The OAS recovery tax

Old Age Security is clawed back at 15 cents per dollar of individual net income above the annual threshold, up to the whole benefit. The CRA calls it the recovery tax; everyone else calls it the clawback.

The formula

recovery = min(OAS received, 0.15 × (net income − threshold))

The threshold is a registry constant with its own effective date. The test is on individual net income, not the household's — a second earner's income does not push their partner's OAS into the clawback.

What the engine does

• Computes each person's net income for the year, including salary, taxable benefits and RRSP or RRIF withdrawals.
• Withholds the recovery amount from that person's OAS cash, which is how it is collected in practice.
• Leaves taxable income unchanged, as on the return.

What it deliberately does not

The Guaranteed Income Supplement is not modelled at all, so a low-income retirement is understated.