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Cancellation of OAS Enrollment: Don’t be Late!
Posted on February 24th, 2026 in Domestic Tax
OAS provides a monthly income-sensitive payment to eligible individuals aged 65 and older. Individuals who normally receive OAS are occasionally surprised when some OAS is subject to a special tax (commonly referred to as a “clawback”) with their personal tax filings due to high earnings. In particular, OAS is clawed back at a rate of 15% of adjusted income received in that year, above an indexed threshold of $93,454 for 2025 and $95,323 for 2026.
Individuals whose income exceeds this threshold may consider deferring the commencement of OAS. Future OAS payment increases of .6% per month of delay (to a maximum of 36% for 5 years of deferral) are provided to compensate for the deferral. If OAS is clawed back in its entirety, it costs nothing to delay but provides the benefit of increased future payments. Increased OAS payments also increase the income level at which all OAS is clawed back.
In a November 18, 2025, Federal Court of Appeal (FCA) case, an individual was not permitted to cancel their OAS pension enrollment decision when requested beyond the allowable period.
The taxpayer had been automatically enrolled for OAS in 2020. He neither objected to the enrollment within the 90-day window to object, nor applied for cancellation within the allowed six months from the first payment, despite Service Canada informing him of those options. Nearly two years later, the taxpayer sought to cancel his enrollment, citing ongoing work, the COVID-19 pandemic, and the delay in the Minister’s response as reasons for delays in asking for the cancellation. He wanted to cancel his enrollment as his earnings from ongoing work were eroding his benefit; a delay in receiving OAS would have resulted in increased future payments.
Taxpayer loses
The FCA agreed with the Federal Court’s determination that the refusal was reasonable. The analysis of deadlines for reconsideration and cancellation was conceptually sound.
Consider whether your OAS payment may be clawed back due to high income before applying. If you have been automatically enrolled, promptly cancel your enrollment if desired.
Article originally published in: Tax Tips & Traps 2026 First Quarter – Issue 153.
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