If your 2007 net income exceeds $63,511, all or a portion of your 2007 Old Age Security (OAS) will be repaid or clawed back. The clawback is $0.15 for each dollar of income in excess of $63,511 and when net income reaches approximately $103,000, all of your OAS will be clawed back.
If your last year's net income exceeded $62,144, this year's OAS payment will be reduced by an estimated clawback based on last year's income.
This clawback is based on your income, not on family income. Splitting income with other family members may reduce the risk of OAS clawback.
Most income splitting procedures require proper planning over several years to be effective. If you haven't planned ahead, don't fret – you can still split future Canada Pension Plan benefits with your spouse by applying for “pension sharing”, and you can split current eligible pension income with your spouse under new pension income splitting rules. Call your Chartered Accountant to find out more.
Information for Tax Tips is provided as a public service by the Chartered Accountants of British Columbia.