If you are still earning substantial income and are either approaching 65 or have been collecting Old Age Security (OAS) for fewer than six months, a change in the law may be of interest to you.
Presently, a taxpayer is required to pay back (the clawback) the lesser of OAS benefits received or 15 % of the excess of the individual’s income over a threshold of $70,954. Clawback of the full benefit occurs when the individual’s income reaches $114,945.
Beginning July 1, 2013, an individual can delay receipt of OAS for up to five years after the normal age of 65. To compensate for the delay once the payments begin, an additional .6% per month is added for each month of delay.
Therefore, if you are earning significant income currently but sometime after age 65 you anticipate that your income will decrease below $70,954, this may be of interest to you. Where there is a partial clawback, the decision can be more complicated.
There is generally no action required to defer OAS. You simply do not apply until you want to receive OAS. You may receive a letter notifying you of proactive enrolment if you are already receiving Canada Pension benefits. In this case, you must take action to defer payment. If you have already started to receive benefits and it has been fewer than six months, you can cancel your benefits and pay back the total benefits received to date.
If you have any questions please feel to contact any Collins Barrow professional.
David Gardner, CA, CPA, MBA, B.Comm, BA, Tax Partner, practices in the Windsor office of Collins Barrow.
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