FILE 112 / DOSSIER D · TAXES
/ 6 MIN READ
The form that can lower OAS clawback deductions in a year your income drops
Monthly OAS recovery tax is based on an older tax return. When this year’s income is much lower, form T1213(OAS) asks the CRA to reduce what is held back.
Retirement often brings a year in which income falls sharply: the last salary is replaced by a pension, or a one-time sale or withdrawal from the year before does not repeat. For people whose income had been high enough to trigger the Old Age Security recovery tax, the monthly OAS deposit can keep shrinking anyway, because the amount held back is based on an older tax return.
There is a form for exactly that situation. It does not cancel the recovery tax or change how it is calculated. It asks the Canada Revenue Agency to reduce what is withheld at source when the current year’s income is expected to be substantially lower.
A deduction based on an older year
The OAS recovery tax, widely called the clawback, is collected in two ways at once. It is calculated finally on each year’s tax return. And it is also deducted from monthly OAS payments in advance, based on income from an earlier year. When income is steady, the two line up closely. When income drops, the monthly deductions keep reflecting the higher year until the next return catches up.
How the recovery tax works
The Government of Canada’s explanation is short: if your net world income is above the threshold for the year, you repay 15% of the amount above it, up to the full OAS pension. Its own reference example uses the threshold for 2025 income:
Spread over twelve months, that is about $81.83 deducted from each OAS payment over the recovery period.
The thresholds
| Income year | Recovery period | Repayment starts above | OAS fully recovered, 65–74 | Fully recovered, 75+ |
|---|---|---|---|---|
| 2024 | July 2025 – June 2026 | $90,997 | $148,451 | $154,196 |
| 2025 | July 2026 – June 2027 | $93,454 | $152,062 | $157,923 |
| 2026 | July 2027 – June 2028 | $95,323 | $155,320 | $161,320 |
Notice the second column. Income earned in one calendar year drives deductions in a period that starts six months after that year ends and runs for twelve months. That lag is the whole reason the form exists.
How the monthly amount is set
The government explains that the net world income you report is used to estimate the repayment for the following period; that estimate is divided by twelve and deducted from your monthly OAS payments as recovery tax. The amount withheld during a calendar year appears in box 22 of the T4A(OAS) slip, and it is credited on the return like other tax withheld.
When the return for the lower-income year is filed, the CRA works out the actual recovery tax for that year. If too much was withheld, the difference comes back as part of the refund. The money is not lost. It is held for longer than it needs to be, sometimes well over a year.
What form T1213(OAS) does
The Canada Revenue Agency’s form T1213(OAS), Request to Reduce Old Age Security Recovery Tax at Source, is completed by individuals who want less recovery tax withheld. The CRA’s guidance sets out when it applies: your net income was above the threshold for the earlier year, and you expect your net income for the current year to be substantially lower. In that case you can ask for a waiver, and Service Canada then reduces the tax withheld.
The request must be made in writing, by sending the completed form to the CRA. The CRA’s guidance for the current cycle describes reductions beginning in July 2026, the start of the recovery period based on 2025 income. Separately, the government notes that anyone for whom the deductions cause financial hardship may ask the CRA to review their situation.
An illustrative year of lower income
In this example the total recovery tax for 2026 should be nil, because income for 2026 is below that year’s threshold. Without the form, the deductions still run until the return catches up. With it, the CRA can have them reduced while the year is under way.
Years when it tends to matter
- The first full year of retirement, when a final salary year is followed by pension income only.
- The year after a one-time event: a property sale with a capital gain, a large RRSP withdrawal or a severance payment. Withdrawals and their tax are explained in what withholding tax takes from an RRSP withdrawal.
- A change in household income, for example when a bridge benefit stops at 65 or a pension is split differently with a spouse.
Before sending the form
- Was your net income above the threshold in the year the current deductions are based on?
- Is your expected income this year substantially lower, and can you show why?
- Have you included every source in the estimate: CPP, OAS, pensions, RRIF and RRSP withdrawals, investment income?
- Are you also asking for voluntary tax on OAS? That is a separate request to Service Canada; see how to ask for tax to be taken off CPP and OAS.
- Do you have a copy of the form and the date you sent it?
The short version
OAS recovery tax is deducted from monthly payments on the basis of an earlier year’s income, so a drop in income is not reflected straight away. Form T1213(OAS) asks the CRA to reduce that withholding when the current year’s income is expected to be substantially lower. The final amount is still worked out on the return; the form only stops too much being held back in the meantime. OAS is a separate program from CPP, whose own January adjustment follows different rules.
- Government of Canada — OAS pension recovery tax — thresholds, the 15% calculation, monthly deductions.
- Canada Revenue Agency — Form T1213(OAS) — request to reduce OAS recovery tax at source.
- Canada Revenue Agency — Line 23500, social benefits repayment — when a waiver can be requested; box 22 of the T4A(OAS).
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