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Market Update| What Happens to My OAS if I Retire Abroad?| November 8, 2021

Clinton Orr - Nov 08, 2021
If you retire in New Zealand or in the United Kingdom, you can collect your OAS, and even if your income is above the threshold, you do not pay the recovery tax

With winter just around the corner, many folks are considering traveling to warmer destinations. What if we retired in one of those warm locations? I have had this discussion with a few clients recently. There are lots of details to consider if you plan on retiring in another country and you would likely want to talk to an accountant specializing in cross border tax matters prior to making that decision. In this update, we are addressing one part of that decision, looking specifically at the Old Age Security (OAS) pension - what happens to your OAS if you retire abroad?


As a refresher, no one pays directly into OAS; it is funded by the federal government. We all pay taxes and some of that money ends up in OAS. The program is not based on employment or income, it is based on residency. If you live in Canada long enough, you get a pension. If you live in Canada for 10 years after the age of 18, you will receive OAS. After 40 years, you get the maximum pension. OAS starts at 65 and for 2021 the maximum monthly pension is $615.37. You can receive additional benefits through the guaranteed income supplement, allowance, and allowance for survivor, if you your income is below a certain threshold.


Those are the basics for OAS, however, if you decide to retire abroad there are different criteria. Instead of a minimum residency of 10 years after the age of 18, to collect a pension while living abroad you must have lived in Canada for a minimum of 20 years after the age of 18. A few nuanced details, it is possible to be working outside of Canada and still have those years count towards your 20-year threshold. If you work in another country but are working for a Canadian employer or live in a country that has a social security agreement with Canada, those years can count towards your 20-year minimum. There is quite a bit of detail on this topic, and it does vary by country, so if you believe this might apply to you it is best to check with My Services Canada.


What about the claw back? It’s officially known as the OAS pension recovery tax, but if your income is above a certain threshold, they take back a portion of your OAS. The threshold is adjusted annually, for the 2021 tax year if your income is above $79,845 your OAS will start to be reduced. For every dollar above that threshold, you will lose 15 cents of your OAS. If you retire abroad it is possible to avoid the claw back. Canada has tax treaties with many countries, in some cases the details of those treaties mean you do not have to pay the OAS recovery tax. For example, if you retire in New Zealand or in the United Kingdom, you can collect your OAS, and even if your income is above the threshold, you do not pay the recovery tax.


A quick note about the supplemental benefits of OAS, specifically the guaranteed income supplement, the allowance and allowance for survivor. All the low-income benefits of OAS are only paid to Canadian residents. So, if you are living abroad, unfortunately, you will not be able to receive these benefits.


Kevin and I recently filmed a video on this topic. We covered quite a few of the details, including a discussion of withholding tax, looked at a full list of countries that have social security agreements with Canada and reviewed the full list of countries with tax treaties that permit folks to avoid the OAS claw back. The video is on our YouTube page, you can watch it here.


It is possible to continue to receive benefits from OAS even while living abroad, however, there are many details to consider when deciding to retire abroad, a proper plan is essential. If you have questions about the government pension programs, your retirement plan or any other financial matter, please let us know. We are happy to help.


Take Care,





P.S. A friendly reminder for those that have not yet registered, we are hosting our webinar with Angela Preteau on Nov 17. Angela specializes in US/Canada cross broder tax issues and during our webinar she will be providing tax tips for snowbirds. You can see the full details and sign up at our website: