As of July 1, 2013, where receipt of Old Age Security (OAS)
is delayed, the monthly pension is increased by a factor of
0.6% for each month deferred, to a maximum increase of
36% (60 months, commencing receipt at age 70).
In a March 25, 2020 Federal Court case,
the Court reviewed Service Canada’s
decision to deny relief to an individual
who applied to cancel his OAS pension
slightly more than one year after it had
commenced. The taxpayer wanted to
benefit from recent changes which allowed
deferral of receipt in exchange for higher
future payments. His entire OAS
pension for the previous year was lost
due to high earnings.
Normally an individual has the ability to cancel a pension
only within six months of the first payment. However, the
Court looked to a special provision which allows the
government to take remedial action for denied benefits
resulting from erroneous advice or administrative error in
the administration of the OAS Act.
The Court found that the government was not required to
demonstrate that communications advising the taxpayer of
changes to the rules had been appropriately delivered.
However, they were required to demonstrate that these
communications had been sent, and the evidence they
provided did not demonstrate their mailings went to the
specific taxpayer. Therefore, the decision to deny relief was
not reasonable. Further, although the taxpayer did not lose
immediate benefits as a result of the early application, there
were future benefits lost due to the denied deferral.
ACTION ITEM: Before applying for OAS, make sure to
determine whether your income (and expected income)
will erode the benefits. If so, consider deferring
application to benefit from increased future OAS
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