The OAS clawback is not about your pension. It is about how your income is counted.

Calculate your OAS recovery tax

Enter the income figure the Canada Revenue​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ Agency actually tests and pick your age band. The tool returns the annual repayment, the monthly reduction to your cheque, the twelve month period it applies to, and your effective marginal rate in the clawback zone. The optional second panel adds investment income on top so you can see the gross up working in real dollars.

How the OAS recovery tax actually works

The official name is the Old Age Security​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ recovery tax. It is a clawback in everything but wording: once your income passes a threshold, Service Canada takes back part of the pension it already paid you, and above a second higher threshold it takes back all of it.

The rate is fixed and the trigger is arithmetic. In canada.ca's own words, dated 2026-06-29, the recovery tax rate is 15 percent and applies only to the income that is above the threshold for the applicable year. That word only is doing real work. Crossing the threshold by one dollar does not cost you your pension. It costs you fifteen cents. Most of the panic around the clawback comes from people imagining a cliff where there is a ramp.

Here is the government's own worked​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ example, from the recovery tax page dated 2026-06-29, reproduced without alteration.

There is a hard ceiling. canada.ca,​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ dated 2026-05-08, states that the recovery tax cannot be more than the amount of old age pension income, including supplements, received in the year. That sentence is why a maximum income recovery threshold exists at all. Once 15 percent of your excess equals the total OAS you received, there is nothing left to recover and additional income costs you no more OAS.

Two thresholds, then. A minimum where​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ recovery starts and a maximum where recovery is complete. Between them sits a band where every additional dollar carries an extra 15 percent cost on top of ordinary income tax. That band is where the planning happens.

The exact income test, not a paraphrase

This is where most calculators quietly go wrong. The trigger is not gross income, not taxable income at line 26000, and not net income at line 23600. The CRA states the test precisely on the line 23500 page, date modified 2026-01-20: you may have to repay all or part of your OAS pension, line 11300, or net federal supplements, line 14600, if the result of taking line 23400, minus line 11700 and line 12500, plus line 21300 or the repayment amount of RDSP income included on line 23200, or both, exceeds the threshold.

Line 11700 is the legacy Universal Child Care Benefit and line 12500 is registered disability savings plan income. Both are almost always zero at this stage of life, and when they are, the test collapses to line 23400 exactly. Line 23400 is net income before adjustments, so it sits above the line 23500 repayment deduction: your clawback is measured before your clawback deduction. That is just the structure of the T1, but it catches people who assume the repayment shrinks the income that caused it.

OAS recovery thresholds, 2023 to 2026

The minimum threshold is identical for​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ both age bands. Only the maximum differs, because people aged 75 and over receive 10 percent more OAS and it therefore takes more income to recover all of it.

The dividend gross up, and why $10,000 of dividends costs $570 of OAS

Everything above is explained in a hundred​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ places. This part is explained almost nowhere, and it is the single mechanic most likely to make an index investor's OAS forecast wrong.

When you receive an eligible Canadian dividend, the amount that goes on your tax return is not the amount that went into your account. The CRA instruction, from the line 12000 page dated 2026-06-12, is to multiply the actual amount received by 138 percent for eligible dividends, and by 115 percent for dividends that are other than eligible. That grossed up figure is what lands on line 12000, and line 12000 flows straight into line 23400, which is the exact number the OAS recovery tax is tested against.

The usual reassurance at this point is the dividend tax credit. It does not apply here. The DTC is a credit, claimed at line 40425, applied far downstream at the tax payable stage. It reduces the tax you owe. It never reduces line 23400. The gross up goes into the clawback calculation at full strength and the offsetting credit arrives too late to help.

Worked example: three ways to receive $10,000

Assume you are in the clawback band​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ for the 2025 income year, comfortably above the $93,454 minimum and below the maximum, so every marginal dollar is exposed to the full 15 percent. Now receive $10,000 three different ways.

That ordering inverts the folk wisdom. Purely in clawback damage, eligible Canadian dividends are the worst of the three, costing $2,070 against $1,500 for plain interest and $750 for a realized capital gain. Dividends are tax favoured on the rate side and clawback punished on the income line side, and those two effects live in different parts of the return.

That is not an argument against owning Canadian dividend payers. It is an argument about where you own them. For a retiree near the OAS threshold with a taxable account, a Canadian dividend heavy holding is clawback inefficient relative to a capital gains oriented one, purely because of the gross up. How a broad fund's distributions are actually characterized is covered in XEQT distributions and tax, and the dividend stream itself in XEQT dividends.

