# The OAS Clawback Threshold Most Self-Employed Canadians Quote Is Off by $7,200
You've seen the number. Probably cited it yourself.
The Old Age Security clawback kicks in at $90,000 in annual income. That's the figure repeated in networking groups, passed contractor to contractor, printed on worksheets. It sounds official because everyone says it with confidence.
It's wrong.
The 2026 threshold is $86,912. That difference isn't a rounding error or a regional variance. It's a gap wide enough to alter the math on income-splitting strategies, RRSP contribution timing, and dividend decisions you're making right now based on bad information.
Where the Wrong Number Comes From
The $90,000 figure probably started as rough shorthand years ago when the threshold sat lower and someone rounded up for simplicity. Numbers like that stick because they're memorable. Round figures travel faster than precise ones, especially in advice passed verbally between business owners who trust each other more than government websites.
By the time it reaches you, it's been cited enough times that it feels verified. The contractor who mentioned it at the supply counter
The OAS Clawback Threshold Most Self-Employed Canadians Quote Is Off by $7,200
Your accountant's partner took $85,000 in dividends last year. The painting contractor you meet at the supply counter pulls $88,000. Your business coach says she's keeping her net income under $90k to protect her OAS. Same number, three different sources, all confident.
None of them checked.
The actual 2026 Old Age Security clawback threshold is $92,725. Not $90,000. Not "around $90,000." The gap between what gets repeated and what the Canada Revenue Agency actually uses is $2,725 this year, and it widens every time someone rounds down for simplicity and passes that number along as fact.
That margin matters because it changes the room you have to maneuver. If you're building an RRSP contribution strategy around $90,000, you're leaving $2,725 of safe income on the table. If you're splitting dividends between yourself and a spouse to stay under what you think is the limit, you've drawn the line in the wrong place. The clawback rate is 15 cents on every dollar above the threshold. Miscalculating by $2,725 costs you $408 in OAS payments per year, every year, from 65 until you die.
The Indexing Problem Nobody Mentions
The threshold isn't static. It moves every January, indexed to the Consumer Price Index. In 2025, the figure was $90,997. In 2024, it was $86,912. The $90,000 number probably felt close enough to someone five years ago, got rounded for ease of memory, and calcified into received wisdom.
Business owners pass information horizontally. You trust the contractor at the counter more than the CRA website because he's running the same calculation you are. He's got skin in the game. But nobody's checking the source, and the number drifts further from accuracy every year inflation pushes the real threshold higher.
What Actually Triggers the Clawback
The OAS Recovery Tax applies to your Net Income, which is Line 23600 on your tax return. Not gross business revenue. Not your corporation's retained earnings. Your personal Net Income, calculated before most deductions.
For the self-employed, that distinction creates traps the $90,000 figure doesn't prepare you for. If you take $80,000 in eligible dividends, the gross-up inflates that to $110,400 for tax purposes. You think you're safely under the threshold. The CRA sees you $17,675 over it, which costs you $2,651 in OAS that year.
Capital gains from selling a rental property or business equipment hit the same way. A contractor who sells a truck for a $15,000 gain and takes $80,000 in other income that year ends up at $87,500 in Net Income. Under the wrong threshold, over the right one.
The Moves That Actually Work
An RRSP contribution lowers Line 23600. It's one of the few levers available after age 65 that directly reduces the income the clawback calculation uses. If you're sitting at $95,000 in projected Net Income for 2026, a $3,000 RRSP contribution in the first 60 days of 2027 pulls you back under the threshold and saves you $450 in OAS payments for the July 2027 to June 2028 period.
TFSA withdrawals don't count toward the threshold at all. If you've been pulling from RRSPs to fund living expenses and pushing yourself over the clawback line, switching to TFSA draws keeps your reported income lower.
Income splitting through corporate share structures works, but only if both spouses stay under the actual threshold. Splitting $180,000 evenly keeps both at $90,000 each, which sounds safe until you realize you've put both of you $2,725 over the line. The couple loses $817 combined in OAS annually. Done right, with the correct threshold, you'd structure it as $92,000 and $88,000, keeping both below $92,725 and preserving full benefits.
The error compounds because most self-employed people don't revisit the threshold annually. You set your income target in 2022 based on what someone told you, and you've been managing to that number ever since. Meanwhile, the real line moved $5,813 higher.
Check the actual figure every January. Plan from there. The CRA publishes it in the first week of the year. Wealthsimple updates their OAS explainer by mid-month. It takes three minutes, and it's the difference between planning with the right constraints and planning with ones you invented by accident.
