Canada's Old Age Security Pension for Non-Residents: An Overview

Many retirees and individuals living abroad wonder if they are eligible to receive Canada's Old Age Security Pension (OAS) despite residing outside the country. The answer is complex and requires a detailed understanding of the rules and regulations. This article aims to outline the key points and provide guidance on what to expect when it comes to collecting your OAS while living abroad.

Can you get an Old Age Security Pension as a Non-Resident?

Yes, you can still receive your Old Age Security Pension even if you live outside Canada. However, there are several factors you need to consider, including withholding taxes and the residency requirements.

Is OAS Contributory?

The OAS pension is not contributory; meaning, you have no direct contributions to the pension. Instead, the benefits are based on your years of residence in Canada. Contributions to the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), contribute to your eligibility for benefits but do not affect the OAS directly.

Residency Requirements for OAS Outside Canada

The Canadian government has set specific residency requirements for individuals who want to collect their OAS while living abroad. Here are the key points to understand:

Residence Requirement for OAS

To be eligible for OAS outside Canada, you must meet one of the following conditions:

You must have lived in Canada for at least 20 years. If you reside in a country with which Canada has a social security treaty, the sum of your years of Canadian residence and that country’s years of residency must be at least 20.

If you reside in Canada but do not meet the 20-year rule, your OAS payments will stop after six months of residence outside Canada. Before leaving, ensure that you are informed about the potential impact on your benefits.

Withholding Tax

When you are a non-resident, a withholding tax of 15% is typically deducted from your OAS payments. However, if this deduction significantly impacts your income, you can file a special income tax form to reclaim all or part of this withholding tax.

Tax Treaties and Non-Resident Tax Rates

Canada has tax treaties with many countries, including the EU, the UK, large nations of the Americas, Australia, New Zealand, Japan, Korea, and the Philippines. These treaties can affect the withholding tax rates for OAS payments sent to these countries. Typically, the withholding tax rate is 25%, but it can be lower under these treaties.

Forms of Senior Benefits in Canada

Canada offers several forms of senior benefits:

Canada Pension Plan (CPP) or Quebec Pension Plan (QPP): These plans are contributory, meaning contributions are made during your working years. The benefits from these plans are available to you regardless of your residency status.

Old Age Security Pension (OAS): This program is funded by taxpayers, and eligibility is based on years of residence in Canada. To receive OAS while living abroad, you must have 20 years of residence in Canada.

Guaranteed Income Supplement (GIS): This benefit is means-tested and only provided to those who would otherwise be in poverty. It is only paid to Canadian residents.

Conclusion

Collecting your Old Age Security Pension while living abroad can be challenging due to the various residency requirements and withholding taxes. However, with the right information and understanding of the rules, you can navigate the complexities and make the most of your pension while enjoying your retirement abroad.

References

For more detailed information, refer to the Canada Revenue Agency website.