Canadian senior citizens are entitled to receive the Old Age Security pension when a certain age is celebrated. This is the Government of Canada’s largest funded pension plan that does not require Canadian citizens to pay directly into it, as it is fully funded by the general tax revenues.
There are three types of OAS Benefits in addition to the pension amount that Canadians may receive:
- Guaranteed Income Supplement (GIS); this is for low income seniors and is a non-taxable benefit added to your monthly OAS pension
- Allowance:if you are between the ages of 60-64 and your wife/husband is receiving the OAS and are eligible for the GIS, you may qualify to receive this benefit
- Allowance for the Survivor: if you are between 60 and 64 and widowed, you may be able to receive this benefit
All Canadians and legal residents of Canada are entitled to receive the OAS. This pension is not based on person’s work history and employment history will not come into play in determining who qualifies for the pension. You can receive the OAS, even if you have never worked or are still working, if you meet the following conditions;
- If you live in Canada, you must be 65 years old, be a Canadian citizen or legal resident and have lived in Canada for a minimum of 10 year since you were 18 years old
- If you live outside of Canada, all the requirements above (#1) need to be met with the exception of the years lived in Canada, you must have lived here for at least 20 years since your 18th
Most of us think you have to receive you OAS when we turn 65, however, you can apply 11 months before your 65thbirthday. In 2013, the Canadian government decided that if a person wanted to delay receiving their OAS, they could for up to a maximum of five years after the date you become eligible. If you delay receiving your OAS, the monthly amount you will receive will increase by 0.6 percent, up to a maximum of 36 percent by the age of 70. If you wish to delay receiving the OAS, you will not receive the GIS during this period and your spouse cannot receive the Allowance.
A main consideration in determining whether to defer receiving your OAS pension, other than the increase in premiums, is your annual income. It is always in your best interest not to draw your OAS when your previous year’s income more than $75,910.00 for various tax related reasons. When in doubt, check with your tax preparer… and if you come pay us a visit, we’ll supply the coffee.