If you receive Old Age Security pension and your income exceeds a certain threshold, the Canada Revenue Agency requires you to repay a portion of your benefits. Luckily, it is fairly simple to calculate whether you owe a repayment.
The Repayment Threshold
As of 2019, if you earn more than $77,580, you must repay some of your OAS payments. According to Service Canada, if your earnings exceed $125,696, you do not qualify and must repay all of your payments.
Calculating Your Income
To calculate your OAS repayments, you need to examine more than your gross income. Instead, you must look at your net income, as determined by the CRA after taking into account all of your income streams and your deductions. You also are required to factor in any relevant Canada Child Benefit, Registered Disability Savings Plan payments, and any other repayments.
Take your net income from line 23400 of your tax return and subtract your UCCB and RDSP payments. Then, add your UCCB and RDSP repayments from lines 21300 and 23200. The result is the figure you use to determine if you owe OAS repayments.
For example, if your net income from line 23400 (T1) is $78,000, you will owe OAP repayments since your income exceeds the threshold. However, if you have received $1,200 in UCCB payments, you can subtract this amount. This would bring your income to $76,800, which is under the OAS repayment threshold.
Filing Your Taxes
At the beginning of each year, you will receive a T4A(OAS) slip detailing OAS payments received, income tax paid and any overpayments recovered. If you owe an OAS repayment based on your income, use the amounts from your T4 slip, and the chart for line 23500 of your income tax return to calculate the amount of your repayment.
Enter your repayment amount on line 23500 of your income tax return. The repayment amount is 15 % of your income minus the threshold.
For example, if your net income — factoring in any RDSP and UCCB re-payments or payments — is $80,000, your repayment would be $936.
This is your repayment amount because the difference between your income and the threshold is $6,422. You must repay either 15 % of that amount or $936.
Claiming a Refund for OAS Repayment Taxes
If you were required to make a repayment in the previous tax year, Service Canada may have withheld additional income tax from your OAS payments.
You may claim a refund of those taxes by taking the number from box 22 of your T4A(OAS) and transferring it to line 43700 of your tax return.
Requesting a Waiver for OAS Repayments
If your high income causes you to owe a repayment and you know your income won’t be as high in the following year, you may request a waiver from the CRA. For example, if you owe a repayment in 2018 but you anticipate that your income will be substantially lower in 2019, you may request the CRA to waive your repayment obligation.
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