Canada's senior snowbirds face significant pension clawbacks

Canada's senior snowbirds face significant pension clawbacks

Canada Canadian residents who have indulged in a gap year, or broadened their horizons with a brief residency overseas, could end up taking a hit on their social benefits. A new border tracking system could help the federal government avoid paying millions of dollars in social benefits to those pensioners who have spent significant time outside of Canada.
 
In a document produced by the Social Development Canada and Canada Revenue Agency, it was detailed that the current exit tracking system could be extended to monitor air travel as well as land crossings.
 
If that is the case, the government would be able to monitor the whereabouts of citizens with greater granularity, using this information to cut Old Age Security (OAS) benefits further down the line.
 
While a bill must be passed in order to put this system into place, up to C$10 million in the OAS benefit could be lost each year, according to The Canadian Press.
 
By monitoring the coming and going of the population a little closer, the government could revoke benefits going to those who have spent a large majority of the time in the US or other countries but failed to disclose it.
 
OAS benefits are based on the amount of time a person has been a resident in Canada. The base pension is around $6,839 per year with subsidiaries and deductions determined by income.
 
The introduction of the new tracking system could mean that those residents who did not live in Canada for the 40-year minimum after the age of 18, and had failed to declare this, would not receive the full amount. If a person has had residency for less than 40 years then one fourtieth of the maximum benefit will be deducted for every year of residency below the limit.
 
Frequent travel could also mean implications to income tax. However, The Canadian Pension Plan benefits should not be affected as they are based on contributions as opposed to residency.
 
If this bill to put this system into place is passed, then residents must start to consider whether their  travel habits are going to cost them a little more than their flight cost in the long run.