OAS Benefits

Written by Johnny Kwong, CPA on Nov. 29, 2016

What is the value of deferring my OAS benefits, sometimes also called OAS pension, to a future year?

There are several reasons why you might want to defer your OAS benefits, such as:

1)     Based on current and future sources of income you may be able to keep thousands more.

2)     You’re planning to work past 65 years of age;

3)     You’re in good health;

4)     Your overall financial and retirement plan indicate it’s a good idea.

Some questions that may come to mind when you think that you may want to defer your OAS benefits are:

Why would I want to defer OAS benefits?

The main reason to defer OAS benefits is that there is a claw back rule that states that your OAS benefits are to be repaid if your net income in 2016 exceeds $73,756. The repayment is 15% of income above this amount to a maximum of the OAS benefit that was received in the year.

So, if your income when you are 65-70 is expected to be over $120,000 you will have to repay all of the OAS benefits that you receive.  There is absolutely no benefit in receiving those benefits in those years. You would be much better off to defer the receipt of those benefits until you are 7o and increase the monthly amounts that you will receive at that time by 36% as described below.

What is the value of deferring OAS benefits?

By deferring your OAS pension, your monthly pension payment will increase by 0.6% for every month you delay receiving it, up to a maximum of 36% at the age of 70. It should be noted that there is no financial benefit in deferring your OAS pension after the age 70.

How long can you defer accepting OAS benefits?

Service Canada allows individual to defer receiving OAS for up to 60 months (5 years) after you become eligible.

How do I notify Service Canada that I want to defer my OAS pension?

There are two ways to notify Service Canada that you want to defer your OAS pension:

  • Access your my Service Canada account and follow the guidelines to delay receiving your OAS pension.
  • Service Canada implemented a process to automatically enroll seniors who are eligible to receive the OAS pension. So in the month after you turn 64, you will receive an automatic enrolment letter by mail and you can defer your OAS pension by signing and returning the automatic enrolment letter by mail.

How do I notify Service Canada when I want to start receiving my OAS benefits?

If you choose to delay receiving your OAS benefits, you can apply up to 11 months before the date you want your OAS benefits to start.

If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.

Thanks to Johnny Kwong of KWB Chartered Accountants for providing this content.

Johnny Kwong, CPA

Johnny Kwong, CPA

Manager

Johnny received his Bachelor of Commerce Degree in 2011, from Athabasca University. In April 2013, he joined the KWB team and began pursuing his CPA designation. He was officially admitted as a CPA member in December 2016 and continued working as a Senior Staff Accountant at KWB. In February 2019, Johnny was promoted to the role of Manager at KWB, and now continues to expand his knowledge and experience in a variety of areas.

In his personal life, Johnny is a proud father to two beautiful girls, who regularly surprise him with their own achievements. He and his wife are continuing to enjoy all the experiences of their parenting journey…except for the still persisting lack of sleep. In his minimal spare time, Johnny enjoys watching movies, going for long walks, and still attempts to find time to sneak in a date night here and there.

Johnny's Contact Information

Other Posts by Johnny

Nov 26 2019
Registering For GST

Do you need to register for GST? Some services are exempt from the GST/HST – that is, no GST/HST applies to them. This means that you do not charge the GST/HST on these services, and you are not entitled to claim input tax credits on property and services acquired to provide them. You cannot register for the GST/HST if

May 26 2014
Heartbleed & CRA’s Deadline For 2013

As you may have heard, Canada Revenue Agency (CRA) extended the 2013 personal tax return deadline to May 5th, 2014. This was due to a security issue, known as the Heartbleed bug vulnerability. This vulnerability affected how usernames and passwords were encrypted when logging into “secure” websites. Thus, allowing hackers the potential to steal private

Jan 29 2019
Unreported T-slip income

Regardless of the reason, if you have unreported T-slip income of $500 or more from any T-slips in your current year tax return, don't wait for CRA to catch it. If you have unreported t-slip income in your current year return and also unreported t-slip income in any of the three years prior, you are subject to a

May 21 2019
Living Out Allowance

In certain situations, a company can pay and deduct a living out allowance and the employee does not have to report the allowance in their income. In order for this to apply, the allowance needs to be reasonable.  Additional criteria must be met as stated below for employees at a special work site and

Oct 13 2015
Taxable Benefits For The Personal Use of Company Aircraft

A corporate aircraft that is owned or leased primarily for business purposes, but is used for personal purposes (i.e. flight to transport employees or shareholders to a vacation destination) will be considered a taxable benefit to that employee or shareholder. The value of the benefit is the cost of a regular first class airfare

Dec 1 2015
CRA Requirements for Keeping Financial Information

You are required by law to keep records if one or more of the following situations apply: You operate a business in Canada You have to file an income tax return (i.e. corporate or personal) You have to file a GST return You filed for a GST rebate You have a trust Note: The

Apr 16 2019
Supporting Documents for a Charitable Donation

When you make a charitable donation, one of the key benefits you receive is the donation tax credit on your tax return. In order to be able to claim a charitable donation and get a credit, Canada Revenue Agency (CRA) requires that individuals keep supporting documents and proof of payment (i.e. cancelled cheques, pledge

Sep 6 2016
Home Buyers Plan

The Home Buyers Plan (HBP) is a program that allows you to withdraw up to $25,000, per person from each of your RRSP accounts in a calendar year to buy, or build, a qualifying home. To be eligible for the Home Buyers Plan, the following must be met: You must be considered a first-time

Oct 18 2016
Canada Child Benefit

Beginning July 2016, the Liberal government combined the Canada Child Tax Benefit, National Child Benefit Supplement and the Universal Child Care Benefit into the Canada Child Benefit. Under the new Canada Child Benefit, families with children under the age of 18 will be eligible for a maximum annual benefit of $6,400 ($533 per month) per

Jan 3 2017
Changes to the Eligible Capital Property Rules Effective January 1, 2017

Eligible capital property (ECP) includes items such as goodwill, patents, trademarks, customer lists and other intangibles with no fixed lifespan. As of January 1, 2017, the new rules for eligible capital property will come into effect and will have a significant impact on tax deferral opportunities for companies that dispose of eligible capital property. Previous

Mar 1 2017
Child Rearing Provision

If you left the work force or reduced your working hours to be the primary caregiver for your children, it will likely be to your benefit to apply for the CPP child rearing provision when applying for CPP benefits. To apply for the CPP child rearing provision you would complete section 11A in the application