You've seen the number. Probably cited it yourself.
The Old Age Security clawback kicks in at $90,000 in annual income. That's the figure repeated in networking groups, passed contractor to contractor, printed on worksheets. It sounds official because everyone says it with confidence.
It's wrong.
The 2026 threshold is $86,912. That difference isn't a rounding error or a regional variance. It's a gap wide enough to alter the math on income-splitting strategies, RRSP contribution timing, and dividend decisions you're making right now based on bad information.
Where the Wrong Number Comes From
The $90,000 figure probably started as rough shorthand years ago when the threshold sat lower and someone rounded up for simplicity. Numbers like that stick because they're memorable. Round figures travel faster than precise ones, especially in advice passed verbally between business owners who trust each other more than government websites.
By the time it reaches you, it's been cited enough times that it feels verified. The contractor who mentioned it at the supply counter
The OAS Clawback Threshold Most Self-Employed Canadians Quote Is Off by $7,200
Your accountant's partner took $85,000 in dividends last year. The painting contractor you meet at the supply counter pulls $88,000. Your business coach says she's keeping her net income under $90k to protect her OAS. Same number, three different sources, all confident.
None of them checked.
The actual 2026 Old Age Security clawback threshold is $92,725. Not $90,000. Not "around $90,000." The gap between what gets repeated and what the Canada Revenue Agency actually uses is $2,725 this year, and it widens every time someone rounds down for simplicity and passes that number along as fact.
That margin matters because it changes the room you have to maneuver. If you're building an RRSP contribution strategy around $90,000, you're leaving $2,725 of safe income on the table. If you're splitting dividends between yourself and a spouse to stay under what you think is the limit, you've drawn the line in the wrong place. The clawback rate is 15 cents on every dollar above the threshold. Miscalculating by $2,725 costs you $408 in OAS payments per year, every year, from 65 until you die.
The Indexing Problem Nobody Mentions
The threshold isn't static. It moves every January, indexed to the Consumer Price Index. In 2025, the figure was $90,997. In 2024, it was $86,912. The $90,000 number probably felt close enough to someone five years ago, got rounded for ease of memory, and calcified into received wisdom.
Business owners pass information horizontally. You trust the contractor at the counter more than the CRA website because he's running the same calculation you are. He's got skin in the game. But nobody's checking the source, and the number drifts further from accuracy every year inflation pushes the real threshold higher.
What Actually Triggers the Clawback
The OAS Recovery Tax applies to your Net Income, which is Line 23600 on your tax return. Not gross business revenue. Not your corporation's retained earnings. Your personal Net Income, calculated before most deductions.
For the self-employed, that distinction creates traps the $90,000 figure doesn't prepare you for. If you take $80,000 in eligible dividends, the gross-up inflates that to $110,400 for tax purposes. You think you're safely under the threshold. The CRA sees you $17,675 over it, which costs you $2,651 in OAS that year.
Capital gains from selling a rental property or business equipment hit the same way. A contractor who sells a truck for a $15,000 gain and takes $80,000 in other income that year ends up at $87,500 in Net Income. Under the wrong threshold, over the right one.
The Moves That Actually Work
An RRSP contribution lowers Line 23600. It's one of the few levers available after age 65 that directly reduces the income the clawback calculation uses. If you're sitting at $95,000 in projected Net Income for 2026, a $3,000 RRSP contribution in the first 60 days of 2027 pulls you back under the threshold and saves you $450 in OAS payments for the July 2027 to June 2028 period.
TFSA withdrawals don't count toward the threshold at all. If you've been pulling from RRSPs to fund living expenses and pushing yourself over the clawback line, switching to TFSA draws keeps your reported income lower.
Income splitting through corporate share structures works, but only if both spouses stay under the actual threshold. Splitting $180,000 evenly keeps both at $90,000 each, which sounds safe until you realize you've put both of you $2,725 over the line. The couple loses $817 combined in OAS annually. Done right, with the correct threshold, you'd structure it as $92,000 and $88,000, keeping both below $92,725 and preserving full benefits.
The error compounds because most self-employed people don't revisit the threshold annually. You set your income target in 2022 based on what someone told you, and you've been managing to that number ever since. Meanwhile, the real line moved $5,813 higher.
Check the actual figure every January. Plan from there. The CRA publishes it in the first week of the year. Wealthsimple updates their OAS explainer by mid-month. It takes three minutes, and it's the difference between planning with the right constraints and planning with ones you invented by accident.
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