# UFile OAS Claw Back



## bariutt (Feb 2, 2013)

Does UFile calculate the actual amount of OAS Recovery Tax that needs to be paid or recovered based upon your declared net income?

My wife and I file our taxes together using Ufile. With my net income my OAS is fully clawed back. In my wife's case about half of her OAS is clawed back.

Using Ufile I tried to split pension income with my wife. I tried to transfer pension income from my wife to me hoping to recover some of the 15% that was clawed back from my wife. 

The Ufile calculator did not seem to take into account the fact that my wife transferred pension income to me and this should reduce her net income and thus the amount of OAS claw back.

It makes me think that UFile does not calculate the extra amount of OAS Recovery Tax to be paid or if a return of previously paid tax is to be returned.

Any advice would be appreciated.


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## 319905 (Mar 7, 2016)

OAS 2017 payments are done and done, your wife's OAS payments will be updated going forward into 2018 ...


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## AltaRed (Jun 8, 2009)

Indeed. Pension income transfers are not going to affect OAS clawback calculations. Besides why would you want to pay more income tax at a higher MTR rate just to reduce her clawback? It makes no mathematical sense.


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## bariutt (Feb 2, 2013)

*OAS Clawback*



AltaRed said:


> Indeed. Pension income transfers are not going to affect OAS clawback calculations. Besides why would you want to pay more income tax at a higher MTR rate just to reduce her clawback? It makes no mathematical sense.


It does make mathematical sense. Yes I am at a slightly higher tax rate but not 15% higher.


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## kcowan (Jul 1, 2010)

rikk2 said:


> OAS 2017 payments are done and done, your wife's OAS payments will be updated going forward into 2018 ...


The OAS repayment is for over-payment last year (2017).


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## AltaRed (Jun 8, 2009)

bariutt said:


> It does make mathematical sense. Yes I am at a slightly higher tax rate but not 15% higher.


Okay. I can see that if the MTRs are not that different. The MaxBack calculation done by UFile should pick that up in its iterations.... unless OAS repayment adjustments are only prospective in nature (2018) and not retrospective (2017). We don't run into that situation because wifey never runs into clawback territory.

Can you duplicate that situation in another software package such as StudioTax? I use StudioTax to test scenarios such as these with simplified proformas. If StudioTax comes up with a different answer according to your point of view, raise the challenge in the UFile Support Forums. You may, or may not, get a response but ultimately may be worth the trouble.


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## 319905 (Mar 7, 2016)

kcowan said:


> The OAS repayment is for over-payment last year (2017).


Well, no, it's for underpayment because buddy thinks that by reducing his wife's 2017 taxable income though end of year pension splitting, he'll increase her 2017 OAS ... not so ... he will increase her 2018 OAS because it's based on her 2017 taxable income.


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## bariutt (Feb 2, 2013)

What I am trying to do when completing our 2017 tax returns is to trigger an OAS over-payment by reducing my wife's net income to $74,788. I want to transfer some of my wife's pension income to me to bring her net income to $74,788.

When trying this strategy on Ufile it does not seem to recognise OAS over-payment.


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## 319905 (Mar 7, 2016)

OAS over-payment ??? OAS is based on the previous years taxable income. I transferred $xxK of my pension to my wife on our 2017 returns reducing my 2017 taxable income by $xxK which will increase my 2018 OAS benefits ... eventually ... and that as far as I know is how it works. Knowing your wife's reduced 2017 taxable income, you can determine how much her 2018 OAS payments will increase.


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## OhGreatGuru (May 24, 2009)

To correct one misunderstanding, pension splitting can in principle be used to minimize OAS clawback, depending on the income ranges the partners are in.

However, if OP's OAS is being fully clawed back as stated, his income is in excess of $121K. So federal marginal rate is 26%. Provincial marginal rate depends on province, but would be 12.16% in Ontario, for a total of 38.12%. It is highly unlikely transferring pension from his spouse would be cost-effective. There are a couple of income-dependent credits that complicate the calculation (medical expenses and age amount) and Ontario for one has surtaxes for higher incomes.

If you think about it, if your income is high enough that all of your own OAS is being clawed back, you shouldn't be able to evade your spouse's clawback by transferring pension amounts from her. If OP's income was below $121K, each dollar transferred would be taxed at his marginal rate plus the 15% clawback. So why should it save money if his income is over $121K?


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## 319905 (Mar 7, 2016)

^ Sure ... off topic: my wife and I have always had our own incomes/savings and have always shared major expenses. Now that we're both retired, and my pension is considerably more than hers, I transfer almost half of my pension to her (she pays the tax on that) so that our pensions are equal, and so we go on having our own "incomes/savings" and sharing of major expenses. Through pension splitting, I reduce our (my) taxes a bit and as it happens, I increase my OAS a bit.


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## Retiredguy (Jul 24, 2013)

I used the calculator found at TAXTIPS.ca (BC - 2017)

Him - 115000 eligible pension plus 7040 OAS
Her - 90000 eligible pension plus 7040 OAS

Result
- clawed back him - 7040 - (Total tax and clawback 36239)
- clawed back her - 3338 - (Total tax and clawback 24224)
(Combined total 60462)

I then shifted 22,000 of her pension to him so he had 137000 plus 7040 OAS, and she had 68000 plus 7040 OAS.

Result 
- clawedback him 7040 - (Total tax and clawback 45193)
- clawedback her 38 (Total tax and clawback 15023)
(Total combined 60216)

Before pension splitting 60462
After pension splitting 60216

Conclusion they pay 246 less after pension splitting.


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## AltaRed (Jun 8, 2009)

Post your example and results on UFile Support Forum http://community.ufile.ca/ under the Feedback section or Tax Questions section and advise UFile that their MaxBack algorithms are flawed. It won't be the first time UFile's results are not the best.


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## Retiredguy (Jul 24, 2013)

I'll leave it to the OP bariutt to notify Ufile. I don't use that program . I use Turbo Tax and further to my earlier example using TaxTips calc, I created a "his and her" in Turbo Tax and the result is even greater. I used 6979 in Turbo Tax for 2017 OAS as that was the correct full amount for 2017. Of course Turbo Tax would use all of the deductions while TaxTips.ca is more limited. 

Using Turbo Tax the couple would pay 458.20 less with pension shifting of 22K from her to him.

Also, BTW the pension splitting optimization feature in Turbo Tax gave an exact amount to split 22190.01.


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