Old Age Security (OAS) is one of the cornerstones of Canada's retirement income system — a monthly pension paid directly by the Government of Canada to most Canadians aged 65 and older. Unlike the Canada Pension Plan (CPP), OAS is not a contributory program. You do not need to have worked or paid into it to qualify. It is funded through general tax revenues, which means eligibility is based on age and years of residency in Canada, not your employment history.
Understanding how OAS works — including the 2025 payment amounts, the income clawback rules, deferral options, and the Guaranteed Income Supplement — can make a meaningful difference in how much you actually keep in retirement. This guide walks through everything you need to know for 2025.
OAS payments are indexed to inflation and adjusted quarterly in line with the Consumer Price Index (CPI). For Q3 2025, the maximum monthly amounts are:
The 10% permanent top-up for seniors aged 75 and over was introduced in July 2022 and is now a fixed feature of the program. These figures represent the maximum payment for someone who has lived in Canada for 40 or more years after age 18. If your Canadian residency history is shorter, your benefit will be prorated accordingly.
To receive any OAS benefit, you must meet all three of the following conditions:
Full OAS requires 40 years of Canadian residency after age 18. If you have fewer than 40 years, you receive a partial OAS — calculated as 1/40th of the full pension for each complete year of residence. For example, 30 years of residency would entitle you to 30/40ths (75%) of the maximum benefit.
Canada also has international social security agreements with several countries. If you lived in a country with such an agreement, periods of residency in that country may count toward meeting the 10-year minimum, though they do not increase the benefit amount beyond what your Canadian years alone would generate.
The OAS clawback — officially called the OAS Pension Recovery Tax — is one of the most important planning considerations for higher-income retirees. Once your net income exceeds the annual threshold, you must repay a portion of your OAS back to the government.
For 2025, the clawback threshold is $93,454. Above that figure, you repay 15 cents of OAS for every dollar of excess income. OAS is fully clawed back at approximately $151,668 for most recipients aged 65 to 74.
Suppose your 2025 net income is $120,000. Here is how the recovery tax is calculated:
The CRA calculates your clawback based on the prior year's tax return (your 2025 income affects OAS payments starting in July 2026). If CRA projects a clawback based on your filed return, the withholding is taken directly from your monthly OAS cheque — you do not pay it as a lump sum at tax time unless the estimate was too low.
The clawback applies to your net income before adjustments (line 23400 of your T1). This includes virtually all income sources:
Notably, the Canada Child Benefit (CCB) and Guaranteed Income Supplement (GIS) are excluded from this calculation. If you are unsure which line items affect your clawback exposure, a review with Swift Accounting Calgary can help you model your retirement income before filing.
You are not required to start OAS at 65. You can defer the start of your benefit to any point up to age 70. For each month you delay after 65, your benefit increases by 0.6% (7.2% per year). Deferring to age 70 — the maximum — results in a permanent 36% increase in your monthly payment.
For Q3 2025, that means a deferred OAS at 70 for the 65–74 bracket would be approximately $989.63/month instead of $727.67/month — a difference of roughly $262/month for life.
Deferral makes the most financial sense if:
If you are in poor health, have limited life expectancy, or have no other retirement income, starting OAS at 65 is generally the better choice.
The Guaranteed Income Supplement is an additional monthly benefit for low-income OAS recipients. Unlike OAS itself, GIS is entirely income-tested and non-taxable. You must already be receiving OAS to qualify.
For 2025, the maximum GIS for a single senior is approximately $1,100 per month. Combined with the maximum OAS of $727.67, low-income single seniors can receive roughly $1,850/month in combined federal benefits — a meaningful income floor.
GIS phases out at a rate of 50 cents for every dollar of other income (excluding OAS). This steep phase-out means that even modest RRSP withdrawals or RRIF payments can significantly reduce or eliminate GIS. Seniors who qualify for GIS should be especially careful about the timing and size of RRSP/RRIF withdrawals.
OAS itself cannot be split with a spouse for tax purposes — it belongs to the individual recipient. However, proactive income management can still meaningfully reduce clawback exposure for couples.
Strategies worth discussing with your accountant include:
The goal is to keep each spouse's net income (line 23400) below $93,454 wherever possible. Even a $5,000 reduction in net income can preserve nearly $750 in annual OAS benefits.
The team at Swift Accounting in Calgary works with retirees and pre-retirees to model these income scenarios ahead of time — often discovering thousands of dollars in avoidable clawback through relatively simple adjustments to withdrawal sequencing.
Service Canada automatically enrols many seniors for OAS. If you are automatically enrolled, you will receive a letter at age 64. If you are not automatically enrolled, you must apply — ideally six months before you want payments to start. You can apply online through My Service Canada Account or by submitting a paper application.
If you are deferring OAS, you do not need to do anything at 65 — simply do not apply until you are ready to begin payments.
Yes. OAS is fully taxable as income in the year you receive it. It is reported on a T4A(OAS) slip issued by Service Canada. The GIS portion, however, is non-taxable. If you are subject to the OAS Pension Recovery Tax (clawback), the amount withheld from your monthly payment reduces your taxable OAS income for that year, and you claim a deduction at line 23500 of your T1 return.
Yes, in most cases. If you have lived in Canada for at least 20 years after age 18, OAS can be paid to you anywhere in the world. If you have fewer than 20 years of Canadian residency, OAS payments abroad are generally only permitted if Canada has a social security agreement with your country of residence. Non-residents have OAS subject to a 25% withholding tax (reduced to 15% in treaty countries such as the United States).
The clawback is recalculated every year based on your prior year's net income. If your income drops below the $93,454 threshold in a given year, no clawback applies for the following benefit year. Conversely, a large one-time income event — such as selling a rental property or a large RRIF withdrawal — can trigger a clawback for the following year even if your income is normally below the threshold. This is why advance tax planning around large dispositions matters significantly for OAS recipients.
It depends on your health, other income sources, and expected longevity. The break-even point is roughly age 80 to 82 — if you expect to live past that, deferring to 70 typically results in a higher lifetime benefit. If you have significant RRSP or RRIF assets that will generate income between 65 and 70 anyway, deferring OAS may also reduce clawback exposure in those years. There is no single right answer, and the optimal strategy depends on your complete retirement income picture. Speaking with an accountant who understands CRA rules and retirement tax planning is the best starting point.
OAS is a significant component of retirement income for millions of Canadians, but the clawback rules, deferral options, and interaction with RRIF and pension income mean the right strategy varies considerably from one household to another. If you are approaching 65 or already receiving OAS and want to ensure your income is structured to minimize tax and maximize benefits, contact Swift Accounting — our team is here to help you plan with confidence.
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