How to Minimize OAS Clawback in 2024 with Advice from Calgary’s Top Financial Planners


Understanding OAS Clawback and Its Impact

What is OAS Clawback?

The Old Age Security (OAS) Clawback is a mechanism by which the Canadian government reduces the OAS pension for higher-income retirees. If your net income exceeds a certain threshold, a portion of your OAS benefits will be clawed back. This is officially known as the OAS Recovery Tax.

How OAS Clawback Affects Your Retirement Income

The OAS Clawback can significantly impact your retirement income, especially if you have multiple income sources. The clawback reduces the amount of OAS benefits you receive, which can affect your overall financial planning. It’s crucial to understand how this works to minimize its impact.

Key Income Thresholds for 2024

For the year 2024, the OAS Clawback threshold is set at $86,912. This means that for every dollar of net income above this threshold, 15 cents will be clawed back from your OAS benefits.

Income LevelClawback Rate
Up to $86,9120%
Above $86,91215%

It’s essential to consult with financial planners, such as those at Bellwether Family Wealth, to navigate these thresholds effectively and minimize the OAS Clawback 2024.

Strategies to Reduce Taxable Income

Income Splitting with Your Spouse

Income splitting allows couples to reduce their overall tax burden by shifting income from the higher-earning spouse to the lower-earning one. This can be particularly beneficial for retirees looking to minimize OAS clawback. By equalizing incomes, you can potentially lower your combined tax rate.

Utilizing Tax-Free Savings Accounts (TFSAs)

TFSAs are a powerful tool for reducing taxable income. Contributions to a TFSA are made with after-tax dollars, and any income earned within the account is tax-free. This means withdrawals do not count as taxable income, helping you stay below the OAS clawback threshold.

Deferring RRSP Withdrawals

Deferring RRSP withdrawals until you are in a lower tax bracket can significantly reduce your taxable income. This strategy is particularly useful if you expect your income to decrease in the future. By delaying withdrawals, you can minimize the impact on your OAS benefits.

Consult with a financial planner, such as those at Bellwether Family Wealth, to tailor these strategies to your specific financial situation.

Leveraging Investment Opportunities

Investing in Tax-Efficient Funds

Investing in tax-efficient funds can significantly reduce your taxable income, thereby minimizing OAS clawback. Tax-efficient funds are designed to generate returns in a way that incurs less tax liability. These funds often focus on capital gains rather than interest income, which is taxed at a higher rate.

The Role of Dividends and Capital Gains

Dividends and capital gains play a crucial role in tax planning. Dividends from Canadian corporations are eligible for the dividend tax credit, which can lower your effective tax rate. Capital gains are only taxed at 50% of your marginal tax rate, making them a more tax-efficient form of income.

Tax-Loss Harvesting Techniques

Tax-loss harvesting involves selling investments that have lost value to offset capital gains from other investments. This strategy can help you manage your taxable income and reduce OAS clawback. Here are the steps to implement tax-loss harvesting:

  1. Identify investments that have declined in value.
  2. Sell these investments to realize the loss.
  3. Use the capital loss to offset any capital gains.
  4. Reinvest the proceeds in a similar asset to maintain your portfolio’s balance.

Consulting with a financial planner, such as those at Bellwether Family Wealth, can help you effectively implement these strategies and ensure they align with your overall financial plan.

Maximizing Pension Income Splitting

Eligibility for Pension Income Splitting

To take advantage of pension income splitting, you must meet certain eligibility criteria. Both you and your spouse or common-law partner must be residents of Canada and at least one of you must be receiving eligible pension income. Eligible pension income typically includes payments from a registered pension plan, but it can also include other types of income depending on your age.

How to Split Pension Income Effectively

Splitting pension income can be a strategic way to reduce your taxable income and minimize OAS clawback. Here are the steps to do it effectively:

  1. Determine Eligible Income: Identify the types of pension income that qualify for splitting.
  2. Calculate the Optimal Split: Use tax software or consult with a financial planner to find the most tax-efficient way to split the income.
  3. File the Election: Both spouses must agree to the split and file the necessary forms with their tax returns.

