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Old Age Security (OAS) Explained

Old Age Security (OAS) was originally intended to be a universal program to provide income support payments to Canadian seniors. It is one of the cornerstones of Canada’s retirement income system.

It is not a pension plan. You don’t make contributions. OAS is a government benefit program that is financed out of general revenue.

Employment history is not a factor in determining eligibility. You can receive OAS benefits even if you have never worked, or are still working.

Residency requirements have to be met. The amount you receive is determined by how long you have lived in Canada after the age of 18.

Everyone who has been a resident of Canada for at least ten years (after age 18) is eligible to collect OAS starting at age sixty-five. Normally, you qualify for the full amount only if you have been a resident for at least forty years after turning 18.

You may still qualify for full or partial payments if you meet certain other requirements.

Old Age Security (OAS) Explained

Up to September 2017, the maximum monthly benefit is $583.74. This rate is reviewed four times a year and may be adjusted based on the cost of living measured by the Consumer Price Index. OAS is taxable income.

Old Age Security (OAS) Explained

OAS for low income seniors

Anyone who receives OAS and whose income falls below a certain level may be eligible to receive additional non-taxable monthly payments.

  • The Guaranteed Income Supplement provides a monthly benefit to low income OAS recipients. It is an income tested benefit. This means your total income from the previous year (combined income for couples) is used to determine your eligibility.
  • Allowance is available to 60-64-year-old spouses/common-law partners of OAS recipients who also receive GIS.
  • If you are sixty to sixty-four years old and are widowed, you may be eligible to receive the Allowance for the Survivor.

OAS for higher income seniors

One of the most despised tax amendments was the Social Benefits Repayment Tax, – also known as the “clawback.”

If a person’s net income exceeds a certain level – called a threshold – they must repay some, or all, of their OAS benefits at a rate of fifteen cents for every extra dollar received.

For the 2017 income year, the clawback applies to anyone whose net income exceeds $74,788 up to a maximum of $117,954 when payments cease completely.

Repayment is calculated on the difference between your income and the year’s threshold amount:

Tom’s income is $82,000. He is $7,212 over the threshold. He has to repay $1,081.80 (7,212 X 0.15).

Enrollment

In order to streamline the process, you may possibly be automatically enrolled to receive OAS. Service Canada will send you a notification letter the month after you turn 64. If you don’t receive this letter, you will have to apply.

GIS, Allowance and Allowance for the Survivor must be applied for (at least three months prior to your 65th birthday).

There is a maximum of one year of retroactive payments for late applications.

Receive OAS now or later?

You can defer your payments up to as late as age 70. The payments would increase 0.6% for every month you delay to a maximum of 36%. You will not be eligible for GIS during that period of time.

Related: When to take CPP – Early, Late, or Somewhere in-Between

Before delaying the payments think about:

  • current and future sources of income
  • plans for retirement
  • health

Conclusion

To calculate the amount of your monthly benefit, see www.servicecanada.gc.ca/eng/services/pensions/oas/payments/index.shtml

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26 Comments

  1. Heather on August 9, 2017 at 1:59 pm

    Could you clarify the amount of the “base rate” that would be used to calculate a deferred OAS? That is, is it the base amount that was in place at the time a recipient turned 65 or the time when the recipient intends to start receiving the payment? (Which amount is used to calculate the .6% per month deferral “premium”?)

    • boomer on August 9, 2017 at 5:53 pm

      Hi Heather. Since you are eligible to collect OAS at age 65, the base rate would be the amount on that date. It increases by .6% for every month you delay. So, if you turned 65 today and deferred the payment until you turned 70, the amount you’d get would be $793.88.

      • Doug on December 28, 2017 at 8:13 pm

        Hi Boomer – I’m sorry, but this is wrong if there is any increase in the CPI between age 65 and 70. The amount payable would be 136% of the base rate when the pensioner reaches age 70.

  2. Donna Berscht on August 9, 2017 at 9:20 pm

    I applied for the GIS but never heard from them yet i was approved for OAS

    • boomer on August 10, 2017 at 10:14 am

      @Donna Berscht: It seems to take a long time for a response. To check up on your application call Service Canada at 1-800-277-9914. Have your SIN handy and be prepared to wait on hold.

      • Donna Berscht on August 10, 2017 at 11:02 am

        I tried to call but could not get through i just want to know if i will be getting the GIS they said i would be getting a letter in july but didnt receive it yet.

