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Discussion Starter #1
These terms both really apply to the same thing, but I like to think of the "clawback" as the amount of your OAS entitlement that's withheld in advance (up to 100%). The clawback for any fiscal year (July to June) is normally based on your income from the previous calendar year, but there is a provision in the Income Tax Act to have the amount of clawback based on your income for the current year instead, if that income is "substantially lower" (see link: http://www.cra-arc.gc.ca/tx/ndvdls/sgmn ... t-eng.html ).

Whether you have the clawback based on your income from the previous year or the current year is somewhat irrelevant however. This is because the actual OAS recovery tax that you calculate on your income tax form, is based on your income for that same calendar year. If you had more OAS clawed back on the basis of your higher income from the previous calendar year, you will receive a refund of this excess clawback when you file your tax return, on the basis of your lower income in that calendar year.

So, although many people will claim that the OAS clawback is based on income from the previous year, that is only part of the truth and it is somewhat misleading.
 

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No one likes to give up money, but I guess if one is earning enough money to kick in the clawback, you'll not suffer too badly. Splitting income with ones spouse may help to keep you below the limit.
 

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I'm a bit confused, Dogger (actually, more than a bit confused!). Last year, I cashed in a 403B plan that my late American husband left me, paid the 30% withholding tax to the IRS, declared the whole amount (over $200,000 Cdn.) as income on my 2013 tax return and claimed the 30% paid to the IRS as a foreign tax credit. Added to my regular income, that left me with an income far higher than the OAS limit, so I am subject to the clawback of my whole OAS for the next year, starting this month. I was fully aware that this would happen, and planned accordingly. I am assuming that in July 2015, after I file my tax return for 2014, which will report my more normal income, I will once again be eligible for my OAS. Is that correct, or are you saying that I had another option? Is it just a matter of whether I take the clawback this year or next?
 

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I'm a bit confused, Dogger (actually, more than a bit confused!). Last year, I cashed in a 403B plan that my late American husband left me, paid the 30% withholding tax to the IRS, declared the whole amount (over $200,000 Cdn.) as income on my 2013 tax return and claimed the 30% paid to the IRS as a foreign tax credit. Added to my regular income, that left me with an income far higher than the OAS limit, so I am subject to the clawback of my whole OAS for the next year, starting this month. I was fully aware that this would happen, and planned accordingly. I am assuming that in July 2015, after I file my tax return for 2014, which will report my more normal income, I will once again be eligible for my OAS. Is that correct, or are you saying that I had another option? Is it just a matter of whether I take the clawback this year or next?
From Canada Customs: "If your net income exceeded the threshold (see line 235) in 2012, and your net income for 2013 will be substantially lower, you may request a waiver from CRA so that Service Canada will reduce the tax withheld at source. The request must be made in writing."

Seems to say that if you will have a clawback one year, but you expect next years income to be much lower, you may qualify to reduce the clawback. In your case I doubt it would have applied.
 

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Discussion Starter #6 (Edited)
I'm a bit confused, Dogger (actually, more than a bit confused!). Last year, I cashed in a 403B plan that my late American husband left me, paid the 30% withholding tax to the IRS, declared the whole amount (over $200,000 Cdn.) as income on my 2013 tax return and claimed the 30% paid to the IRS as a foreign tax credit. Added to my regular income, that left me with an income far higher than the OAS limit, so I am subject to the clawback of my whole OAS for the next year, starting this month. I was fully aware that this would happen, and planned accordingly. I am assuming that in July 2015, after I file my tax return for 2014, which will report my more normal income, I will once again be eligible for my OAS. Is that correct, or are you saying that I had another option? Is it just a matter of whether I take the clawback this year or next?
Karen - Thanks for providing a very good example! As cannew has already replied, if you expect your 2014 income to be significantly less than your 2013 income you can complete the form asking CRA to reduce the amount of your clawback. Whether you do that or don't do that though, the actual OAS recovery tax that you pay on your 2014 OAS will depend on your 2014 income. If you have been clawed back in excess of that amount, you will get a refund of OAS when you file your 2014 Income Tax return.
 

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As a humorous aside, I just got my OAS clawback statement from Service Canada and it says that my clawback is based on 2012 income and that the clawback period starts July 2014 and ends June 2014. Hopefully the proof readers are paid for performance!
 

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If you have been clawed back in excess of that amount, you will get a refund of OAS when you file your 2014 Income Tax return.
My recollection ... sent in the letter, didn't get an OAS refund per se for the amount already clawed back, but did get a tax credit at years end which closely amounts to the same thing.
 

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Dogger...I have been drawing CPP for two years. Had 25K T4 earnings in 2013 from a company settlement. Paid CPP and reported same on my return. Filed and assessed by April 30.

But, the dopes at Megacorp recorded my SIN down as 999 999 999 on the T4. I submitted the T4 as the reported amounts were correct. Now I have a desk audit because of the 999 999 999. CRA is checking up on my charitable and on my stock option deduction. No issue, just doing their job as they should.

My question is....will this SIN foul up cause me NOT to have my CPP recalculated to reflect my 2013 CPP contributions? Do the CPP folks base the adjustment on my tax return or on megacorp's filing? When should I expect to see the adjustment.

thanks
 

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Discussion Starter #11
Dogger...I have been drawing CPP for two years. Had 25K T4 earnings in 2013 from a company settlement. Paid CPP and reported same on my return. Filed and assessed by April 30.

But, the dopes at Megacorp recorded my SIN down as 999 999 999 on the T4. I submitted the T4 as the reported amounts were correct. Now I have a desk audit because of the 999 999 999. CRA is checking up on my charitable and on my stock option deduction. No issue, just doing their job as they should.

My question is....will this SIN foul up cause me NOT to have my CPP recalculated to reflect my 2013 CPP contributions? Do the CPP folks base the adjustment on my tax return or on megacorp's filing? When should I expect to see the adjustment.

thanks
fraser - CPP records of earnings/contributions always comes to Service Canada through Revenue Canada. Sometimes it shows up when the T4 is submitted electronically by the employer, but at the latest it should show up when Revenue Canada assesses your income tax return. Your post-retirement pension for the 2013 earnings should be effective January 2014, and you should normally expect to receive the retroactive payment sometime between May & July. In your case, it's probably been delayed by the SIN mixup on the T4 slip. I would recommend calling Service Canada at 1-800-277-9914 and asking if they have a record of those earnings yet. If yes, ask them when you should expect your PRB adjustment. If no, ask them what evidence they want (probably the T4 slip and possibly your Notice of Assessment).
 
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