Canadians are planning to spend an average of $3,825 on travel this summer, even as economic pressures mount. That’s according to a new BMO survey, which found nearly 80% of Canadians are still moving ahead with vacation plans, despite inflation and the rising cost of living. While travel can be a healthy way to enjoy life, there’s a more urgent financial reality that older Canadians should be watching for. The Canada Revenue Agency (CRA) has signalled areas of concern, and Old Age Security (OAS) pensioners could be at risk if they’re not careful.
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What to watch
For OAS recipients relying on investment income, those investments are good news until it pushes income too high and triggers a clawback. That’s the first red flag: underestimating your total income. The CRA considers all income sources when determining OAS eligibility and clawback thresholds. That includes Canada Pension Plan, pensions, and capital gains. Many retirees focus only on their base pensions and forget to account for portfolio income. For investors, this means a growing dividend, while welcome, could push your total income over the clawback limit, which starts at $90,997 in 2025. If you’re spending $3,825 on summer travel, you might be forgetting what that added expense looks like when added to retirement income sources.
The second red flag is related to tax slips. Retirees with multiple investments sometimes forget to report all income, especially when holding dividend stocks in taxable accounts. That’s a problem. The CRA’s systems are more advanced now, automatically matching slips and income reported. Missing even a small amount can lead to reassessments, fines, or interest charges. Stocks that pay regularly and reliably often produce multiple tax slips, especially if you’ve switched brokerages or transferred accounts mid-year.
The third red flag is failing to adjust withdrawals from registered accounts. With inflation causing many Canadians to dip into Registered Retirement Savings Plans (RRSP) more heavily, some pensioners may be withdrawing more than they realize. Once added to other income sources, this can unintentionally push them into a higher tax bracket or result in OAS repayment. It’s a tax trap that’s easy to fall into when using investment withdrawals to fund summer spending or special events.
Consider Hydro One
In light of all this, Hydro One (TSX:H) remains a solid pick for conservative investors, especially those in retirement. It offers a predictable yield now at around 2.7% at writing and operates a regulated business with steady cash flow. But that steady cash flow can cause problems if the income isn’t tracked properly. The key isn’t avoiding great dividend stocks; it’s making sure you understand how their income affects your overall tax and pension situation.
With inflation still top of mind and more seniors relying on investment income, the CRA is increasingly flagging common issues that affect pensioners. Hydro One , a top dividend stock many retirees hold, continues to pay consistent income. In Q1 2025, Hydro One posted earnings of $300 million, or $0.50 per share, up from $296 million last year. Revenue rose to $2.1 billion, and the dividend stock raised its quarterly dividend to $0.33 per share. All this can help investors, as long as they’re careful! Right now, a $15,000 investment could help by bringing in about $404 per year in dividends alone!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| H | $49.25 | 304 | $1.33 | $404.32 | Quarterly | $14,977.00 |
Bottom line
Canadians are spending more than expected on travel, with 62% saying they plan to match or exceed last year’s vacation budgets. While that’s great for mental health and family connection, it comes with a cost. According to the same BMO survey, 32% of Canadians are compromising long-term savings to afford these trips, and 46% have cut back on other spending to fund their summer plans. For OAS pensioners, that pressure could lead to financial blind spots and CRA penalties.
In the end, a balanced approach wins. Enjoy the travel. Hold the dividend stocks. But track your income, stay on top of tax slips, and make sure your withdrawals are planned with OAS rules in mind. Financial freedom doesn’t just come from the size of your portfolio; it comes from knowing how to protect it.
