For thousands of retirees across Canada, the Old Age Security (OAS) pension remains one of the most important lifelines in retirement. It is dependable, inflation-adjusted, and paid monthly, helping seniors cover essentials like food, utilities, and housing. But while OAS may feel automatic, it is not untouchable.
The Canada Revenue Agency (CRA) keeps close watch on eligibility, and even minor missteps can trigger clawbacks, delays, or in serious cases, suspension of payments. In 2025, three common mistakes stand out as the top risks: earning too much income, failing to file taxes, and extended travel abroad.
Understanding these pitfalls is critical for seniors who rely on OAS to maintain financial stability.
Mistake #1: Earning too much income
One of the main reasons Canadian seniors lose access to OAS—either partially or entirely—is due to high income. In 2025, the OAS clawback threshold is set at \$90,997 in net annual income. Once your income crosses this line, the CRA applies a recovery tax, commonly referred to as the “clawback.”
Here’s how it works:
- For every \$1 earned above \$90,997, your OAS payment is reduced by 15 cents.
- At around \$148,000 or more, your OAS benefit may disappear entirely.
This reduction can catch many retirees off guard, especially those with retirement income sources beyond CPP and OAS. Withdrawals from RRSPs or RRIFs, capital gains, and employer pensions all count toward taxable income.
Example clawback scenarios in 2025:
| Net Income | OAS Reduction | OAS Eligibility |
|---|---|---|
| \$90,000 | \$0 | Full OAS |
| \$100,000 | \$1,351 | Partial OAS |
| \$120,000 | \$4,351 | Reduced OAS |
| \$148,000+ | Full clawback | No OAS |
Strategies to minimize clawbacks
Fortunately, there are ways to protect your OAS:
- Income splitting with a spouse or common-law partner can lower reported taxable income.
- Using a Tax-Free Savings Account (TFSA) instead of RRSPs or RRIFs provides tax-free withdrawals that don’t count toward clawback calculations.
- Planning withdrawals strategically to stay below the income threshold.
By keeping taxable income under control, seniors can preserve more of their OAS entitlement while still drawing from retirement savings.
Mistake #2: Not filing your taxes
It may surprise some retirees, but not filing your taxes can directly impact OAS. The government uses your annual tax return to confirm eligibility and calculate whether a clawback applies.
Even if you owe zero taxes, failing to file by April 30 can result in delays—or worse, a full suspension of OAS and related benefits such as the Guaranteed Income Supplement (GIS).
The CRA must have updated income records each year to determine benefit amounts. Missing this deadline essentially leaves the agency in the dark, and as a result, they may stop payments until accurate tax information is provided.
Filing tips for 2025 seniors:
- Use the CRA’s Auto-fill My Return service for quick and accurate submissions.
- File online with certified software to reduce errors.
- Ensure all income sources—pension, savings, investments—are properly reported.
For retirees on fixed incomes, missing out on months of OAS due to filing errors can be financially devastating. Staying proactive ensures smooth and uninterrupted payments.
Mistake #3: Long-term travel or relocation abroad
Travel is a cherished part of retirement, but extended absences from Canada can put your OAS at risk. The key factor is residency history.
To receive OAS outside Canada, you must have lived in the country for at least 20 years since the age of 18. If you don’t meet this condition, your OAS may be suspended once you leave for long stretches.
Short vacations or seasonal stays outside Canada generally cause no issues, but moving abroad for years—or failing to update Service Canada about long absences—can complicate eligibility.
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Important reminders for traveling seniors:
- Notify Service Canada of extended travel or relocation.
- Keep a detailed travel log in case proof of residency is required.
- Check if Canada has a social security agreement with your new country of residence—this may allow you to continue receiving OAS abroad.
- Always update contact information with CRA to avoid missing important notices.
By planning ahead, seniors can enjoy travel and even retirement abroad without jeopardizing their pension.
Why these rules matter in 2025
As Canada’s senior population grows, the government continues to fine-tune programs like OAS to balance sustainability and fairness. While OAS is universal in nature, it is not unconditional. High earners, non-filers, or residents living overseas for too long could all find their benefits suspended or clawed back.
These safeguards ensure that OAS remains targeted toward Canadians who rely on it most, while discouraging misuse or administrative oversights.
The ripple effect on other benefits
Losing OAS doesn’t just affect monthly pension checks. It can also limit access to related supports, such as:
- Guaranteed Income Supplement (GIS): Additional income for low-income seniors.
- Allowance: For spouses or partners of GIS recipients aged 60–64.
- Allowance for Survivors: For low-income widows or widowers aged 60–64.
Because eligibility for these supplements is tied to OAS, any disruption to OAS payments may directly reduce or eliminate access to these extra benefits.
How seniors can stay protected
To keep OAS payments flowing smoothly in 2025 and beyond, seniors should:
- Monitor income closely to avoid exceeding the clawback threshold.
- File taxes every year on time, even if no taxes are owed.
- Plan travel carefully, ensuring residency requirements are met and Service Canada is informed.
Simple diligence can make the difference between uninterrupted financial support and costly suspensions.
5 SEO-Friendly FAQs
Q1: What income level triggers the OAS clawback in 2025?
The OAS clawback begins once annual net income exceeds \$90,997 in 2025.
Q2: Can I lose OAS completely due to high income?
Yes. At around \$148,000 or more, OAS benefits may be fully clawed back.
Q3: What happens if I don’t file my taxes?
The CRA may withhold or suspend OAS payments until your income information is updated.
Q4: Can I still get OAS if I move abroad?
Yes, but only if you have lived in Canada for 20 years after age 18. Otherwise, your OAS may stop after six months abroad.
Q5: How can I avoid OAS clawbacks and suspensions?
Monitor income levels, file taxes on time, and notify Service Canada about extended travel or relocation.
