Are you a taxpayer? The Canada Revenue Agency (CRA) offers retirees various benefits, including the Canada Pension Plan (CPP), Old Age Security (OAS), and Guaranteed Income Supplement (GIS). While CPP is funded from the contributions you and your employer make, OAS and GIS are funded from the tax revenue the CRA collects. All three benefits have one thing in common: taxable income, like salary, dividends, pensions, or capital gains.
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What is so special about OAS?
In the case of CPP, the more you earn in your lifetime, the more CPP payout you get. In the case of OAS and GIS, the more you earn, the less OAS and GIS you receive. The idea is to provide financial support to lower-income earners.
Whether you are earning or not, as long as you filed your taxes regularly and were a Canadian resident, you are eligible for OAS.
The maximum monthly OAS you can get in July-September 2025 is $734.95 per month. That is a pretty good amount and will be adjusted for inflation.
How to ensure you get the maximum OAS
The key criteria in OAS are taxable income and age. If your 2024 taxable income is below $90,997, you will receive the maximum OAS. And if your income is above this threshold, the OAS will be reduced by 15% of the surplus amount and become nil when income reaches $148,451.
Suppose you earned taxable income of $100,997 in 2024. Your 2025 OAS will fall by $1,500 (15% of $10,000 surplus income). If you divide it into monthly installments, the CRA will claw back $125 from your monthly OAS of $734.95, and you will receive $609.95.
The year 2024 is over, and you can do nothing about it. However, you can plan your 2025 taxable income to be below $93,454 to get maximum OAS.
How much dividend income can you have before losing your OAS
When calculating taxable income, the income from dividends must be grossed up by 38% and added to taxable income. If you earn $100 dividend income, you have to add $138 to your taxable income, which could affect your OAS and GIS benefits that depend on the taxable income.
Assuming you earn a maximum CPP payout of $1,433, which equates to $17,196 annually, and have no other source of income other than stocks. You can earn between $76,258 and $97,443.48 in other income before losing your OAS.
Since dividend income is grossed up by 38%, you can earn a dividend income of $55,259 before OAS clawback begins. If your dividend income reaches $97,443.48, you will lose all your OAS.
| Particulars | OAS Minimum Income threshold | OAS Maximum Income Threshold |
| OAS Income threshold 2025 | $93,454 | 151668 |
| Maximum CPP payout | -$17,196 | -$17,196 |
| Remaining Balance for other income | $76,258.00 | $134,472.00 |
| Dividend income (after 38% gross up) | $55,259 | $97,443.48 |
You can deduct all other taxable income sources at age 65, such as Registered Retirement Savings Plan (RRSP) withdrawals and taxable capital gains, to arrive at the remaining amount, and then factor in the 38% gross-up to know dividend income.
However, if you earn dividends from a Tax-Free Savings Account (TFSA), you need not worry about OAS clawback, as the TFSA income is not taxable.
How to earn dividend income at age 65
At age 65, you could consider investing in Slate Grocery REIT (TSX:SGR.UN) and lock in an 8.17% yield. The real estate investment trust (REIT) has 116 properties across 23 states of the United States and leases 46% of its gross leasable area to grocers and essential retailers. The first quarter is relatively slow. Its occupancy fell slightly to 94.4% from 94.8% in the fourth quarter of 2024. Despite this, its revenue and net income surged 2.2% and 18.1% year over year as rental spreads increased.
The REIT distributes 82.3% of its funds from operations and can sustain this distribution per share of $1.17 annually. The REIT gives distributions in U.S. dollars but converts them into Canadian dollars for payouts in Canada, giving investors the benefit of strengthening of the US dollar. A $20,000 investment can earn you $1,661 in annual dividend income.
