The New Guide to Old Age Security

What is Old Age Security? Times are tough, especially when you stop working. Your income goes down while prices go up. Old Age Security (OAS), sometimes called Old Age Pension, is money you might receive from the government when you turn 65. The program was created to help most Canadians, but especially low-income seniors, cope with the cost of living. 

Old Age Security payments are taxable, and the amount you get depends on your income and how long you have lived in Canada. No matter how old you are or when you plan to retire, you need to understand how Old Age Security works. Why? So you can plan ahead for the life you want to live after you stop working.  

The history of Old Age Security 

The first version of Old Age Security was launched in 1927, originally called the Old Age Pensions Act. It provided financial relief to low or no-income Canadians aged 70 and older. While the program was modified several times over the years, it remained unpopular among most Canadians.

Narrow qualification requirements and tight restrictions made the program difficult to access. And many seniors found the application process demoralizing. For example, seniors had to prove their adult children could not provide any financial support in order for the application to even be considered.

It was not uncommon for the government to encourage applicants to sue their adult children for financial support. The government even had the right to recover the total of claims paid to a recipient from their estate after they died. People hated the program, and things got ugly. 

Public outcry led to reform. In 1951, a new version of the program made it more accessible, inclusive, and relieved undue stress on Canadians with elderly parents. Under the new Old Age Security Act, payments were now calculated using a universal flat rate and available to every Canadian aged 70 or older who had lived in Canada for the past 20 years. 

On January 1, 1952, the Canadian Government started paying $40.00 per month to Canadians over the age of 70. Today, we call that monthly payment Old Age Security, or OAS for short. But you get a lot more than $40 a month, and you don’t need to live in Canada for quite as long to qualify. 

What is Old Age Security? 

Today, The Old Age Security Act is now called the Old Age Security pension, commonly referred to as OAS. OAS intends to help elderly Canadians meet their basic needs and avoid financial hardship. The qualifying age has since come down from 70 to 65 years old.

Old Age Security payments ensure seniors receive up to $800 a month. Payments are made once a month by direct deposit into the recipient’s bank account, or by cheque through the mail. 

Is Old Age Security taxable? 

Yes, Old Age Security is taxable. The amount of OAS you receive is included in your total income for the year and taxed according to your income tax bracket. If your total annual income is more than the annual income threshold set by the government, it will trigger a clawback called the OAS Pension Recovery Tax. 

Every year, you will receive T4A (OAS) tax slip from Service Canada that indicates how much Old Age Security you received and how much tax was deducted. If an OAS Pension Recovery Tax was deducted from your OAS, you will see that amount in box 20. 

Snowbirds and ex-pats who live outside Canada while receiving Old Age Security could be subject to a 25% withholding tax if the Canadian government considers them to be non-residents. Some countries have a social security tax treaty with Canada, which can lower the amount of withholding tax for Canadian pensioners living abroad. 

Do I qualify for Old Age Security? 

Accessing Old Age Security is a lot easier now than it was in 1952. It is not tied to employment during your working years, but the number of years lived in Canada as an adult. 

To be eligible for OAS, you must: 

• Be at least 65 years old 
• Be a Canadian citizen
• Have lived in Canada for at least 10 years after you turned 18
• If you currently live abroad, you must have lived in Canada for at least 20 years as an adult

To be eligible for the maximum amount of OAS, you must:

• Have lived in Canada for at least 40 years after you turned 18
• Have a personal net annual income less than $86,912*

Your current income will help determine how much Old Age Security you receive, but it has nothing to do with your employment history. Only the years you lived in Canada are considered, not the number of years you spent working. 

That means even a person who has never worked in Canada can qualify for OAS, like home-makers or those with disabilities, for example. If you worked outside Canada, those years may still count in certain situations. 

Can I be denied Old Age Security? 

Yes, some people may not qualify for any Old Age Security. Canadians who are 65 or older, and have an annual income equal to or greater than $142,609 (or $148,179 for those 75 years old or older)* will not receive OAS because their income is sufficient. Canadians who have lived as an adult in Canada for less than 10 years will not qualify for OAS either. 

What if I lived outside Canada? 

If you lived or worked abroad, you could still qualify for Old Age Security. Typically, you must have spent at least 20 years as an adult living in Canada. In other cases, your time abroad could count towards your OAS eligibility even if you have not lived in Canada for 20 years.  