One more asymmetry. Foreign dividends receive no gross up and no dividend tax credit. They are fully included as ordinary income, which is worse on a pure tax rate basis than a Canadian eligible dividend but better on a clawback basis per dollar of cash received: 100 percent rather than 138. Those are two different comparisons and they are easy to conflate. Foreign withholding tax recovered through the foreign tax credit is, once again, a credit, so it does not reduce line 23400 either.

Capital gains are included at 50 percent, and that did not change

The inclusion rate for capital gains​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ is one half. Fifty percent. The 2024 federal budget proposal to raise it to two thirds on gains above $250,000 was deferred on 2025-01-31 and cancelled outright on 2025-03-21. It was never enacted. Worth stating plainly, because the misinformation has proved durable and any calculator still carrying two thirds logic will overstate your clawback badly.

The timing lag, and why your cheque shrank a year late

There are two separate mechanisms here,​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ and confusing them is the most common way a clawback conversation goes sideways.

The first is assessment. The repayment for an income year is computed on that year's return, entered as a deduction at line 23500 and as an amount payable at line 42200. CRA's wording, dated 2026-01-20, is that your repayments are not part of your taxable income but are included at line 23500 to increase your total payable.

The second is collection. Service Canada reduces the next recovery period's monthly OAS payments by one twelfth of the assessed amount. Recovery tax deducted from a payment appears in box 22 of your T4A(OAS), or box 27 of the NR4(OAS) for non residents.

The reduction begins roughly six months after the income year closes and runs for twelve months, so the last affected payment arrives about eighteen months after the year ended. Retirees experience this as a two year lag. It also means the two numbers people casually call "my clawback" are different numbers: the amount assessed on an income year, and the cash reduction experienced during a calendar year. In a year when income moves sharply they diverge a lot. This calculator reports the amount assessed on the income year you select and names the recovery period it will be collected over, so there is no ambiguity.

There is an escape hatch when income​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ falls sharply. Form T1213(OAS), Request to Reduce Old Age Security Recovery Tax at Source, filed in writing with CRA, can reduce or eliminate the at source withholding starting in July rather than making you wait for a refund after filing. Non residents have a separate obligation: the OAS Return of Income must be filed by April 30 or payments stop in July.

What counts in net world income, including the OAS pension itself

Service Canada defines net world income as the total of all income paid or credited to you in a year from Canadian and foreign sources minus any allowable deductions. The word world is literal: foreign dividends, foreign interest, foreign pensions and US Social Security are all in, converted to Canadian dollars, gross.

Counted at full value

• Interest from GICs, high interest savings and bonds, at line 12100, included at 100 percent. The worst per dollar clawback impact of the common investment income types.
• RRSP and RRIF withdrawals, fully included. RRIF minimums are the usual involuntary driver of the clawback, because they are mandatory and they ratchet up with age.
• CPP retirement pension at line 11400 and employer pensions at line 11500, fully included.
• OAS itself at line 11300, fully included, as above.

Counted at a discount, or not at all

• Capital gains, included at 50 percent.
• TFSA withdrawals and TFSA income, not income at all. They never touch line 23400. This is the single most effective clawback management tool available to an index investor, and it is entirely boring, which is why it works.
• Return of capital distributions from ETFs and REITs, not income in the year received. They reduce your adjusted cost base and surface later as capital gains. This defers the problem rather than eliminating it.

Deductions that genuinely reduce the clawback

• RRSP contributions, still possible up to age 71, reduce line 23400 directly.
• Carrying charges and investment interest expense at line 22100.
• Pension income splitting at lines 21000 and 11600, which moves up to 50 percent of eligible pension income, including RRIF income once you are 65, to a lower income spouse. Note that the income moves to the other spouse, so a household needs to look at both sides before celebrating.

The 75 plus difference, and what it does not change

In July 2022 the Old Age Security pension was permanently increased by 10 percent for seniors aged 75 and over. The uplift is exact: for the July to September 2026 quarter the maximum monthly OAS is $751.97 for ages 65 to 74 and $827.17 for 75 and over, and $751.97 multiplied by 1.10 is $827.17 precisely.

The consequence for the clawback is narrow but important. Because someone aged 75 and over receives more OAS, it takes more income before 15 percent of the excess has recovered all of it. So the maximum threshold is higher for the 75 plus band: $157,923 against $152,062 for the 2025 income year. The minimum is identical for both bands at $93,454. A calculator that applies one maximum to everyone is wrong for every person over 75.

