An Old Age Security (OAS) clawback can turn retirement income from “nicely planned” to “excuse me, who invited this?” very quickly.
For high-income seniors, taxes do not become simpler just because work slows down. In some cases, retirement adds more moving parts like pensions, Registered Retirement Income Fund (RRIF) withdrawals, investment income, foreign assets, and OAS — a lovely little paperwork bouquet.
Yet the Canada Revenue Agency (CRA) says a review is not a tax audit. In most cases, it’s a routine check to confirm that the information on a return is correct. The CRA also says it refines reviews each year based on results and areas of non-compliance. Translation: if numbers look unusual, unsupported, or mismatched, someone may ask questions.
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The CRA is watching
The first red flag is the OAS recovery tax. For 2025 income, the OAS recovery threshold is $93,454, and repayment equals 15% of income above that threshold. That repayment applies to the July 2026 to June 2027 payment period. High-income seniors simply need to watch their taxable income before year-end.
The second red flag is missing foreign reporting. Canadians generally must file Form T1135 if they held specified foreign property with a total cost of more than $100,000 at any time in the year. That can include certain foreign stocks, foreign rental property, or foreign bank accounts, depending on the situation. Forgetting this form can therefore get expensive.
The third red flag is pension income splitting done incorrectly. The CRA says eligible couples may jointly elect to split qualifying pension income if they meet the rules. If they want to change or revoke a previous election, paperwork and signatures matter.
The fourth red flag is aggressive credits or deductions. Medical expenses can help reduce tax, but the CRA lays out specific rules for eligible expenses and how to calculate the amount. Finally, the fifth red flag is mismatched income. Seniors may receive slips from pensions, RRIFs, investment accounts, consulting work, or rental income. The CRA’s self-assessment system depends on taxpayers reporting income and claiming only amounts that apply. If one account says one thing and the tax return says another, the CRA may notice.
Keep it safe and growing
So, what should high-income seniors do? Keep records, watch taxable income, check slips, confirm TFSA and RRSP/RRIF details, and avoid making tax moves in December with the energy of someone panic-buying cranberry sauce.
Once the tax foundation is clean, investors can think about building income with less fuss. Bank of Nova Scotia (TSX:BNS) is one Canadian dividend stock worth watching for that job. BNS stock is one of Canada’s major banks, with operations across Canadian banking, wealth management, global banking and markets, and international banking.
The dividend is the clear attraction. BNS stock declared a quarterly dividend of $1.14 per share in 2026, a 4% increase, and the bank says it has paid common-share dividends continuously since 1833. That is a very long time to keep showing up with cash.
Considerations
Recent results support the case. In the second quarter of 2026, BNS stock reported adjusted diluted earnings per share (EPS) of $2.02, up from $1.52 a year earlier. Its common equity tier-one ratio stood at 13.3%, giving it a solid capital cushion.
The valuation point is simple. BNS stock offers a dividend yield of around 3.7% and a price-to-earnings ratio of near 17.2. That is not screaming-cheap, but it offers a reasonable mix of income and quality for patient investors.
Now, just because it’s a bank doesn’t mean it’s risk-free. The risk here is credit. If Canada or key international markets weaken, loan losses can rise, and bank earnings can feel pressure. Scotiabank also carries more international exposure than some peers, which can add opportunity and volatility.
Bottom line
For high-income seniors, the lesson is bigger than one stock. Keep taxable income tidy, avoid CRA surprises, and then build dividend income with companies built to last. Retirement should come with cash flow, not mystery envelopes.
