OAS Clawback 2026: How to Avoid It

What Is the OAS Clawback?

OAS recovery is 15% of net world income above $95,323 for 2026 income, capped at actual OAS received. July 2026–June 2027 withholding instead uses 2025 income and $93,454. Include taxable OAS in recovery income; do not use GIS assessable income.

The full-recovery ceiling depends on actual pension amounts. See Service Canada recovery rules and our explicit-period calculator.

Income That Triggers Clawback

The following count toward the clawback threshold: CPP income (once started), DB pension and annuity income, RRIF withdrawals, employment income, investment income (dividends, capital gains, interest), rental income, and business income. TFSA withdrawals do NOT count — this is one of the TFSA's most powerful retirement advantages. Understanding which income sources are 'clawback-neutral' is central to any retirement withdrawal order strategy.

Strategies to Reduce OAS Clawback

Consider RRSP withdrawal timing, TFSA withdrawals, eligible pension splitting, OAS deferral and capital-gain timing. Use the applicable income-year threshold: $95,323 for 2026, not $93,454 from 2025. Earlier RRSP withdrawals can reduce later RRIF balances but incur tax now.

Deferral raises later OAS and means giving up earlier payments. Model taxes, longevity, GIS eligibility and both spouses' income before choosing a strategy.

OAS Clawback and CPP Timing

CPP timing changes taxable retirement income and therefore can change recovery. CPP deferral and bridge withdrawals can help some households, but higher later CPP may increase later recovery. No start age guarantees elimination of clawback; use your personal CPP estimate and each year's threshold.

OAS Clawback and Income Splitting

Eligible pension income may be split up to 50%, subject to age and income-type rules; use CRA Form T1032. If income is $130,000 and $60,000, transferring $35,000 produces $95,000 each — below the 2026 threshold of $95,323, but ABOVE the 2025 threshold of $93,454.

In the simplified 2026 example, recovery falls by $5,201.55 before other adjustments and actual-OAS caps. CPP sharing follows separate rules; OAS is not splittable.