
Other deductions that you can use to reduce your net income to below the threshold and reduce claw back is contribute to RRSP before deadline and claim an RRSP contribution, split pension income,
The Federal Guaranteed Income Supplement (GIS) is available to low-income seniors living in Canada, who are receiving (or are eligible to receive) the Old Age Security Pension (OAS). An application must be filed to receive this supplement – it is not done automatically when you file a tax return.
Once a person is receiving the GIS, it will be automatically adjusted each year after the income tax return is filed. However, if there is a reduction in your pension or employment income, Service Canada may calculate your GIS benefit by estimating your pension and employment income for the current year, instead of using last year’s pension and employment income. If you or your spouse or common-law partner have a lower income this year for either of these reasons, you should contact Service Canada. Your benefits may increase.
The following would be eligible to receive GIS in 2016, based on 2015 income:
single persons with total income less than $17,304.married/common-law couple, both OAS pensioners, with combined total income less than $22,848OAS pensioners whose spouse/common-law partner is not receiving OAS, with combined annual income less than $41,472
The Allowance, until April 2023, is available to 60 to 64 year old spouses/common-law partners of OAS pensioners who receive the Guaranteed Income Supplement (GIS). The Allowance is available when 2014 combined annual income of both spouses (excluding OAS and GIS) is less than $23,016. The Allowance must be applied for. For more information, see Allowance Program on the Service Canada website.
Allowance for the Survivor (ALWS)
The Allowance for the Survivor may be available if your spouse or common-law partner has died, you are 60 to 64 years old, and your 2015 annual income (again, excluding OAS and GIS, etc.) is less than $23,328. See the Service Canada web page on The Allowance for the survivor.
Income from the Allowance is tax-free.
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