The OAS clawback: how the recovery tax works

If your income is high in a year you receive Old Age Security (OAS), you have to pay back some or all of that year’s pension. The government calls this the OAS pension recovery tax; it’s often called the clawback. The repayment for each year is based on your net income for that year. For the wider picture, see tax for seniors and retirees.

How much you repay

For 2025, if your net income is more than $93,454, you repay 15% of the amount above that threshold, up to the full OAS pension you received. The threshold is indexed to inflation each year; for 2026 it’s $95,323. Our registered plans table shows it by year.

The CRA measures your net income with a few adjustments; for example, income from a registered disability savings plan is left out. Service Canada also publishes the income at which the whole pension is repaid. That level is higher for people 75 and older than for those 65 to 74.

On your return, the repayment is added to your total payable. The CRA notes it isn’t part of your taxable income.

It comes off your monthly payments

You don’t only settle it when you file. Service Canada also takes the recovery tax off your monthly OAS payments, based on your income from an earlier year: your 2025 income sets the amount withheld from July 2026 to June 2027.

What was withheld during a year is shown in box 22 of your T4A(OAS) slip. When you file, you work out the actual repayment for the year with the chart on the Federal Worksheet, and you claim the amount withheld as income tax already deducted.

If your income has dropped. If your net income was above the threshold last year but you expect this year’s to be substantially lower, you can ask the CRA, in writing, to have Service Canada reduce the recovery tax it withholds from July. Use Form T1213(OAS), Request to Reduce Old Age Security Recovery Tax at Source.

Ways to reduce it

Because the test looks at one person’s net income for one year, these can make a difference.

• Pension income splitting. The CRA notes that splitting changes credits and benefits based on one person’s net income, including the OAS repayment. Moving eligible pension income to a lower-income spouse or common-law partner lowers your net income and raises theirs, so check both sides if your partner gets OAS too. See pension income splitting.
• When you start OAS. You can start OAS at 65 or as late as 70, and payments are larger the later you start. Service Canada lists still working, with income above the threshold, among the things to consider before starting at 65. See when to start CPP and OAS.
• TFSA withdrawals. Income earned in a tax-free savings account, and money you take out of one, don’t affect federal income-tested benefits such as OAS. Taxable income such as RRSP or RRIF withdrawals does count; see converting your RRSP to a RRIF.

If you live outside Canada

If you’re a non-resident receiving OAS, the recovery tax works on your net world income: income from all sources, in Canada and abroad, minus allowable deductions. You generally have to file an Old Age Security Return of Income (Form T1136) by April 30 each year, even if your income is below the threshold. If you don’t, your OAS can be suspended from July.

Generally, the recovery tax applies to non-residents unless a tax treaty limits or eliminates it. You don’t have to file if, at the end of the year, you lived in one of the tax treaty countries or regions listed in Guide T4155 and don’t plan to move to one that isn’t on the list (for the 2025 return, before July 1, 2027). The guide lists a few other exceptions too. Non-residents also pay non-resident tax on OAS, but that tax and the recovery tax together can’t be more than the OAS paid in a month. If more recovery tax was withheld than you owe, the CRA refunds the difference or applies it to other Canadian tax you owe.

What to do

1. Estimate your net income for the year and compare it with the threshold.
2. If you have a spouse or partner, compare your combined tax at different pension-splitting percentages. Our income tax calculator works out one person’s tax at a time and doesn’t include the OAS repayment, so run it for each of you and work out the repayment separately.
3. When you file, claim the recovery tax shown on your T4A(OAS) slip as tax deducted.
4. If your income has fallen, send the CRA Form T1213(OAS) so less is withheld.
5. If you live outside Canada, file your Old Age Security Return of Income by April 30 unless your country is on the CRA’s list.