Clawbacks Can Sting Seniors

Those who turn age 65 in the tax year, not only start receiving their Old Age Security, which will be subject to tax, but they also can partially offset that income with the Age Amount.

This is a maximum non-refundable tax credit of $3482. However, when the individual’s net income exceeds $25,921, the credit is reduced by 15% of the amount over that income level. Unfortunately this income threshold has not been indexed for inflation since 1995.

In the case of the Old Age Security, individuals whose net income exceeds $53,215 will also see their OAS eroded.

Therefore, seniors will want to time income receipts from RRSPs and RRIFs or other investments, particularly if their taxable income is near the $25,921 or $53,215 level.