Benefits of Pension Income Splitting

Pension income splitting offers several benefits:

  • Tax Savings: By shifting income from a higher-income spouse to a lower-income spouse, you can reduce your overall tax burden.
  • OAS Clawback Reduction: Lowering your taxable income can help you avoid or minimize the OAS clawback.
  • Enhanced Financial Planning: Effective income splitting can provide more flexibility in managing your retirement income.

Consulting with a financial planner, such as those at Bellwether Family Wealth, can help you navigate the complexities of pension income splitting and maximize your benefits.

Consulting with Financial Planners

Choosing the Right Financial Planner

Selecting a financial planner Calgary can be a daunting task. It’s crucial to find someone who understands your unique financial situation and retirement goals. Look for certified professionals with a strong track record and positive client testimonials.

Questions to Ask Your Financial Advisor

When consulting with a financial planner, come prepared with a list of questions to ensure they are the right fit for you:

  1. What are your qualifications and experience?
  2. How do you charge for your services?
  3. Can you provide references from other clients?
  4. What is your approach to minimizing OAS clawback?
  5. How will you tailor your advice to my specific needs?

Case Studies from Calgary’s Top Financial Planners

Bellwether Family Wealth has helped numerous clients in Calgary minimize their OAS clawback. For instance, one client was able to reduce their taxable income significantly by utilizing a combination of income splitting and tax-efficient investments. Another client benefited from strategic RRSP withdrawals and maximizing their TFSA contributions.

Consulting with a financial planner can provide you with personalized strategies to optimize your retirement income and minimize OAS clawback. Make sure to choose a planner who is well-versed in the latest tax laws and investment opportunities.

Understanding Government Benefits and Credits

Overview of Available Benefits

The Canadian government offers a variety of benefits and credits to support retirees. These include the Old Age Security (OAS), Guaranteed Income Supplement (GIS), and various tax credits. Understanding these benefits can help you maximize your retirement income.

How to Maximize Government Credits

To make the most of government credits, it’s essential to be aware of all available options and eligibility criteria. Some key strategies include:

  • Applying for the Age Credit if you are 65 or older.
  • Utilizing the Pension Income Credit for eligible pension income.
  • Claiming the Disability Tax Credit if applicable.

Impact of Benefits on OAS Clawback

Government benefits can impact your OAS Clawback. For instance, the GIS is income-tested and can affect your OAS payments. Here’s a quick overview:

BenefitImpact on OAS Clawback
GISMay reduce OAS payments
Age CreditNo direct impact
Pension Income CreditNo direct impact

It’s crucial to consult with a financial planner, such as those at Bellwether Family Wealth, to understand how these benefits interact and to develop a strategy that minimizes OAS Clawback.

Creating a Comprehensive Financial Plan

Setting Financial Goals

Establishing clear financial goals is the cornerstone of a successful retirement plan. Identify your short-term and long-term objectives to create a roadmap for your financial future. Consider factors such as desired retirement age, lifestyle expectations, and potential healthcare costs.

Developing a Retirement Income Strategy

A well-thought-out retirement income strategy ensures you have a steady stream of income throughout your retirement years. This involves diversifying your income sources, such as pensions, investments, and government benefits.

  • Pensions: Ensure you understand the details of your pension plans.
  • Investments: Allocate assets in a way that balances growth and security.
  • Government Benefits: Maximize benefits like OAS and CPP.

Monitoring and Adjusting Your Plan

Regularly reviewing and adjusting your financial plan is crucial to stay on track. Life events, market changes, and evolving goals may necessitate updates to your strategy.

Consistent monitoring helps you adapt to changes and maintain financial stability.

Consider consulting with a financial planner, such as those at Bellwether Family Wealth, to ensure your plan remains aligned with your goals.


Minimizing OAS clawback in 2024 requires a strategic approach tailored to individual financial situations. By consulting with Calgary’s top financial planners, retirees can explore various methods such as income splitting, tax-efficient investments, and strategic withdrawals from retirement accounts. These professionals can provide personalized advice to help maximize OAS benefits and ensure a more secure financial future. Taking proactive steps now can make a significant difference in reducing clawbacks and enhancing overall retirement income.

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