Repayment of Old Age Security pension

Are you receiving an Old Age Security pension? Is your income for 2016 over $73,756? Do you live in Canada?

If so, please read on for some important information about your Old Age Security (OAS) pension.

Each February, we send you an income statement – your T4-OAS or NR4-OAS tax information slip – to help you file your income tax return. It shows how much Old Age Security you received the previous year.

In accordance with the Income Tax Act, if your net income before adjustments (line 234 on the tax return) exceeds $73,756 (for 2016), you may have to repay part or all of your pension. If so, enter this repayment amount on lines 235 and 422 of your income tax return.

How do I calculate the repayment amount?

Your repayment calculation is based on the difference between your income and the threshold amount for the year. The first step is to figure out how much higher your income is than the threshold. You must repay 15 percent of that amount.

Example:

The threshold for 2016 is $73,756.

If your income in 2016 was $82,000, then your repayment would be 15 percent of the difference between $82,000 and $73,756:

$82,000 - $73,756 = $8,244

$8,244 x 0.15 = $1,236.60

You would have to repay $1,236.60 for the July 2017 - June 2018 period.

Note:

This calculation is presented for reference only and is not official. In order to calculate your repayment amount, please refer to the T1 General Federal Worksheet.

Will I have to repay part of my pension next year?

If you have to pay back part of your Old Age Security pension this year, an appropriate amount will be deducted from your future OAS pension payments as a recovery tax.

This way, you will have your deductions spread over your 12 monthly pension payments instead of paying back a lump sum at tax time. You will receive an Advisory Letter informing you of any recovery tax deductions being withheld from your OAS pension payments.

Using the example above, if you had to repay $1,236.60 of your 2016 OAS pension benefits, a recovery tax of approximately $103 per month would be deducted from your pension payments starting in July 2017.

When a recovery tax deduction is made from your pension payment, it is indicated in box 22 of your T4-OAS or in box 27 of your NR4-OAS tax information slip for that year.

You can claim this amount on line 437 of your return for that year.

You can also contact us to find out how much is being deducted or to request a larger deduction from your future pension payments.

Detailed information on the repayment of OAS benefits can be found in the Income Tax Guide (line 235 – Social benefits repayment).

What if these deductions cause financial hardship?

In that case, you may ask the Canada Revenue Agency to review your situation.

Questions about your taxes?

Canada Revenue Agency

  • 1-800-267-5177
    (toll-free in Canada and the U.S.)
  • 613-952-3741
    (from all other countries)
  • Fax: 613-941-2505
  • 1-800-665-0354 (TTY)
    (toll-free in Canada and the U.S.)
  • Canada Revenue Agency
    International Tax Services Office
    Ottawa, Ontario K1A 1A8
    CANADA
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