Old Age Security


The Old Age Security program is a universal retirement pension available to most residents and citizens of Canada who have reached their 65th birthday. This pension is supplemented for seniors with lower incomes by the Guaranteed Income Supplement which is added to the monthly OAS payment. Some low-income spouses and survivors of OAS recipients are eligible to receive an income-tested Allowance while they are aged 60 to 64.

Legal Foundation

Old Age Security is a monthly payment available to qualifying citizens and permanent residents of Canada who are 65 years of age or older. Authorized by
,
the program is defined by the .
Implementation is the responsibility of the .
Administration is performed by through offices across Canada.

Payments

The pension is paid monthly, on the third business day from the end of the current month. In December the payment is made about one week earlier than it is in all other months. The Government prefers to use Direct Deposit and this has been observed to be executed shortly after midnight Pacific time. There is an that does not specify the time of day.

Amounts

The full OAS payment amount is reviewed at the beginning of each calendar quarter, compared to the Consumer Price Index and increased as appropriate.
Please consult the latest quarterly
.
These reports include the maximum payments for OAS and GIS and the numbers of persons and total dollars for each category of payment.

Enrollment and Eligibility

Prior to 2013, a person needed to and meet the eligibility criteria to receive benefits. Since 2013, the
has become increasingly automatic as Service Canada are now permitted to use data from Income Tax files. For persons who are not enrolled automatically, a
remains in place.

Eligibility

Eligibility for Old Age Security is straightforward for most Canadians. Persons who have lived outside of Canada
for details including residency requirements and a list of reciprocal agreements with other countries which may allow pooling of residency periods to increase eligibility for Canadian or foreign pension rights.

Pension Amounts

A complete description of the payment amounts is beyond the scope of this article. Please check the
for definitive information.

Guaranteed Income Supplement

The OAS includes a provision for additional support for low-income seniors. The
provides an additional payment to seniors whose qualifying incomes fall below a threshold that depends on the marital status and OAS eligibility of the person and their domestic partner.

Income Testing of Tax Benefits

The OAS Pension is riddled with claw-backs intended to prevent low-income seniors from accessing more than a basic amount of support from government. These are all tied to various definitions of income contained in the Income Tax system. In particular, a central role is given to Family Net Income, the total of Lines 236 -- Net Income on spouses tax returns or on a single persons tax return. This figure includes the OAS and the GIS and allows the taxation of the officially 'non-taxable' Guaranteed Income Supplement, through various claw-backs strewn across Canada and the provinces and territories.

OAS Recovery Tax

The OAS is subject to a claw-back, officially named the
that reduces the amount retained by recipients by 15% of taxable income in excess of $75,910. For 2018, some of the government documentation appears to state that the maximum income from which the claw-back will be applied is $123,386. This is in fact the base-line case for OAS paid commencing at age 65. The 2018 version of the "Worksheet for the Return" applies the claw-back to the total of OAS and GIS received. This accounts for any cases in which an OAS recipient deferred the pension and received more than the base amount as a result of the deferral.
Taxpayers subject to this claw-back have taxable incomes that are greater than the incomes of more than eighty percent of Canadians according to .

Tax Benefit and Claw-back Examples 2018 Tax Year

Newfoundland and Labrador

Amounts are Additive

The benefits can be added which means that claw-backs can combine to produce some steep declines where they overlap.
Claw-backs cause a benefit to diminish by a fixed percentage of the amount that "Family Net Income" exceeds a fixed threshold.
Economists include these declines in the definition of the Marginal Effective Tax Rate. In

GST Credit Example

The GST credit and claw-back work like this:
While the combination of OAS, GIS and Tax Benefits comes close to The Poverty Line, receiving the income will be problematic for many seniors. The official published documentation for the GIS is does not clearly indicate a direct path to obtaining the correct payment upon retirement. Furthermore, federal and provincial tax benefits are not generated at the senior's retirement income until the benefit period following the filing of the first full taxation year in retirement. A senior could retire from a position at an income level that claws back tax benefits and find themselves falling short of the combination of GIS and tax benefits that would otherwise lift them up to the poverty line.
The Newfoundland and Labrador example indicates that those tax benefits make up about 10% of this poverty-line target. The GIS maximum payment in 2019, represents more than half of this target with the OAS representing about thirty-six percent of the amount. A low-income part-time job can add up to $5,000 in earnings in 2020 without reducing the GIS and would add another tax benefit, the Canada Workers Benefit would pay $520 without requiring high-school algebra. The CWB maximum payment of $1,355, generated at an income of $8,212 but the math should be checked carefully as the addition of $3,212 in income would reduce GIS by 803 and drive up the worker's income tax.

Invisibly Taxed

The GIS is described as non-taxable income although it is reported to CRA in box 21 of from whence it is included in
which is a critical part of the claw-back implementation used by both Federal and Provincial programs.

Income Testing The Non-Taxable GIS

A number of Federal and Provincial Tax Benefits are income-tested using personal information shared by Canada Revenue Agency taken from the T1 Income Tax Form
. This total includes
and makes the Supplement subject to claw-backs, an implicit tax on income. Notable federal claw-backs include the
and
. Provincial benefit claw-backs are different from province to province. As an example, in Newfoundland and Labrador claw-backs include the
,
.

Determination of Payments

Each calendar quarter, Service Canada publishes a set of for five different classes of recipient
which determine the amounts payable to eligible persons:
One common point of confusion is the impression that there is a waiting period between retirement and eligibility for the GIS and the Allowance for spouses aged 60 to 64. The OAS Act stipulates at 14. that anyone who experiences a loss of income may file an Estimate of Income with the Minister. The form used to accomplish this, is not available on the Service Canada web site but can be obtained on paper after discussing ones situation with a Service Canada agent over the phone or in person.
There is also a time limit for the filing of the form ISP-3041: "Reduction of Estimated Income after Retirement or Reduction of Pension Income Year 20xx". This is problematic because the existence of the provision and the procedure for exercising the retiring person's right to file it are absent from the
presented on the Service Canada web site.

Canada Pension Plan

Old Age Security should not be confused with the Canada Pension Plan, which is a contributory, earnings-related pension paid in addition to the OAS to those who have contributed to it.