Retirees relying on Old Age Security (OAS) face increasing scrutiny from the Canada Revenue Agency (CRA). To preserve your full OAS benefit and avoid unexpected clawbacks, it’s crucial to watch for three key financial red flags.
Discover how careful tax planning and the right dividend stocks held in a TFSA—such as Brookfield Asset Management (BAM)—can help safeguard your income.
Red Flag #1: Excessive Taxable Income
If your net income exceeds $93,454 in 2025, CRA will begin clawing back your OAS benefit—recovering 15% of every dollar over that threshold. At about $151,668 (age 65–74) or $157,490 (age 75+), your OAS benefit may be fully eliminated
Why It Matters
Common income sources like interest, capital gains, or business earnings in non-registered accounts can push retirees over the threshold—even unintentionally.
Red Flag #2: Misreported Business or Side Income
Many retirees run consulting gigs, do rental operations, or freelance without realizing the tax implications. Underreporting revenue or inflating expenses may draw CRA audits. Passive, tax-efficient dividend income is often safer—and easier to track.
Red Flag #3: Large One-Time Withdrawals from Taxable Accounts
A big withdrawal in a single year—often triggered by market dips—can spike your taxable income and lead to one-time OAS clawbacks. Instead, retirees should lean toward steady dividend payouts, reducing the urge to tap taxable savings all at once.
Three Dividend Stocks That Help Avoid CRA Triggers
Holding dividend-paying stocks in a Tax-Free Savings Account (TFSA) can provide stable, tax-free income and help keep your OAS intact. Consider these blue-chip Canadian stocks:
| Stock | 2025 Dividend Yield | Income Benefits |
|---|---|---|
| Brookfield Asset Management (BAM) | ~ 2.6–3.2% | Global asset manager; steady payouts; no taxable income in TFSA CIFinancial |
| Exchange Income Fund (EIF)** | ~ 4.2% (monthly) | Regular monthly income, defensive sector exposure |
| Canadian Tire (CTC.A)* | ~ 3.8% | Solid retail earnings; ideal for consistent income |
*Estimated yields based on Q1‑2025 data.
How These Stocks Help Mitigate the CRA Risk
1. Stay Below the OAS Clawback Threshold
By placing BAM, EIF, and Canadian Tire dividends inside a TFSA, retirees avoid adding to their taxable income, keeping them safely under the $93K threshold.
2. Avoid Business Income Complexities
Dividend income is straightforward and doesn’t trigger CRA audit flags linked to side gigs or business revenue.
3. Reduce Income Volatility
Steady dividends lessen the need for large withdrawals—so there’s no sudden spike in Line 23400 income to trip OAS clawback rules.
Example Scenario: How the Strategy Works
- Taxable income under $93,454 → no OAS clawback
- Your TFSA holds BAM, EIF, and CTC.A shares that provide consistent income without reporting
- No business income, no large RRIF withdrawals
- Income remains stable, your OAS benefit remains fully intact
Other Helpful Income-Planning Tools for OAS Pensioners
- Pension Income Splitting: Allocate up to 50% of eligible pension income to a lower-income spouse to reduce household taxable income.
- RRIF Withdrawal Strategies: Minimize taxable withdrawals; consider basing it on the younger spouse’s age to lower required minimums.
- TFSA Withdrawals Over RRIF: Use TFSA distributions first since they don’t count toward taxable income
Retirees planning an income strategy should prioritize tax efficiency and long-term stability. Avoid the CRA’s clawback traps by keeping net taxable income below $93,454, steering clear of complex side business income, and minimizing large withdrawals.
Leveraging dividend-paying stocks like BAM, EIF, and Canadian Tire inside a TFSA offers a dependable, tax-free income stream without raising CRA red flags.
By keeping your portfolio simple, consistent, and sheltered, you can maximize your OAS benefit, enjoy peace of mind, and maintain stability in your golden years.
FAQs
What happens if my net income slightly exceeds the threshold?
CRA will recover 15% of the excess via reduced monthly OAS payments for the July‑June pension year.
Can dividend income in TFSA affect OAS?
No — dividends inside a TFSA are tax‑free and don’t count toward net income, making OAS clawback calculations unaffected.
Is business income automatically risky?
If you operate rentals or consulting without proper bookkeeping, it could trigger CRA scrutiny. Passive dividend strategies are much cleaner.