Plain meaning
A reduction or recovery of a benefit when income exceeds a threshold.
Also called
income recovery
recovery tax
Key points
- Clawbacks can reduce the value of benefits as income rises.
- The calculation depends on the specific program and income measure.
- Retirement withdrawals, pension income, investment income, or employment income can affect income-tested benefits.
- A clawback is different from ordinary tax, though both can affect after-tax cash flow.
Why it comes up
Readers need this concept to understand OAS recovery, income-tested credits, and how withdrawals can affect retirement spending power.