Deferring OAS to 70, and what it does to your personal threshold

You can start OAS at 65 or as late as 70. Deferral increases payments by 0.6 percent each month, which is 7.2 percent a year, up to a maximum of 36 percent at age 70. Sixty months at 0.6 percent is exactly 36 percent, so the arithmetic is linear. There is no benefit to deferring past 70, and unlike CPP there is no option to start early.

Do not borrow the CPP numbers for this.​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ CPP uses 0.7 percent per month upward to a maximum of 42 percent and has an early option down to minus 36 percent at 60. OAS uses 0.6 percent per month upward only. The two are routinely confused and the factors are genuinely different.

Here is the part most calculators miss. Deferring raises your monthly OAS, which raises your personal maximum recovery threshold, because the maximum is the income at which 15 percent of the excess equals the total OAS you actually received. The published maximums in the table above assume standard, undeferred OAS. Somebody who deferred to 70 needs more income before every last dollar is recovered.

The offsetting risk is timing. Deferring​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ pushes OAS income into your seventies, exactly when mandatory RRIF minimums are ramping up. Defer both CPP and OAS to 70 without planning the drawdown and you can walk into the clawback band in your seventies having paid it no attention in your sixties.

Levers an index investor actually has

Most clawback advice is either unusable,​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ such as earning less, or a product pitch. These are the levers that move line 23400 for somebody holding a broad equity portfolio.

Account location, which is the big one

TFSA income and TFSA withdrawals never​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ appear on the return in any form, so they cannot trigger the recovery tax. Anything you can reasonably hold inside a TFSA is income that does not exist for clawback purposes. RRSP and RRIF do the opposite: they convert investment income into fully included ordinary income at withdrawal, on a schedule you do not fully control once RRIF minimums begin. Taxable accounts sit in between, and there the gross up means the character of what you hold matters more than most people assume.

Drawdown sequencing between 60 and 70

The structural move is to draw down​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ RRSP and RRIF balances in the low income years before benefits start, so post 70 RRIF minimums are computed on a smaller balance. This pairs naturally with deferring OAS. Whether it nets out positive depends on the registered balance, your marginal rate today against your rate at 75, and how close to the threshold you sit. It is a calculation, not a rule.

Pension income splitting

Once you are 65, RRIF income qualifies​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ as eligible pension income for splitting, and up to 50 percent of it can be attributed to a lower income spouse at lines 21000 and 11600. Where one spouse sits just above the threshold and the other well below it, this can be the cheapest available fix. It is a transfer, not a deletion: if both spouses are already near the threshold it moves the problem rather than solving it.

Timing of realizations, and deductions

Because the test is annual, one very​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌‌‌‌​‌‌‌​​‌‍‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​​​ large realization does more clawback damage than the same gain spread across three years. Rebalancing a large taxable position across calendar year boundaries is free in a way that very little in tax planning is free. And in the clawback band a deduction is worth your marginal rate plus 15, so RRSP room still usable to 71 and investment carrying charges at line 22100 pay better than most people assume.

What this calculator does not do

An honest tool names its own edges.

• It does not compute your income tax. You supply your marginal rate and the tool stacks 15 percentage points on top of it. It does not model brackets, credits or provincial surtaxes.
• It does not model partial OAS. Full OAS requires 40 years of Canadian residence after age 18, with a minimum of 10 years to receive it in Canada, and partial entitlement is prorated in fortieths. If you have partial OAS, your personal maximum threshold is lower than the published figure and your clawback caps out sooner.
• It does not adjust for deferral. The maximum thresholds used are the published ones, which assume standard undeferred OAS. If you deferred, your personal maximum is higher than shown.
• It does not handle the RDSP and UCCB adjustments. The full CRA formula subtracts lines 11700 and 12500 and adds line 21300. For most retirees these are zero and the test is line 23400 exactly. If they are not zero for you, adjust your input first.
• It does not model a household. The recovery tax is assessed individually, and pension income splitting needs both returns modelled to evaluate properly.
• It does not project 2027 or later. Those thresholds are not announced, and a tool that quietly extrapolates them would look more confident and be less true.
• It does not know what your fund will distribute. The actual eligible dividend, foreign income and capital gains characterization of a year's distributions comes from your T3 slips.

Frequently asked questions