Can you receive a government pension if you live outside of Canada?


Q. My father, who was born in 1945, left Canada to live in Thailand when was 26 years old. That was 50 years ago and he has never returned. If he comes back to Canada for one year to apply for his OAS, would he be eligible to receive a full pension? And would they be able to calculate his pension and pay benefits retroactively from his 65th birthday?
–Helen

A. The Old Age Security (OAS) pension is based on residency in Canada. It differs from the Canada Pension Plan (CPP), which is based on contributions by employees and the self-employed. 

Canadian residents must have lived in Canada for at least 10 years after the age of 18, be 65 or older and be a citizen or a legal resident at the time their OAS application is approved. 

Non-residents must have been a citizen or legal resident on the day they left Canada, be 65 or older and have lived in Canada for at least 20 years after the age of 18. 

If an OAS applicant falls short of the residency years, they may still qualify if Canada has a social security agreement with another country where they live or lived. Canada does not have such an agreement with Thailand, Helen, but does with 58 other countries.

Your father could qualify for a partial OAS pension if he lived in Canada for at least 10 years after age 18. Given your father lived in Canada until he was 26, that could be as many as 9 years. Without the help of a social security agreement with Thailand, he would need another year of residency in Canada to qualify. 

Retroactive OAS payments can be paid going back as many as 12 months, but again, would not apply in your father’s case, given that he has not yet met the 10-year criterion. 

If your father worked while he was in Canada, he would have contributed to the CPP. The plan was introduced in 1966, so he may have had a few years of contributions before he left to move to Thailand at age 26 (around 1971). 

CPP does not have residency limitations. The international social security agreements mentioned above coordinate social security contributions by residents to potentially qualify for or increase social security benefits. Again, Thailand is not one of those countries that has an agreement with Canada. But your father may have a small CPP retirement pension entitlement and you should contact Service Canada for more information.

CPP can start as late as age 70 and you can get up to 12 months of retroactive payments. This might help him receive some of the pension benefits he may have missed. 

OAS and CPP payments made to non-residents are generally subject to 25% non-resident withholding tax. If a country has a tax treaty with Canada, residents of that other country may be subject to a lower withholding tax, generally 15%. 

A non-resident receiving CPP or OAS does not need to file a Canadian tax return. However, a low-income non-resident retiree may be able to file an optional section 217 tax return to be taxed as if they were a Canadian resident. If their Canadian tax rate would have been less than the 15% or 25% withholding tax, they may be eligible for a refund. 

A high-income non-resident whose worldwide income exceeds $79,845 for 2021 may have to repay some or all of their OAS pension. There are 41 countries that have a tax treaty with Canada so that this recovery tax does not apply. 

In summary, Helen, your father may be able to live in Canada for a year and qualify for OAS. He probably has an existing CPP retirement pension entitlement if he worked prior to leaving Canada. Service Canada would be his best resource for more information. 

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.

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