Question

3. Michelle received $6,600 in OAS pension income in 2018. Her total income for 2018 was $94,000. For 2018, the minimum income threshold is $75,910.

a. What is her monthly OAS clawback? SHOW YOUR WORK.

b. What is the clawback period? (1 mark) FNCE3314 – Retirement and Estate Planning TERM TEST 2 Page 6 of 7

c. Assuming that her OAS payment does not increase with inflation, what is Michelle’s new OAS payment? SHOW YOUR WORK. (1 mark)

d. At what level of 2018 income would she have her entire OAS benefit clawed back? (1 mark)

Answer 1

a)

The OAS Clawback is basically calculated as 15% of the amount by which your income exceeds the yearly minimum income threshold

Thus total OAS Clawback= 15% of ($94,000- $75,910)

= 0.15*18090

=$2,713.5

Thus monthly clawback = 2713.5/12

=$ 226.125

b) The Clawback period is 1 year i.e July 2019 to June 2020 for the Income year 2018.

c) The revised OAS pension after Clawback will be = $6600- $2713.5 = $3,886.5

d) 15% of Income exceeding threshold is clawed back,

At maximum a OAS of $6,600 will be clawed back and hence maximum Income should be such income whose 15% is $6,600.

= 6600/0.15

=$44,000

Thus if the income is $44000 above the minimum threshold limit, then the entire OAS would be clawed back.

Thus Income should be $75,910+$44,000 = $119,910 for all of the OAS to be clawed back.