Old Age Security (OAS): complete guide 2026

Eligibility and Amount

OAS is paid to any Canadian resident aged 65 or older who has resided in Canada for at least 10 years after the age of 18. To receive the full pension, 40 years of residence are required; otherwise, the pension is prorated (1/40th per year of residence).

The maximum amount is indexed quarterly. OAS is taxable and constitutes ordinary income.

The Clawback (OAS Recovery Tax)

When net income exceeds an annually indexed threshold, OAS is reduced by 15 cents per dollar of excess income. OAS is completely eliminated when income reaches an upper ceiling.

The clawback is applied through source deductions during the following year, based on the tax return. The exact threshold and maximum amount are updated in the annual regulatory figures.

The clawback creates an effective marginal rate of 15% that adds to the regular marginal rate. A dollar of RRIF withdrawal in the clawback zone therefore costs the marginal rate plus an additional 15%.

Deferral to Age 70

OAS payments can be deferred up to age 70. Each month of deferral increases the pension by 0.6%, or 7.2% per year. At age 70, the enhancement is 36%.

Deferral is advantageous when: • The client has other income sources to cover ages 65–70 • Income between ages 65–70 would exceed the clawback threshold • The client is in good health and expects to live beyond ages 80–83 (approximate break-even)

However, if the client is eligible for GIS, deferral is generally NOT advantageous because it also delays access to GIS.

Strategies to Minimize the Clawback

Several strategies can reduce or eliminate OAS clawback:

• Prioritize TFSA withdrawals (not included in net income) • Split eligible pension income with a spouse • Make significant RRSP/RRIF withdrawals before age 65 • Defer OAS to age 70 if ages 65–69 income would be in the clawback zone • Use a corporate dividend strategy to control income • Plan capital gains realizations to avoid clawback years

GIS — Guaranteed Income Supplement

The GIS is an additional benefit for low-income OAS pensioners. It is calculated based on household net income and is not taxable.

The GIS is reduced by 50 cents per dollar of income other than OAS for single individuals. For couples, the reduction rate is 25 cents per dollar.

This 50% recovery rate creates an extremely high effective marginal rate for low-income individuals. A dollar of RRIF withdrawal can cost 50% (GIS reduction) plus the marginal income tax rate, sometimes exceeding 80% in total. The TFSA is absolutely critical for this client segment.

Frequently Asked Questions