The OAS is a taxable benefit, which means you need to pay a cut to the Canada Revenue Agency.

The maximum monthly benefit for the OAS is $613.53 in 2020.

That works out to an annual maximum of $7,362.36.

In any case, some Canadians are forced to fork over more to the Canada Revenue Agency.

Canadians who have prepared well for retirement and are collecting income from a pension, and RRSP, and other streams will likely be at risk of crossing this threshold.

Retirees How to tackle the OAS clawback

The OAS clawback can be frustrating for retirees, because it can act as an additional 15% tax.

However, Human Resource Development Canada has said that only about 5% of seniors receive reduced OAS pensions and only 2% lose the entire amount.

Pension splitting lets spouses give up to 50% of their pension income to their spouse for tax-splitting purposes.

Canadians can also look to spend their RRSPs before they turn 65.

The benefits of the tax deferral wane in the later years of this Canada Revenue Agency-administered account.

You can also opt to defer the OAS.

This new rule allows seniors to elect to defer the OAS to as late as age 70.

Canadians planning to work past the age of 65 may find this option particularly useful.


Retirees should pursue this strategy in 2021

The Tax-Free Savings Account (TFSA) is open to retirees who want to pursue capital growth or extra income.

Best of all, these gains do not have to go to the Canada Revenue Agency.

Retirees can enjoy the gains and worry about the Canada Revenue Agency another day.

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