CRA: 3 Methods to Avoid the 15% OAS Clawback
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Canadian seniors who collect the Old Age Security (OAS) need to realize the importance of keeping an eye on their overall retirement income. If you are approaching retirement, you might be worried about the OAS recovery tax, also known as the OAS clawback.
This pension recovery tax kicks in when a retiree’s net income exceeds a minimum threshold. The number to watch in 2021 is $79,845. The amount is up from $79,054 in 2020. Once your income reaches the threshold, every additional dollar of your income triggers a 15% OAS clawback.
Retirees: Turn Your RRSP Into a RRIF to Pay Less CRA Taxes When You Retire
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Retirement brings a host of surprises to Canadians. A costly expense that planners often underestimate or give less importance is tax. Would-be retirees must realize that tax planning doesn’t end when you leave the workforce. You’ll still contend with the Canada Revenue Agency (CRA). Taxes are thorns, because they impact retirement cash flow.
Aside from living expenses, healthcare costs, and discretionary expenditures, such as a dream vacation, a retiree must include taxes in the budgeting process. If you’re looking forward to finally tap your Registered Retirement Savings Plan (RRSP), implement a strategy that could reduce taxes owed to the CRA.
With another tax season coming, CPP pension users can use three proven ways to avoid the 15% OAS clawback. If you’re maximizing your TFSA, pick the BCE stock as the core holding.
Schedule I chartered banks are Canadian-owned banks and are best known as the big-6 banks: Bank of Nova Scotia, Royal Bank, Bank of Montreal, Toronto Dominion Bank, Canadian Imperial Bank of Commerce and National Bank. Schedule II banks are incorporated and operate in Canada as federally regulated foreign subsidiaries. An example of a Schedule II bank is BNP Parabis (Canada), which is a French retail banking company. Schedule III banks include branches of foreign banks that are federally regulated and are allowed to do business within Canada under the Bank Act. The likes of Bank of New York Mellon and Barclay’s Bank would fall under the Schedule III bank umbrella.