Some political jobs in Canada, like diplomats, require the person to live abroad. Your time away may also count if you worked for certain international organizations, a Canadian employer, or in a country that has an existing tax treaty with Canada. 

Do I have to apply to Old Age Security?

That depends on how much information Service Canada has about you and your income. Sometimes, they have enough information on file to automatically enroll you in the Old Age Security pension program. If you have been enrolled automatically, Service Canada will notify you. 

Other times, you may need to submit an application for Old Age Security. In most cases, Service Canada will send a letter inviting you to apply. You will also need to apply if you were automatically enrolled, but the notification letter has missing or incorrect information. 

When and how do I apply?

Before you apply for Old Age Security, you first need to decide when you want to start receiving payments. You can begin collecting OAS as early as the month after you turn 65, or at a later date if you choose to defer payments. You can apply up to 11 months before your 65th birthday; ie. you can submit an application one month after you turn 64. 

Next, you can submit your application online or by mail. If you want to apply online, you need to have a My Service Canada Account (MSCA). If you don’t already have one, you can register online and Service Canada will send a personal access code in the mail that is required to complete the registration process.

Before you apply, make sure: 

• You are a Canadian Citizen 
• You are currently living in Canada
• It is at least one month past your 64th birthday 
• You are not already receiving OAS payments 
• You don’t already have an OAS application under review 

On your application, you will need to provide: 

• Your Social Insurance Number (SIN)
• Where you have lived since you were 18
• Information about a spouse or common-law partner, if applicable 
• Information about your employment or pension income 
• The date you would like to start receiving OAS payments 
• Banking information for direct deposit 

After you submit an application for Old Age Security, Service Canada will either make a decision or request more information. If approved, Service Canada will send a letter indicating how much money you will receive each month, the date of your first payment, and any past payments they might owe you. 

If your application is denied or you are unhappy with the decision, you can submit a Request for Reconsideration of an Old Age Security Decision. Fill out the form, and submit it within 90 days either online or by mail.

Recap: You can apply for OAS one month after you turn 64. You can receive your first OAS payment one month after you turn 65. 

When will I get my first OAS payment? 

The earliest you can receive your first Old Age Security payment is the month after your turn 65. However, you don’t have to start collecting OAS as soon as you turn 65 if you don’t want to. You have the option to defer Old Age Security. 

Why would I defer my OAS payments? 

You can defer Old Age Security up to 5 years, until you turn 70. But why would you put off extra money? Deferring OAS increases the amount for each month you delay the first payment, which could be beneficial for a few different reasons. Let’s take a look. 

The OAS monthly payment amount increases 0.6% for each month you defer the first payment, to a total of 60 months and a total increase of 36%.  That can be confusing, so let’s use an example.

You are 65 and qualify for the full 2023 payment amount of $707.68. 

You choose to defer your first OAS payment by 5 years, which is 60 months. When you start to collect at age 70, you would receive $962.44 per month: 

1. 60 months x  0.6% = 36%
2. $707.68 x 1.36 = $962.44

If you are still working full-time at age 65, and financially comfortable, you might not need OAS right now. Or, your income at 65 might be high enough to trigger the OAS Pension Recovery Tax, commonly referred to as a “clawback.” 

In that case, it could be beneficial to defer OAS to a later date when your income will be lower. Doing so can avoid or reduce a clawback, and optimize the monthly payment amount you can receive. 

You may also want to defer your Old Age Security if you do not qualify for the full amount because you did not live in Canada for at least 40 years after the age of 18. Deferring OAS will increase the amount you can receive each month.

While you do not have to start collecting Old Age Security when you turn 70, there is no longer a financial benefit to delaying it further. 

What are retroactive payments? 

When you apply for Old Age Security, you can select a payment start date in the past. Why would you do that? Perhaps you forgot to apply for OAS until you turned 66, but didn’t intend to actually defer payments.

You can choose a payment start date up to 12 months before your application date, but not past the month you turned 65.

How much money will I get each month? 

The maximum Old Age Security you can receive each month is $707.68 if you are 65-74 years old and $778.45 if you are 75 or older. However, the actual amount you will receive depends on your personal net annual income, how long you lived in Canada after the age of 18, and when you start collecting OAS. The amount can change up to 4 times per year to account for inflation.

