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.

OAS is indexed quarterly (January, April, July, October), so the monthly maximum changes four times a year. For the July–September 2026 quarter the maximum monthly OAS payment is:

• $751.97 per month for those aged 65 to 74
• $827.17 per month for those aged 75 and older (the permanent 10% enhancement since July 2022)

Because the rate moves each quarter, the calendar-year total is never 12 × any single quarter’s figure. For the 2025 income year the full-year maximum works out to about $8,791 at ages 65–74 and about $9,670 at 75+. Live figures for every quarter are on the OAS + GIS calculator.

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.” The threshold depends on which income year you are talking about, because the recovery tax on a given payment period is assessed on an earlier year’s return. CRA’s published table:

So the figures being applied to cheques right now (July 2026 – June 2027) come from your 2025 return: clawback starts at $93,454 and OAS is fully gone at $152,062 (65–74) or $157,923 (75+). If you are planning this year’s income, use the 2026 income-year row instead: $95,323, $155,109 and $161,088. Suppressing income to the older $90,997 figure gives away about $4,300 of room you did not need to give up.

The repayment rate is 15 cents for every dollar of net income above the threshold, capped at the OAS you actually received.

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 annual income (excluding OAS) below approximately $22,800 (single) or combined couple income below approximately $30,096 (both receiving OAS; Jul–Sep 2026 quarter). These cutoffs are indexed quarterly — the OAS/GIS calculator always carries the current quarter’s figures

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. For the current eligibility rules, income test, and exemptions, see GIS in 2026: eligibility, income test and the 50% clawback.

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 from your net income for the year; the repayment amount appears at line 23500 of your return or is withheld from monthly payments as recovery tax
• 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