Working After Retirement Canada 2025 — Tax & CPP Rules

What happens to CPP, OAS, and your taxes if you work after starting retirement benefits. Understanding the Post-Retirement Benefit and OAS clawback risk.

Can You Work While Receiving CPP and OAS?

Yes — absolutely. There is no restriction on working while receiving CPP and/or OAS in Canada. Unlike some US Social Security rules, Canadian government pensions do not reduce based on employment income. You can receive full CPP, full OAS, and earn a million dollars from employment — no clawback on CPP based on earnings.

However, there are important implications for:

• OAS clawback: Employment income counts toward the $90,997 threshold that triggers OAS recovery
• CPP contributions: If you work between 60–70 while receiving CPP, you may be required (or can opt) to continue CPP contributions — creating the Post-Retirement Benefit
• Income taxes: Employment income is fully taxable, potentially pushing you into higher brackets
• GIS: Employment income can affect or eliminate GIS eligibility

CPP Post-Retirement Benefit (PRB)

The Post-Retirement Benefit (PRB) is additional CPP income you earn when you continue working and contributing to CPP after you've already started receiving your CPP retirement pension.

How PRB Works

• If you work and receive employment/self-employment income while already receiving CPP (ages 60–70), you (and your employer, if employed) continue making CPP contributions
• Each year of contributions creates a new, small additional CPP benefit (PRB)
• The PRB is paid starting in January of the year following the contributions
• PRBs are permanent and indexed to inflation, just like regular CPP
• PRBs stop accruing when you turn 70 — no more mandatory CPP contributions after 70

PRB Amounts

The PRB per year of contributions is relatively small — based on the year's contributions relative to the maximum CPP benefit. For a full year of maximum contributions, a PRB is roughly $400–$500/year. But over multiple years, PRBs accumulate and can add up to $1,000–$2,000/year in additional lifetime CPP income.

Opting Out of PRB Contributions (Ages 65–70)

Canadians aged 65–70 who are receiving CPP and continuing to work can opt out of making further CPP contributions by completing Form CPT30. To opt out:

1. Complete Form CPT30 (Election to Stop Contributing to CPP)
2. File with your employer or CRA (if self-employed)
3. The opt-out is effective the month following the election

The opt-out can be reversed — you can cancel it (Form CPT30 Part D) in a subsequent year if you change your mind. If you opt out, neither you nor your employer contributes CPP on your earnings, and no PRB is earned for those years.

OAS Clawback Risk When Working

The most significant concern for working retirees aged 65+ is the OAS recovery tax. Your employment income counts toward net income, potentially triggering the OAS clawback of 15 cents per dollar above $90,997.

Example

Jean, 67, receives $728/month OAS ($8,736/year), $900/month CPP ($10,800/year), and earns $50,000 from part-time work.

• Total net income: ~$69,536 → Below $90,997 → No clawback

If Jean also received $30,000 in RRIF income:

• Total net income: ~$99,536 → $8,539 above threshold → Clawback: $1,281/year → Jean keeps $7,455/year in OAS

Managing the Clawback When Working

• Use TFSA withdrawals instead of RRIF to reduce net income
• Delay OAS if income is consistently above $90,997 during working years
• Consider pension income splitting with spouse
• Maximize RRSP contributions while still working (reduce net income)

For complete strategies, see our OAS Clawback Guide.

Income Tax When Working in Retirement

Employment income in retirement is taxed exactly the same as during your working years — added to all other income (CPP, OAS, RRIF, pension) and taxed at marginal rates.

Tax Impact of Working in Retirement

Withholding When Working

Your employer will withhold income tax based on your employment income alone — they don't know about your CPP, OAS, and RRIF income. This often means you're under-withheld and will owe a balance on your April 30 tax return. Consider requesting additional tax withholding from your employer (using the "additional tax" box on your TD1 form) or making quarterly tax instalments.

CPP Contributions on Employment Income After 60

Self-employed individuals ages 60–70 who are receiving CPP must pay both the employee and employer portions of CPP (total ~7.74% of net self-employment income up to YMPE). Opting out using Form CPT30 is available at 65+.

Self-Employment and Gig Income in Retirement

Many Canadian retirees supplement their income through consulting, freelancing, gig work, or small businesses. Tax considerations:

• Self-employment income is fully taxable at your marginal rate
• Business expenses are deductible: Home office, vehicle (if used for business), professional development, technology
• CPP contributions apply until age 70 (both employee and employer portions)
• HST/GST registration required if annual revenues exceed $30,000
• Quarterly tax instalments are required if you expect to owe more than $3,000 in tax

Strategies for Working Retirees

1. Limit Working Income to Below OAS Clawback Threshold

If you're receiving OAS, consider structuring part-time work to keep your total net income below $90,997. For example, if CPP + OAS = $20,000/year, you could earn up to $70,000 in employment income before touching the clawback zone.

2. Maximize RRSP While Working

If you're working and earning income (with RRSP contribution room remaining under age 71), contribute to your RRSP to reduce taxable income — especially valuable if you're in the 33–43% bracket.

3. Delay OAS During High-Income Working Years

If you're working until 68 with high income, deferring OAS until 70 avoids the clawback during working years AND gets you 36% more OAS for the rest of your life.

4. Structure as Incorporated Business

If earning significant self-employment income, consider incorporation. A Canadian Controlled Private Corporation (CCPC) allows income deferral, salary/dividend splitting with a spouse, and flexible timing of personal income. Professional advice required.

5. Use TFSA for Low-Income Years

When you eventually stop working and income drops, draw from RRIF to fill low tax brackets. Use TFSA for top-up spending to avoid clawbacks. Build TFSA during working years using excess earnings.