Please note ... In 1989 and 1990, if your Net Income BEFORE adjustments (line 234) is over $50,000, you will have to pay back part of your OAS. See LINE 235 section for worksheet.
This line refers to the Old Age Pension which is given to almost all Canadians at the age of 65. There are no qualifying tests other than residence and age. Enter the amount from Box (F) if you received a T4A (OAS) slip or the amount in Box (K) if you received a T4(P) slip. Do NOT report any Guaranteed Income Supplement or spouse's allowance received. GIS and spouse's allowances are not taxable BUT if your spouse received either, you must take them into account for net income purposes if you wish to claim your spouse as a dependent on line 303, Page 2 or Line 326 if you try and transfer deductions from your Spouse on Schedules 7 and 8 for 1988 and Schedules 7 and T1C and the new GST form for 1989 and 1990.
Please note again! Guaranteed Income Supplement payments do not go in this space. The amount on line 113 should never exceed THE BASE MONTHLY PENSION TIMES THE NUMBER OF MONTHS YOU RECEIVED THE PENSION UNLESS a retroactive payment for 1989 pension was paid in 1990, or 1987 in 1988, or 1988 in 1989. etc. If this was the case, it is important to make sure that the retroactive amount was also not included on the 89, 87 or 88 tax return.
The most important requirement before collecting the pension is that you must have reached the age of 65. Health and Welfare Canada requires that you prove this by filing certain documents. They prefer a birth or baptismal certificate, but they understand that many people were born in circumstances where proper records were not kept, so other suitable documents will be accepted. If you have difficulty in securing these documents, do not delay your application because of this. Merely indicate in your application that the proof of age will follow.
To qualify for an Old Age Security Pension you must have fulfilled certain residence requirements. Since July 1, 1977, there are two separate sets of rules that apply in this area. The new rules are being phased in over a 40-year period, but effectively for all people turning 65 before July 1, 1987 the more favorable set of rules will apply.
Under the old rules the Old Age Security Pension is an all or nothing payment. There are three ways to qualify under these rules:
1. By having lived in Canada for any full 40 years since your 18th birthday;
2. By having lived in Canada continuously for the last 10 full years, or;
3. By having lived in Canada for the last full year before making the application and by making up any absences from Canada in the last ten years with three times that amount of time in Canada in the preceding period since your 18th birthday. As an example of using this last method if you made up your last year of residence with July, 1978 at age 68, and had previously spent all of 1970, 1971 and 1973 and no other time in Canada in the last ten years, your period of absence in that ten years would be 10 - 4 = 6 years and would have needed 6 x 3 = 18 years in Canada between your 18th birthday and July 1968.
Obviously if you can qualify under these rules you will have them applied since they will give you the full pension. In determining the amount of time absent from Canada short periods of temporary absence such as for vacation or going to school are not counted.
Under the new residence rules all that is needed to qualify you for a pension is 10 full years of residence in Canada since your 18th birthday. The full amount of Old Age Security Pension is then multiplied by the number of full years spent in Canada since your 18th birthday and divided by 40. If you have resided more than 40 years in Canada you would of course receive the full pension. The new rules apply whenever you cannot qualify under the old ones.
There is a catch here! Once you have begun receiving a partial pension any further time spent in Canada cannot be used to increase your pension. If you aren't careful this could have a drastic affect. Let's look at an extreme example. You became a landed immigrant to Canada for the first time in 1977 and spent one full year here at that time. Then, because of a very good job opportunity, you went overseas and did not return to Canada until late March 1981. In April, 1990 (having some time earlier reached your 65th birthday) you fulfill the minimum 10-year requirement for receiving a partial pension of 10/40 of the full amount, but you cannot increase this later. If you forego your application for a further 8 months you will give up 8 months of partial pension at 1/4 of the full amount (the dollar equivalent of two months of full pension) in order to be eligible for the full amount of the pension for the rest of your life.
Finally, in order to have the Old Age Security Pension continue being paid to you for more than 6 months when you are out of the country, you must have had at least 20 years of residence in Canada since your 18th birthday. This is not affected by the date on which you began the pension, so that if you qualified for the pension with 19 years of residence, then after one more year of residence, you could apply for the pension to be paid to you anywhere in the world.
An Old Age Security pension cannot be paid until an application has been made and approved. Application forms are available at all Post Offices, Old Age Security, and Canada Pension Plan offices in Canada. All questions on the form should be answered fully. When you have completed the application form, mail it in the envelope provided, to the Regional Old Age Security Office in the capital of the province in which you live; if you no longer live in Canada, mail it to the regional office in the province in which you last resided. If possible, a copy of proof of age should be sent in with the application form. If you have not yet obtained proof of age documents, your application should not be delayed because of this. Proof of age can be obtained and mailed later.
You should apply six months before becoming eligible for the pension. This will allow time for proof of age to be obtained, if necessary, and for your history of residence to be confirmed.
If any person cannot make an application because of infirmity, illness, or any other good reason, someone else may apply on his or her behalf.
If you require assistance in completing an application for the Old Age Security pension, you should get in touch with the Old Age Security office in your province or the nearest Canada Pension Plan office. Representatives of these offices will make home visits when necessary.
If there is a CEN-TA Group office near you, the consultant there will be pleased to help you with the application.
PLEASE NOTE. 1989 WAS THE LAST YEAR THAT THE GROSS AMOUNT OF OAS AND CPP MAY BE TRANSFERRED TO AN RRSP. HOWEVER FOR 1991, you will be able to roll over $6,000 into a Spousal plan. Also for 1990 and 1991, you must transfer any RRSP or Pension monies DIRECTLY from plan to plan. You may no longer take the money into your possession for a couple of months, and then redeposit it into another plan after using it for an intermediate purpose.
Old Age Security payments were $337.04 a month in Jan 1989 and went to $340.07 in 1990 and $354.92 in 1991. They can be changed every three months with indexing to the (excess over 3%) CPI (Consumer Price Index).
Simply fill in the amount shown on the orange or brown slip T4A(CPP) which you received from the Canada Pension people. If the amount is incorrect or you don't receive the slip, contact your nearest Canada Pension Plan office.
For want of a better place to put this, I shall now outline some facts about the Canada Pension Plan which every Canadian should know.
The Canada Pension Plan is not just a retirement plan that one receives at the age of 65. Under the CPP umbrella are: death benefits; retirement benefits; benefits for orphans of deceased contributors; widows' and widowers' benefits; disability benefits; and also benefits for children of disabled contributors.
Contributions must have been paid in for one year. This does not mean a whole year; it could have been paid in for only one month's work if you earned over the annual minimum below:
<$&TABLE1[-]>Low earnings would not qualify you for a large pension, but there would be something and you should apply for it. If the amount is very low it will be paid in quarterly or annual amounts. The maximum retirement benefit for 1988 was $543.06 per month, for 1989, it was 556.25 per month, for 1990 it was $577.08 per month and for 1991 it is $604.86 per month reducing by .05% for each month it is taken out prior to age 65, because, yes, you may now take it out at age 60. (As a matter of interest, in 1984, it was $387.50 per month - inflation helps.)
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