OAS Clawback: Why Your Income Can Affect Your Pension Payment
Your monthly pension deposit is smaller than usual. If it’s your Old Age Security payment (OAS), one possible reason is that your income in an earlier year was above the limit for that year.
Get help with your pension income and personal taxesHere’s the idea: when your income goes over that limit, you may have to pay back some or all of the OAS you received. The government can take part of that amount out of later pension payments. Your letter may call this monthly deduction recovery tax. You may also see the name OAS clawback.
Why a deposit may shrink
Earlier income can affect later pension payments
Earlier year
Your income was above that year’s limit
Your taxes
You may have to repay some or all of the OAS you received
Later payments
Part may be withheld from each monthly deposit
There can be other reasons a deposit changed. A Service Canada letter can tell you if recovery tax is being deducted.
How can higher income affect your OAS?
Your OAS payment can go down even if your income is lower now. The CRA looks at your income from an earlier year. If it was above the limit for that year, part of your OAS may be withheld from later payments.
Why did the payment change after that income year ended?
Monthly recovery tax deductions can follow a July-to-June period based on income from an earlier calendar year. For example, 2025 income can affect what is deducted from OAS payments from July 2026 through June 2027. A higher-income year can therefore show up in deposits after your income has returned to its usual level.
The repayment calculated on your return and the deductions from your monthly OAS are related. The monthly deductions are amounts already withheld. Your OAS slip shows how much was withheld during the tax year it covers, and the return takes that amount into account. The July-to-June period can span two separate tax years.
Which year are you looking at?
2025 income can affect OAS payments starting in July 2026
2025
You receive income
Your income was higher than usual.
2025 tax return
Your annual repayment is calculated
Your income is compared with the threshold for 2025.
July 2026 to June 2027
Recovery tax may come off your OAS
The monthly withholding can reflect your 2025 income.
Each annual return accounts for the amount shown as withheld on its own calendar year’s OAS slip.
What to look at when a deposit changes
The Service Canada letter about recovery tax can explain the deduction from your payments. Keep it with your OAS slip, called the T4A(OAS), and the tax information for the year mentioned in the letter. The amount deposited in your account is only one part of that picture.
Anytime Accounting can review the income and amounts withheld alongside your personal tax return. We can explain which year affected the monthly deposit, what was taken into account at tax time, and what records we’d need if you’d like us to prepare or review your return.
Want help making sense of your OAS amounts?
If your OAS payment changed, we can check which year affected it and review what was withheld when we prepare or review your return. Your first consultation is free.
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Official Canadian sources (4)
These CRA and Government of Canada pages are the primary sources used to check the tax information in this article.
This article is general information, not personal tax advice. Your situation may differ. For advice specific to you, book a free call.