Retiring Abroad: Can I Retire Abroad and Keep Receiving CPP and OAS?
Milestone Wealth Management Ltd. - Nov 05, 2019
Can I Retire Abroad and Keep Receiving CPP & OAS?
There are typically three pillars of retirement income for Canadians: personal retirement savings (RRSP, TFSA, etc.), company pension plans, and government retirement benefits. When considering retiring outside Canada, whether part-time or full-time, it is important to consider the consequences this will have on all three of these income streams.
Focusing specifically on government retirement benefits, there are two main income sources that most Canadians can receive: Canada Pension Plan (CPP) and Old Age Security (OAS). Fortunately, Canadian retirees can continue to receive their CPP and OAS payments after they permanently relocate to another country. In fact, it is even possible to receive your CPP and OAS payments in the local currency of the country to which you’ve relocated. This can help to simplify things somewhat, as you could then skip the step of having to convert Canadian dollars to the local currency every month. Here is a link for more information.
Related to the topic of receiving OAS and CPP payments is taxation of those benefits. As a non-resident of Canada for tax purposes, your CPP and OAS payments might be subject to withholding tax. Typically, this tax is a flat 25% if your chosen retirement country does not have a tax treaty with Canada. Fortunately, many countries do have tax treaties with Canada that may allow for a reduced tax rate if you submit a form NR5. However, this doesn’t typically mean that you need to file a Canadian tax return, as withholding tax is generally your only tax obligation to Canada as a non-resident. Here is a link for more information on this topic, including a list of countries with tax treaties with Canada.
There is a third, lesser-known form of government retirement income called the Guaranteed Income Supplement (GIS). This is available to Canadian retirees with a low annual taxable income. However, in this case, if a Canadian who is receiving GIS leaves Canada for more than six months, their GIS payments stop. Once the person returns to live in Canada, the payments will begin again, provided that they still qualify.