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The CRA Checklist Every Retiree Needs to Pass

Hit the OAS clawback threshold and the CRA starts taking 15% of every extra income dollar, so retirement withdrawals need a plan.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published July 23, 11:45 am EDT

Key Points

The OAS clawback starts when net world income tops $93,454, and big RRIF withdrawals can push you over.
Use planning tools like smoothing RRIF income, pension splitting, and claiming credits to reduce taxable income.
TFSA withdrawals don’t affect OAS, and Power Corp offers a growing dividend tied to retirement-focused financial businesses.

Cross one invisible Canada Revenue Agency (CRA) line and 15 cents from every extra dollar of income can start disappearing from your Old Age Security (OAS). Retirement may end the Monday commute, but it doesn’t end the need to keep taxes, withdrawals, and benefit rules working together.

That becomes especially important when income arrives from several places. The Canada Pension Plan (CPP), OAS, workplace pensions, registered retirement withdrawals, dividends, and part-time work can each look manageable alone, then combine into a surprisingly expensive year. So, here’s what to consider.

woman checks off all the boxes — Source: Getty Images

OAS income

The OAS recovery tax begins when net world income crosses the annual threshold. For income earned in 2025, which determines deductions from July 2026 through June 2027, that threshold is $93,454.

The CRA claws back OAS at 15% of income above that amount. One large Registered Retirement Income Fund (RRIF) withdrawal, capital gain, or burst of consulting income could therefore reduce future monthly payments, which makes the next checkpoint essential.

Plan RRIF withdrawals

A Registered Retirement Savings Plan (RRSP) must generally become an RRIF, an annuity, or a full withdrawal by the end of the year its owner turns 71. Starting the following year, the RRIF must pay a minimum amount based on its value and the annuitant’s age.

Those withdrawals count as taxable income, even when the retiree doesn’t need the cash. Converting part of an RRSP earlier or using a younger spouse’s age to calculate the minimum may smooth future income, although the right approach depends on the household.

Use retirement tax breaks

Eligible retirees can split up to 50% of qualifying pension income with a spouse or common-law partner. That could lower the household tax bill and keep one spouse farther from the OAS threshold.

The pension income amount and age amount may reduce taxes further, while medical expenses can also produce a credit. These savings aren’t automatic in every situation, so retirees should check each line rather than assuming their tax software caught every opportunity.

Keep benefits active

Retirees should file a return every year, even when they owe nothing. The government uses tax-return information to calculate income-tested payments, and missing the deadline can interrupt the Guaranteed Income Supplement (GIS).

Once the paperwork passes inspection, retirees can focus on building income that won’t increase taxable earnings. Withdrawals from a Tax-Free Savings Account (TFSA) won’t affect OAS or GIS, making the account an excellent home for long-term investments.

A retirement stock to consider

Power Corporation of Canada (TSX: POW) offers exposure to insurance, retirement products, wealth management, and alternative investments through holdings including Great-West Lifeco and IGM Financial. Those businesses benefit as Canadians save, invest, and manage income throughout increasingly long retirements.

First-quarter adjusted net earnings rose 15% year over year to $905 million. POW stock also raised its quarterly dividend 9% to $0.67 per share, continuing a record of returning growing cash flow to shareholders.

The shares recently yielded around 3%, which won’t satisfy investors chasing the largest payout on the TSX. However, the company combines dividend growth with financial businesses positioned to serve an aging population, making it a useful candidate among Canadian dividend stocks.

There are risks to consider. POW depends on investment markets, insurance results, and the performance of its major holdings. A prolonged market decline could pressure earnings and asset values, while its holding-company structure can remain complicated for investors to assess.

Bottom line

Retirees who coordinate OAS limits, RRIF withdrawals, pension splitting, credits, and annual filing can keep more of the income they already earned. Adding tax-free TFSA withdrawals and a growing dividend stock like POW could then help that retirement paycheque stretch much farther.