Many retirees rely on Old Age Security (OAS) to help cover rising costs, but the Canada Revenue Agency (CRA) is watching more closely than ever. Three red flags could raise eyebrows and lead to a clawback or audit. If you’re trying to stretch your income safely, it’s worth knowing what to avoid and which investments could actually help you steer clear of trouble. Three dividend-paying stocks like Brookfield Asset Management (TSX:BAM), Exchange Income (TSX:EIF), and Canadian Tire (TSX:CTC.A) could help protect your financial health while giving your portfolio a boost.
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Don’t be excessive
The first red flag the CRA is monitoring is excessive taxable income from non-registered accounts. Once your net income hits $93,454, your OAS starts getting clawed back for the 2025 tax year. Many Canadians unintentionally trip this wire by relying too heavily on interest income or capital gains.
That’s where dividend stocks in a Tax-Free Savings Account (TFSA) come in. BAM is a solid example. In the first quarter (Q1) of 2025, BAM reported fee-related earnings of US$577 million, with assets under management rising to US$924 billion. It also pays a 3.19% dividend, up 10% from the prior year. Holding BAM in a TFSA shelters your dividend from taxes and avoids tipping you into clawback territory.
Mind your business
The second red flag is failing to properly account for business or side income. Retirees running small consulting gigs or rental income operations sometimes underreport revenue or overclaim expenses, which the CRA is cracking down on. That makes it all the more important to keep passive income truly passive.
EIF is a prime candidate here. In Q1 2025, it delivered record revenue of $656 million and net earnings of $20 million. It pays a monthly dividend at 4.21%, which comes to $2.74 annually. The dividend stock generates reliable income without the CRA headaches that come from running your own business.
Much too much
The third red flag is taking on too much investment risk that leads to large one-time withdrawals. These could come from panic selling or large shifts in taxable accounts. That’s where a blue-chip name like Canadian Tire can offer peace of mind.
In Q1 2025, the dividend stock reported revenue of $3.46 billion, with normalized diluted earnings per share (EPS) of $2.00. It pays a dividend of $7.10 per share, which translates to an annualized yield of roughly 3.83%. That income can stay consistent even during market dips, helping retirees avoid the trap of big withdrawals that spike income for a single year.
Bottom line
While the CRA is tightening its watch, there are smart ways to earn income without raising red flags. Holding these dividend stocks in a TFSA keeps your income tax-free and steady. It also avoids the need to chase higher-yielding assets that may come with more risk or taxable events. And because each of these companies is rooted in different sectors, you also get diversification. That helps with income reliability and capital stability.
Brookfield Asset Management provides global exposure with strong growth potential, EIF offers monthly cash with a defensive business mix, and Canadian Tire adds brand strength with retail reach. All three offer dividend income, but more importantly, they offer peace of mind. You don’t need to get creative with deductions or side hustles. You just need to structure your portfolio in a way that delivers steady returns without crossing CRA lines.
So, if you’re an OAS pensioner or planning to be one soon, think carefully about how your income shows up on paper. The CRA isn’t looking to penalize retirees who plan wisely, but it will crack down on those who don’t. By staying below the income threshold, avoiding questionable deductions, and using tax shelters like a TFSA, you can keep your benefits intact. These three dividend stocks could help make that easier.
