, based on calculations provided by a tax expert, was that, even for an investor in the OAS “clawback zone," earning dividend income is still more tax-friendly than earning interest income.For 2019, the OAS clawback – formally known as the OAS pension recovery tax – kicks in when net income reaches $77,580. For every dollar of income above that threshold, 15 cents of OAS benefits are clawed back. When income reaches $125,937, no OAS is payable.
Granted, most people don’t live on dividend income alone. What about a more typical situation, where a senior has income from OAS, the Canada Pension Plan and a company pension, in addition to dividend or interest income?crunched the numbers and found that dividends still provide a clear tax advantage over interest, even after taking the OAS clawback into account.
In Ms. Kelt’s comparison, the dividend investor’s tax savings relative to the fixed-income investor ranged from about $3,500 to more than $7,000, depending on the province or territory. Her calculations also took into account a clawback of the age credit available to people 65 and over. Ms. Kelt ran a second comparison with $50,000 of investment income from either dividends or interest, and the tax savings for the dividend investor were even larger.
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