If you are 65 years of age or older, you’re likely collecting Old Age Security each month. The amount of OAS you get, which is indexed quarterly to inflation, is based in part on the number of years you’ve lived in Canada after age 18. It’s also based on your annual, individual “net income,” which may not be the same as what the Canada Revenue Agency considers your “taxable income.”
For July through September 2015, the maximum monthly OAS amount you could receive is $564.87. This benefit is reduced by 15% for each dollar of your net income above $72,809, and is fully eliminated once your net income reaches $117,954.
The difference between your net and taxable income amounts may result in an unexpected loss of OAS payments.
Take, for example, the recent case of a retired Nova Scotian steelworker who was forced to repay nearly $3,300 of OAS he received in 2012. The taxpayer was injured in 1969 when molten steel struck his thigh, leaving him with a bad burn. He continued to have pain in the affected area, which increased over time such that by 2011 he was diagnosed with Complex Regional Pain Syndrome.
He made a claim to the Workers’ Compensation Board of Nova Scotia and in 2011 he received an award of nearly $54,000. While the WCB issued a T5007 slip for that amount, the taxpayer did not include it in his income when he filed his 2012 return, as he believed that a T5007 slip “should not have been issued to him.” It was his belief that the lump sum he received from the WCB was a “non-economic-loss award for pain and it was not to be included in income … it was an award of damages for the pain he suffered.”
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