Introduction
Are you planning to retire outside of Canada? Or maybe you have thought about it and are curious to know how it affects your CPP, OAS, or even the GIS. Well, you’re in the right place. We’re going to be talking about that today.
Canada Pension Plan (CPP)
The Canada Pension Plan (CPP) is a benefit that you pay into. Because you contribute to the plan, you can generally receive benefits regardless of where you live. As long as you have contributed to the plan, you will receive your benefits. Nonetheless, you will need to provide Service Canada with your foreign address and banking information to ensure payments are sent to the right account overseas.
Old Age Security (OAS)
OAS is not as simple as CPP. If you watched my other video, you will know you could qualify to receive OAS payments with as little as 10 years of living in Canada after age 18. This is a social program based on residency, not contributions.
To qualify for OAS payments while living abroad, you must have lived in Canada for at least 20 years after the age of 18. If you do not meet the 20-year residency requirement, you may still qualify for OAS if Canada has a social security agreement with the country you’re moving to. The country you’re moving to is important because the treaty with that country will determine many things.
If you do not qualify to receive your OAS pension while outside of Canada, your payments will stop. Specifically, if you’re out of the country for more than six months after the month you’ve left, then the payments will stop. Once you’ve returned and notified Service Canada, your payments will resume.
Clawback and Recovery Tax
You might be wondering about the clawback or recovery tax, which applies to individuals once they reach a certain income threshold. It also applies to non-residents unless limited or exempted by a tax treaty. Depending on where you are, there may be circumstances where you earn income above that threshold and do not pay the recovery tax. This is why you need to research before moving.
Non-resident seniors receiving OAS payments must file an OASRI (Old Age Security Return of Income). This ensures that the government knows your worldwide income.
Guaranteed Income Supplement (GIS)
The Guaranteed Income Supplement (GIS) and Allowance are based on residency and income. They are generally not payable if you live outside of Canada for more than six months. While there’s some flexibility with OAS, GIS payments are more restrictive. Once you’ve been outside of Canada for more than six months, you will not receive GIS.
Recommendations
My big recommendation is to do your research. Look at the country you’re moving to, examine the treaty, and understand what’s in place. This affects not only your clawback but also your withholding tax. If no treaty is in place, you will pay withholding tax, which may be significant depending on your retirement plans.
Take your time and thoroughly research your destination. Consider the cost of living and how far your funds will go. From a benefits standpoint for CPP, OAS, and GIS, taking the time to do the research is crucial.
Conclusion
I hope this information was helpful. If you have any questions, you can also reach out to me.
