OAS Clawback

The OAS clawback is a special tax that the government imposes on Old Age Security (OAS) payments if a person's net income for the year exceeds a certain annual threshold. 

As shown on the Government of Canada Website, a person's net income for 2023 will be used to calculate the clawback for OAS benefits for the period July 2024 - June 2025. However, for the OAS clawback calculations in Snap, we have decided to base the current year's clawback on the same year's taxable income for simplicity.  Here is an example.

The OAS Minimum Income Recovery threshold for 2024 is $90,997 as set by the Canadian Government.  A person would need to repay 15% of the difference between their net income before adjustments and this threshold amount.  

Here is a simple example of a client with only a defined benefit pension income of $90,000 in 2024.  Their net income before adjustments is their employment income plus the full value of the OAS pension amount they are eligible to receive before any clawback.  In 2024, this is $90,000 + $8,560 which is $7,563 over the threshold. ($98,560 - $90,997 = $7,563).  

The OAS clawback in 2024 in Snap is calculated as 15% of $7,653 which is $1,134.   

The OAS clawback threshold is assumed to increase with inflation each year. (You can update the inflation setting in your scenario under Scenario Setup -> General).

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The amount shown in the OAS column is the OAS benefit received by the client. The OAS clawback has already been subtracted from the client's maximum annual OAS amount and displayed in its own column.

Continuing the example above, here is this client's OAS information from the Gov't Benefits page.

2024 OAS benefit = Maximum annual OAS amount - OAS Clawback 

2024 OAS benefit = $8,560 - $1,134 = $7,426

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No, it differs from other columns in that respect and it is an exception. OAS clawback is already factored in in the OAS amount reduction (if we subtracted it again from cash flow, we would be double-counting it).

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Under the Cash Inflow Details section of the report, both the OAS Pension and OAS Clawback are displayed.

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