The trap: two thresholds are live at once, and only one is yours to move
| Recovery tax period | Income year it is based on | Clawback starts at | Fully recovered at (65 to 74) | Fully recovered at (75 and over) |
|---|---|---|---|---|
| July 2026 to June 2027 | 2025 | $93,454 | $152,062 | $157,923 |
| July 2027 to June 2028 | 2026 | $95,323 | $155,320 | $161,320 |
Read the table the way the CRA reads it, one row per payment period, each row locked to an income year that is already finished or about to be. The OAS arriving between July 2026 and June 2027 was sized by 2025 income. Nothing earned, withdrawn or deducted in December 2026 touches that row; it is settled. The row still open is the second one. Your 2026 net world income, a number that is still being written in the last weeks of the year, decides whether the payments running from July 2027 to June 2028 arrive whole or reduced. Most explanations of the clawback quote a single threshold, and the two figures most often quoted, $93,454 and $95,323, belong to different rows. Using the wrong row misprices every December decision by a full year. One detail on the official table is worth knowing in November: the maximum thresholds are marked as estimates from January to September of the current tax year and final from October to December, so the 2026 row above is the finished version, not a projection.
The Guaranteed Income Supplement is a separate income-tested benefit with its own rules. Every figure in this piece is an Old Age Security figure; do not borrow these thresholds for a GIS decision.
The worked math: 15 cents on the dollar over the line
The recovery tax takes 15 percent of the amount by which net world income exceeds the threshold for the income year. The government's own worked example runs on the 2025 row: income of $100,000 against the $93,454 threshold is $6,546 over the line, and 15 percent of $6,546 is $981.90, repaid across the July 2026 to June 2027 period. The repayment is not collected as a single bill. It is divided monthly and deducted from the OAS payments themselves, and the recipient gets a letter setting out the deductions being withheld.
Now run the same arithmetic on the open row, with assumptions stated. Suppose your projected 2026 net income lands at $105,323. That is exactly $10,000 over the $95,323 threshold, so the recovery tax on the July 2027 to June 2028 payments would be $1,500, roughly $125 a month across the twelve payments. Every $1,000 of 2026 income kept below that projection is $150 of OAS kept. That exchange rate, 15 cents per dollar, is the price tag to attach to any December move that adds income, and the saving attached to any move that removes it. It also explains why the check belongs in December rather than at tax time: by the time the return is filed, the income year the return reports is closed.
What still moves the 2026 number in December
- Which account funds a December expense. Every dollar that comes out of a RRIF is fully taxable income, and the annual RRIF minimum has to be received by December 31 whether it is needed or not. Money coming out of a TFSA is not income at all: it does not go on the tax return, and neither TFSA earnings nor TFSA withdrawals reduce income-tested federal benefits such as OAS. A $10,000 December expense funded from a TFSA instead of an extra RRIF withdrawal is $10,000 that never approaches the threshold, worth up to $1,500 of OAS at the 15 percent rate.
- Timing an optional withdrawal. An extra RRIF withdrawal is optional in a way the minimum is not. Taken in December, it is 2026 income and counts against the $95,323 line. Deferred to January, it is 2027 income and counts against a later row. The withdrawal itself is identical; the row it lands on is the decision.
- A deduction, where one is genuinely available. The recovery tax reads net income, and deductions are what reduce income. An RRSP deduction is the familiar example, subject to having contribution room and being eligible to contribute at all. The deduction is claimed on the 2026 return, so December is when its size has to be decided, while the year's income can still be estimated honestly.
What does not move it, however good it feels
The December donation is the classic false lever. For an individual, a charitable donation produces a non-refundable tax credit, and a credit reduces tax payable. It is calculated after net income, and it leaves the net income figure exactly where it was. The distinction that matters here is credit versus deduction: a deduction reduces the income number itself, a credit reduces the tax calculated on that number. Donate in December for the reasons donations are worth making, including the donation credit itself. Do not donate expecting the OAS clawback to notice, because the number it reads never changes.
The same applies to the rest of the credit shelf. Credits are valuable, and they are simply aimed at a different line of the return than the one the recovery tax watches.
Decide in December, elect at filing: the two lists
Pension income splitting sits on the wrong list in most clawback advice, presented as a December move. It is not one. Splitting lets a pensioner allocate up to 50 percent of eligible pension income to a spouse or common-law partner, and RRIF withdrawals qualify once the pensioner is 65 or older. The allocation is notional, no money changes hands, and both spouses make the election together on Form T1032, annually, when the returns are filed. What splitting changes is each spouse's individual net income, and the recovery tax is an individual test, so a split can pull one spouse under the threshold without the household earning a dollar less. That is a powerful lever, and December's part in it is only to know it exists, so the December income decisions are made with the household's two thresholds in view rather than one. Old Age Security itself cannot be split, and Canada Pension Plan payments are outside the T1032 election as well; CPP has its own separate sharing arrangement.
The framework: if a move changes what lands in 2026 net income, it belongs in December, while the year is open. If a move only reallocates income that is already earned, it belongs at filing time, and December's job is to leave it room to work.
When this check is not worth your December
If your projected 2026 income sits comfortably below $95,323, the check takes five minutes and ends there; no move is needed and none should be manufactured. If income is far above the full-recovery line for your age group, the year's OAS for the July 2027 period is already fully spoken for, and December moves should be judged on their ordinary tax merits instead. And the table resets every year, each payment period based on a fresh income year, so a clawback set by an unusual 2026, a work bonus, a property sale, a one-time withdrawal, is a one-period reduction, not a permanent loss of the pension. Next year's row gets its own income year, and its own December check.
The number to write down before January
One line, three figures: projected 2026 net income, the $95,323 threshold, and 15 percent of the difference. If the difference is zero, file the line away and enjoy December. If it is not zero, that product is the amount of OAS riding on the remaining weeks of the year, and it is the number every December withdrawal, deduction and funding choice should be priced against. Decisions made with that number on paper are planning. Decisions made without it are how a pension gets smaller in July and nobody can say why.
— Penny Hughes, Money Writer — Saving Desk