  3. Maria couture on August 9, 2017 at 10:27 pm

    I just received my application for GIS. I had never heard of GIS and therefore did not apply for it 3 months before I turned 65. I will turn 65 on September 3/17. How long should it take for approval? Will I get a lump sum of retroactive payments? I can’t seem to find a phone # to speak with a real person regarding my application.

    • boomer on August 10, 2017 at 10:17 am

      @Maria couture: See phone number above. After approval you will get a lump sum retroactive payment for up to one year.

      • boomer on August 19, 2017 at 9:12 am

        I called Service Canada and I was told that it takes 154 days to process a GIS application.

        • marie couture on September 2, 2017 at 10:59 am

          I mailed my GIS application on Aug. 8 and checked on status by phone and was told it had been approved but not calculated yet. So it took 3 weeks from date of mailing for approval. So u never know; call them and check.

  4. Agim on August 10, 2017 at 4:06 am

    I want to delay collecting OAS. Do I need to notify Service Canada?
    Thank you !

    • boomer on August 10, 2017 at 10:19 am

      @Agim: Yes, the instructions for delaying payment will be on your letter. Then you will have to apply when you want to start the payment.

  5. Brenda Head on August 10, 2017 at 10:01 am

    When’s the real age to be eligible for OAS? I tried to apply but was told I must be 65. That lady didn’t need to be rude and didn’t explain anything at all.

    • boomer on August 10, 2017 at 10:21 am

      @Brenda Head: You are eligible to receive OAS the month after your 65th birthday.

    • Doug on December 28, 2017 at 8:22 pm

      Hi Brenda – You can apply for OAS up to one year in advance, but benefits are only payable as of the month following your 65th birthday, at the earliest.

  6. Sharon Inglis on August 10, 2017 at 11:10 am

    My OAS was “clawed back” in 2015 and I was informed it would be repaid in July 2016 but my monthly payments continued at the claw back level until July 2017 even though my income had been drastically reduced in 2016 (retirement). Will I be reimbursed for the 12 month overpayment?

    • boomer on August 10, 2017 at 12:46 pm

      @Sharon Inglis: You will need to ask CRA to review your situation – 1-800-267-5177

    • Doug on December 28, 2017 at 8:26 pm

      Hi Sharon – If you were over-clawedback, you will get a refund for the withholds for Jan 2016 thru Dec 2016 when you file your 2016 income tax return, and you will get a refund for the withholds for Jan 2017 thru Jjune 2017 when you file your 2017 income tax return.

  7. Ron MacMaster on August 24, 2017 at 6:34 am

    I’m 62 years old and I’m on CPP medical disability for copd,congestive heart failure and diabetes. This is the only income I have. Is it possible to receive OAS and GIS early …??? Thanks Ron

    • boomer on August 24, 2017 at 5:03 pm

      Hi Ron. You will be eligible to collect OAS and GIS only when you turn 65 – you can’t receive it earlier than that. In addition, your CPP disability amount will automatically switch over to the CPP pension at 65 – at a reduction of about 30%, unfortunately.

  8. Coleen Whynott on December 21, 2017 at 4:49 pm

    I’m 64 years old and am still working. If I don’t retire at age 65 and continue working, can I wait until I retire before I apply for the GIS or is there a deadline on applying?
    Thanks.

    Coleen

    • boomer on December 22, 2017 at 10:44 am

      Hi Coleen. You have to be receiving OAS to apply for GIS so, if you want to wait, you have until age 70 to apply for both.

  9. Coleen Whynott on December 22, 2017 at 5:36 pm

    Sorry to bother you again, but I have another question:
    If I take my OAS at 65 and still continue working, can I apply for my GIS at a later date or is there a deadline for this.
    I plan on taking my OAS at 65, but wasn’t planning on applying for GIS until I stop working. This way my income would be much less. Can this be done?

    • boomer on December 22, 2017 at 6:12 pm

      Since GIS is based on income you would be better off applying after you stop working. Again, you have to age 70 to apply.

    • Doug on December 28, 2017 at 8:32 pm

      Hi Coleen – You should apply for GIS approximately 6 months before you plan to stop working. In that way they should be able to process your application for GIS based on your estimated income after you stop working.

  10. Rejean Martel on October 29, 2018 at 1:40 am

    I apply for OAS on April 23th 2018. I’ll be 65 on February 2019.
    I haven’t heard from Service Canada yet as of today October 29th..
    Very slow if you ask me.. When it’s us owing them $$$ they are VERY quick for processing our forms……

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