Income: to qualify for Old Age Security, your annual personal income after tax must be less than $142,609$ (65-74 years old) or $148,179 (75 and older)*. 

Time in Canada: if you lived in Canada for less than 40 years after the age of 18, you may not qualify for the maximum OAS, regardless of your annual income.

Deferred payments: deferring OAS will increase the amount for each month you delay the first payment. 

How are payments calculated?

Assuming you do not defer your Old Age Security, your OAS payments are calculated based on your personal net annual income in the previous year, and the number of years you lived in Canada after the age of 18.

If you lived in Canada for less than 40 years after the age of 18, the number of years you actually lived here are calculated as a percentage of 40, which is then used to calculate the amount of your OAS.

For example, say Thomas is 65. He moved to Canada as an adult and has been living here as a Canadian citizen for 30 years. Thomas is eligible to receive 75% of the maximum OAS amount because he has not lived in Canada for 40 years.

1. 30 years  ÷  40 years = 75% 
2. $707.68 maximum x 75% = $530.76

If Thomas were to defer his OAS until age 70, he could increase the payment by $92 per month.

1. 35 years  ÷ 40 years = 88%
2. $707.68 maximum x 88% = $622.75

What is the OAS Pension Recovery Tax? 

Your income from the previous year is used to calculate OAS payments for the upcoming benefit period, which runs from July to June of the following year. An OAS clawback is triggered when your personal net annual income exceeds the OAS Pension Recovery threshold. The threshold is set by the Government of Canada and changes every year.

Because there is a lag between the most recent tax return and your current income, there is the potential you could receive more OAS than you actually qualify for. If your income exceeds the threshold at the same time you are collecting OAS, it will trigger a clawback called the OAS Pension Recovery Tax. 

Why would your income change? Income after retirement can fluctuate for any number of reasons, like if you decide to work part-time or withdraw more RRSP than you usually do, for example. 

The current income threshold for 2022 (for payments made in 2023-2024) is $81,761; it is $86,912 for 2023 (for payments made in 2024-2025)*.  If you collect OAS in the same year your individual annual net income exceeds the threshold, you will need to pay back $0.15 on every dollar of excess income over the threshold. 

For example, you retire at 65 and start collecting the maximum OAS. A year later, you get bored and decide to work part-time. The extra money increases your annual income, which is $3,239 over the threshold and triggers a clawback. Now you have to pay back $0.15 on every dollar of that excess income. 

1. Annual income – Threshold = Excess income
2. $3,239 excess income x 15% recovery tax = $485.85
3. $485.85 / 12 months = $40.49

You owe an OAS Pension Recovery Tax of $485.85. The Canada Revenue Agency (CRA) will reduce your future OAS payments by $40.49, starting in July. That way, the clawback is paid over the course of a year instead of a large lump sum that’s due when you file your taxes in April. 

Will my Old Age Security be clawed back? 

Service Canada uses the reported income from your most recent tax return to calculate your Old Age Security payments. But you only file an income tax return once a year. Depending on when you apply, you could receive more OAS than you actually qualify for if your current income is higher than what Service Canada has on file. 

If you receive OAS in the same year your income is equal to or greater than $142,609 (for people 65-74 years old)*, you will not receive any OAS payments in the upcoming benefit period because it will all be clawed back.

The OAS clawback does not impact very many Canadians over the age of 65 because most retired people don’t have enough income to exceed the OAS Pension Recovery threshold.

Does your retirement income exceed the OAS Tax Recovery threshold? Use our Retirement Planning Calculator to find out. 

Can I avoid an OAS clawback? 

Nobody likes to give money back to the government. There are a few ways you can avoid an OAS clawback. For example, if you have a spouse or common-law partner, you can take advantage of income splitting. 

Income splitting allows the higher-earning spouse to reduce their taxable income by sharing a portion of their pension income with the lower-earning spouse. For example, consider a couple who are both over 65:

Spouse A: has a total income of $100,000 from a private pension, the Canadian Pension Plan (CPP), Old Age Security (OAS), as well as part-time employment. 

Spouse B: has a total income of $50,000 from CPP, OAS, and freelance work.  

The higher-earning spouse makes $100,000 which exceeds the OAS Pension Recovery threshold and triggers a clawback. So they take advantage of income splitting to bring the income of the higher-earning spouse down below the threshold. 

