The OAS "clawback" is not quite a clawback — it is the OAS recovery tax, and it works automatically through your tax return. For 2026 payments (based on 2025 net world income), it begins at about $152,062 for ages 65–74 and $157,923 for 75+, repaying 15 cents of OAS per dollar above the line until the pension is fully recovered.
Because the thresholds are indexed and the calculation uses net income, planning — not luck — decides who pays it. The strategies below are standard, CRA-legal tax planning.
How the recovery tax works
| Age | Clawback starts | Recovery rate |
|---|---|---|
| 65–74 | ~$152,062 | 15% per dollar above |
| 75+ | ~$157,923 | 15% per dollar above |
Example: $162,062 of net income at age 70 means $10,000 over the threshold × 15% = $1,500 of OAS repaid (about $125/month). CRA can also reduce your monthly OAS in advance based on last year's return, with a true-up at filing.
Five legal ways to stay under the line
- Pension income splitting: split up to 50% of eligible pension income with a lower-income spouse — the single most effective clawback tool for couples.
- TFSA withdrawals: TFSA withdrawals are not income and do not touch net income — fund spending from the TFSA instead of the RRSP in high-income years.
- RRSP/RRIF timing: spread withdrawals to avoid spike years; consider strategic larger withdrawals before OAS begins at 65.
- Defer OAS to 70: if you are working past 65 and would lose OAS to clawback anyway, deferring banks a 36% increase for later.
- Capital loss harvesting: realized losses reduce net income in the year claimed — useful in high-gain years.
What does NOT help
GIS-style income tricks do not apply here: the recovery tax uses net world income (line 23600), so foreign pensions, rental income and taxable capital gains all count. Charitable donations reduce tax payable but not net income for clawback purposes (the donation credit applies after). And "just earn less" is technically effective but rarely the goal — the strategies above preserve income while managing the line it is measured on.
The couple's advantage: two spouses each under the threshold keep full OAS on $300,000+ of combined income. Income-splitting is not a loophole — it is the system working as designed.
Frequently asked questions
At what income is OAS clawed back in 2026?
For 2026 payments: about $152,062 of 2025 net world income (ages 65–74) or about $157,923 (75+). Above that, 15% of each extra dollar is recovered.
How is the OAS clawback calculated?
15 cents of OAS repaid per dollar of net world income above the threshold, administered through your tax return. CRA may also reduce monthly payments in advance.
Can I avoid the OAS clawback legally?
Yes: pension income splitting, TFSA withdrawals instead of RRSP withdrawals, timing RRSP/RRIF withdrawals, deferring OAS to 70, and harvesting capital losses are all standard strategies.
Do TFSA withdrawals affect the OAS clawback?
No — TFSA withdrawals are not income and do not increase net income, making them ideal spending money in high-income years.
Sources and methodology
- Wealthvieu: OAS & GIS Guide 2026
- Immigration News Canada: CPP and OAS Payments August 2026
- Immigration News Canada: October 2026 OAS Increase
This article provides general information for planning purposes, not professional advice or a quote. Cost figures are NorthPeak planning estimates unless a source is named; confirm current prices with licensed local contractors and professionals before making decisions.