Guide
OAS clawback: the threshold, and what actually reduces it
Above $93,454 of net income, Old Age Security is recovered at 15.0% of every dollar over the line, and it is gone entirely at $151,667. Whether the levers people are told to pull actually help depends on the household, so here they are measured one at a time on two couples.
The short answer
The recovery tax takes 15.0% of net income above $93,454. With OAS at $8,732 a year, the whole pension is recovered once net income reaches $151,667. It is assessed each year on that year’s income, so it comes and goes with your withdrawals.
One worked year
The Ontario couple, 52 and 52 today with $570,000 in RRSPs, first pay it at 66. The first person’s net income for the recovery test that year is $98,463, which is $5,009 over the threshold; 15.0% of that is $1,130 of OAS repaid.
Does this couple pay it?
Drawing in the ordinary order, RRSPs first, the couple pay the recovery tax in 22 years of the plan, $195,384 in all, in today’s dollars. The chart shows when: the forced RRIF minimums from seventy-two are what keep pushing income over the line.
What reduces it
Two levers, each measured on its own against the plan as it stands; the third is the withdrawal order itself, which the planner chooses for this couple.
- Defer OAS to seventy. Raises the couple’s lifetime clawback by $16,500 to $211,885, over 22 years instead of 22. It leaves less at the end of the plan, though: $5,750,077 after tax.
- Draw the RRSP down early, the meltdown order. Lowers the couple’s lifetime clawback by $35,415 to $159,969, over 30 years instead of 22. It also leaves more at the end of the plan: $5,830,977 after tax.
| Lever | Lifetime clawback | Years with clawback | Lifetime income tax | Left at the end, after tax |
|---|---|---|---|---|
| As planned | $195,384 | 22 | $2,113,486 | $5,751,806 |
| OAS deferred to 70 | $211,885 | 22 | $2,145,620 | $5,750,077 |
| RRSP meltdown order | $159,969 | 30 | $1,961,519 | $5,830,977 |
Pension income splitting
Splitting moves eligible pension income to the lower-income spouse, so it helps a couple whose incomes differ. The Quebec couple, 61 and 59, one with an employer pension and one still working, pay $122,916 of recovery tax without splitting and $76,144 with it: $46,771 less, over 16 years rather than 24, and $62,552 less income tax besides. For a couple with equal incomes there is nothing to move.
When it does not matter
The retired single person in Alberta, 66, has a net income of $57,520, $35,934 under the threshold, and pays no recovery tax in any year of the plan. Most retirees are in this position; the clawback is a high-income problem, and the levers above cost something of their own, so it is worth checking that you would pay it before restructuring a plan to avoid it.
Computed with Retirafy’s engine on the 2025 federal and provincial tables, in today’s dollars. How the projection works.
Check your own OAS clawback, year by yearFree for one household. No card, no password.