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10% Increase to OAS Payments
Started 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.
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.
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.
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.
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.
OAS for 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 Old
Age Security Payment Amounts on the Government of Canada website.
The Federal
2016 Budget 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.
OAS Taxation & OAS Clawback
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%. This means if you are eligible for the maximum
OAS, your monthly payment would be increased by 36% of the maximum monthly
amount at the time you turn 70. See Applying
to delay your first payment (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.
2021 One-Time OAS 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.
Unfortunately, many seniors did not receive a T4A for this income, and
weren't aware that it was taxable. Canada Revenue Agency has been issuing
reassessments based on the additional $500 of taxable income.
Because the $500 is not categorized as OAS, it was not clawed
back. However, it increased net income for tax purposes, so increased
the OAS clawback for those with income over the
threshold.
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.
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