Good news for new OAS Applicants

You may have heard of the pending new Old Age Security (OAS) rules that will be coming into effect on July 1, 2013.

The rules are quite clear for those turning 65 after July 1, 2013 as they will have the option to defer taking their OAS and increasing their future benefit by 0.6% for each month of deferral up to age 70.  This option will work great for those who expect to be in a clawback position over the age of 65 due to other sources of income, such as from continuing employment, anticipated capital gains from sale of investments or significant dividends from their private corporations as they transition into retirement.

What was not clear in the proposed rules was whether those turning 65 before July 1, 2013 would be able to benefit from the new rules by deferring their application until after the July 1, 2013 start date.  For people in this situation I have good news!

I wrote to the Minster of Finance some months ago to raise this very question and have now received a reply from the office of the Minister of Human Resources and Skills Development to confirm that people in this situation will still be able to benefit from this deferral if they so choose:

“Individuals who turn 65 before July 1, 2013 can still benefit from this initiative. However, any months of deferral prior to July 1, 2013 will not be included in the calculation of the enhanced pension amount. For example, individuals turning 65 in January 2012 may choose to defer taking their OAS pension up to their 70th birthday, however, the calculation of their enhanced OAS pension will only be based on the number of months of deferral as of July 2013.”

Although the benefit will not grow until after July 1, 2013 deferral may still be an attractive option for those now close to age 65 who expect to be in a potential clawback situation.

I would be happy to discuss this further if you feel this may be an issue for yourself.

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Disclaimer

Information contained within this blog or on this website, either expressly or by reference, does not constitute professional advice and is designed strictly for general information purposes. As individual circumstances vary widely anyone seeking assistance with either their accounting or tax situation are strongly encouraged to seek appropriate professional advice.

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