As Canadians approach retirement age, one of the key government benefits they may be eligible for is the Old Age Security (OAS) pension.
This taxable monthly payment is designed to help supplement the retirement income of seniors in Canada. In this article, we’ll dive into the details of the OAS program, including eligibility requirements, payment amounts, and additional benefits.
Eligibility for OAS
To be eligible for the OAS pension, you must meet the following criteria:
- Be at least 65 years of age
- Have lived in Canada for at least 10 years after the age of 18 (or 20 years for those living outside of Canada)
There are no requirements related to employment status – you can receive the OAS pension even if you are still working or have never worked before.
OAS Payment Amounts
The maximum monthly OAS payment amount varies based on your age:
- For individuals aged 65 to 74, the maximum monthly payment is $718.33 (as of July 2024).
- For those aged 75 and older, the maximum monthly payment is $790.16 (as of July 2024). This includes a 10% increase that was implemented in July 2022.
The actual amount you receive may be less than the maximum if you have not lived in Canada for the full 40 years after age 18. In that case, your payment will be prorated based on the number of years you have lived in Canada.
Additional OAS Benefits
In addition to the basic OAS pension, there are a few other benefits that seniors may be eligible for:
Guaranteed Income Supplement (GIS)
The GIS is a non-taxable monthly benefit paid to low-income OAS recipients. Eligibility is based on your annual income (or combined income with your spouse/partner).
For 2024, the maximum monthly GIS payment is $1,072.93 for single, widowed, or divorced seniors, and $645.84 for those who are married or in a common-law relationship.
Allowances
The Allowance and Allowance for the Survivor are non-taxable monthly benefits available to low-income individuals aged 60-64 whose spouse/partner is eligible for OAS and GIS. The maximum monthly Allowance in 2024 is $1,626.20.
Taxation and Repayment of OAS
The OAS pension is considered taxable income, so it must be reported on your annual tax return. Taxes are not automatically deducted from your monthly payments, but you can request that they be withheld if you prefer.
Additionally, there is an “OAS recovery tax” or “OAS clawback” that applies if your net annual income exceeds a certain threshold.
For 2024, this threshold is $90,997. If your income is above this amount, you will have to repay 15% of the difference between your income and the threshold.
There is also a maximum income threshold, which is $148,264 for those aged 65-74 and $153,991 for those aged 75 and older.
If your income exceeds these amounts, you will have to repay the full OAS pension you received for the year.
Applying for and Deferring OAS
Enrollment in the OAS program is typically automatic – you will receive a letter about your eligibility in the month after you turn 64.
However, if you don’t receive this letter, you should contact Service Canada to apply.
You also have the option to defer receiving your OAS pension for up to 5 years (until age 70).
For every month you defer, your monthly payment will increase by 0.6%, up to a maximum increase of 36% if you wait the full 60 months.
Canada OAS
The Old Age Security program is a crucial part of the retirement income system in Canada, providing a stable monthly payment to seniors.
By understanding the eligibility requirements, payment amounts, and additional benefits, Canadians can ensure they are taking full advantage of this important government program.