OAS and GIS: Tax Implications for Canadian Seniors

Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) are key income sources for Canadian seniors. While both are government benefits, they have very different tax treatments that can significantly affect your retirement income.

Old Age Security (OAS) Basics

OAS is available to most Canadians aged 65 and older who have lived in Canada for at least 10 years after turning 18. You do not need to have worked or contributed to receive OAS.

For 2025, the maximum monthly OAS payment is approximately:

• $727.67 per month for those aged 65 to 74 (approximately $8,732/year)
• $800.44 per month for those aged 75 and older (approximately $9,605/year)

OAS is taxable income and must be reported on your tax return.

The OAS Clawback (Recovery Tax)

Higher-income seniors face the OAS recovery tax, commonly called the “clawback.” If your individual net income exceeds $90,997 (for the July 2025 to June 2026 payment period), you must repay part or all of your OAS.

The repayment rate is 15 cents for every dollar of net income above the threshold. OAS is fully clawed back when net income reaches approximately $148,000 (age 65-74) or $155,000 (age 75+).

Guaranteed Income Supplement (GIS)

GIS is a monthly non-taxable benefit for low-income OAS recipients. To qualify, you must:

• Be receiving OAS
• Have an individual income below approximately $21,768 (single) or combined couple income below approximately $28,752 (2025 thresholds)

GIS is not taxable and does not need to be reported as income. However, it is income-tested — your GIS amount is reduced as your income rises.

How GIS Clawback Works

The GIS reduction rate is steep. For every dollar of income above certain thresholds, GIS is reduced by 50 cents (or 75 cents in some ranges). This creates an effective marginal tax rate that can exceed 70% when combined with federal and provincial income tax.

Income sources that affect GIS include:

• Employment and self-employment income (after a partial exemption)
• RRSP/RRIF withdrawals
• CPP/QPP payments
• Investment income

TFSA withdrawals do not affect GIS, making the TFSA especially valuable for low-income seniors.

Strategies to Minimize the OAS Clawback

1. Maximize TFSA contributions — withdrawals are not included in net income
2. Delay OAS to age 70 — payments increase by 0.6% per month of deferral (up to 36% more), and you avoid clawback years
3. Income split with your spouse — pension income splitting can bring both spouses below the threshold
4. Withdraw RRSP/RRIF strategically — consider drawing down RRSP savings before age 65 to reduce mandatory RRIF income later
5. Avoid large one-time income events — spreading capital gains over multiple years can help

Pension Income Splitting

Eligible pension income (such as RRIF withdrawals after age 65) can be split between spouses. Up to 50% of qualifying pension income can be allocated to the lower-income spouse, potentially keeping both spouses below the OAS clawback threshold.

Tax Return Reporting

• OAS payments are reported on line 11300 and shown on your T4A(OAS) slip
• The OAS clawback is calculated on line 23500 and repaid through your tax return or deducted from monthly payments
• GIS is reported on the T4A(OAS) but is non-taxable

Sources

• Government of Canada — Old Age Security
• Government of Canada — GIS amounts
• CRA — OAS recovery tax