1. $100,000 + $50,000 = $150,000
2. $150,000 / 2 = $75,000

Because their individual net Incomes are both below the threshold, they would still each be entitled to receive and keep their OAS. 

Other ways to avoid a clawback can include, but are not limited to: 

• Defer OAS past 65
• Adjust your RRSP contributions after retirement
• Make spousal RRSP contributions 
• Drawdown a non-registered investment account before collecting OAS
• Drawdown your RRSPs before collecting OAS
• Consider selling capital assets before collecting OAS
• Consider selling stocks in a non-registered account before collecting OAS

These are general principles that may not be appropriate for everyone. Each strategy is nuanced and based on your personal financial situation.

What are the 2024 OAS payment dates? 

If you have direct deposit, Old Age Security is deposited into your account the last week of every month, typically on the 3rd last business day. OAS cheques are mailed out slightly sooner to help ensure you receive them on time, but can be affected by shipping and handling delays. December is the only month when OAS is paid earlier, typically a week ahead of the normal deposit date. 

OAS payment dates for 2024 are: 

• January 29, 2024
• February 27, 2024
• March 26, 2024
• April 26, 2024 
• May 29, 2024 
• June 26, 2024
• July 29, 2024
• August 28, 2024
• September 25, 2024
• October 29, 2024
• November 27, 2024 
• December 20, 2024

Can’t remember OAS payment dates? Starting with the last weekday of the month on your calendar, count backwards 3 weekdays. 

Is there an Old Age Security supplement? 

Yes. Low-income seniors can receive other retirement income from the government in addition to their Old Age Security, such as: 

Guaranteed Income Supplement (GIS): single OAS recipients who earn less than $21,456 per year may be eligible for the GIS. Married or common-law OAS recipients with a combined income less than $51,408 may be eligible for the GIS (if you’re partner does not receive OAS). In both cases, the maximum amount is $1,057.01 per month.

GIS Spouse Allowance: if you are the spouse or common-law partner of GIS recipient, you are between 60 and 64 years old, and your combined incomes are less than $39,648 per year, you may qualify for an allowance up to $636.26. Other conditions and restrictions apply. 

Survivor Allowance: if your spouse has passed away, you are between 60 and 64 years old, you have not remarried or living common-law with a new partner, and your annual income is less than  $28,872, you could qualify for an allowance up to $1,602.07.

What is the difference between OAS and CPP? 

The fundamental difference between Old Age Security (OAS) and the Canada Pension Plan (CPP) is that you pay into one during your working years, but not the other. Working Canadians pay into the CPP program from every paycheque through federal tax deductions. It is a line item on your paystub. 

Canada Pension Plan (CPP): eligibility is tied to employment. To qualify, you must be at least 60, worked in Canada and made at least one contribution to the program. The amount of money you get each month is based on the number of years you worked in Canada, not the number of years you lived here. You need to apply for CPP because there is no automatic enrollment, and you can defer payments until you turn 70. Canada Pension Plan is taxable, but not subject to a clawback. 

Old Age Security (OAS):  eligibility is not tied to employment, and you are not required to pay into the program. To qualify, you must be at least 65, lived in Canada as an adult for at least 20 years, and have a personal net annual income less than a certain threshold. You are eligible to collect OAS when you turn 65. For most people, enrollment is automatic, and you can defer payments until you turn 70. Old Age Security is taxable and subject to a clawback. 

Will my Old Age Security payment ever change? 

Yes, the amount of your monthly Old Age Security payment can and will change for a number of different reasons. Your OAS payment is based on your taxable income each year. If your income fluctuates enough, so will your OAS payments in the upcoming benefit period.

If your income fluctuates above the OAS Pension Recovery threshold amount, a clawback will reduce the amount of your future OAS payments for the upcoming benefit year. 

Old Age Security is pegged to inflation. As the cost of living increases, the Government of Canada will increase the amount of OAS to help seniors afford their basic needs. Typically, OAS is recalculated every 3 months to keep pace with inflation.

Can my OAS payment go down? 

Yes and no. Even though Old Age Security is pegged to inflation, payments will not go down if the cost of living goes down. However, your OAS can go down if your income increases, especially above the OAS Pension Recovery threshold. In that case, your OAS will be clawed back, reducing the number of future payments for the upcoming benefit period. 

*This number changes every year. To find the most up-to-date OAS annual income information, visit the Government of Canada website.