Take the default retiree drawing $1,200 a month of CPP, $728 of OAS, $2,000 from an RRSP or RRIF, and $500 from a TFSA, at a 22 percent average tax rate. Three of those four sources are taxable: CPP, OAS, and the RRSP/RRIF withdrawal add up to $3,928 a month of taxable income. At a 22 percent average rate that is about $864 of tax, leaving $3,064 after tax from the taxable streams. The TFSA withdrawal is tax-free, so its full $500 is added back on top, giving after-tax monthly income of about $3,564, or roughly $42,766 over the year. Gross monthly income across all four sources is $4,428, so tax takes a little under a fifth of the total. The reason the TFSA is listed last and pulled last in practice is that it does not count toward the income that triggers the OAS clawback, making it the cleanest dollar to spend in higher-income years.
Source (monthly)
Amount
Taxable?
How it is calculated
The tool builds total retirement income by adding four monthly streams and treating them according to how the CRA taxes each. CPP, OAS, and RRSP or RRIF withdrawals are fully taxable income, so they are summed and an average tax rate is applied to estimate the tax bite. TFSA withdrawals are not taxable and not even reportable, so they bypass the tax calculation and are added to the after-tax total in full. The result is an after-tax monthly figure and its annualised equivalent, alongside the gross total before tax. Using a single average rate is a simplification: real tax is progressive and depends on pension income splitting, age and pension credits, and provincial rates, so the figure is an estimate rather than a return calculation. The order in which you draw accounts matters too, because keeping taxable income lower can protect income-tested benefits like OAS, which is why the conventional sequence spends non-registered and registered money before the TFSA.
Frequently asked questions
Withdrawal sequence?
Common rule: spend taxable accounts first, then RRSP/RRIF, leave TFSA for last. Pulling TFSA is "stealth" income (not counted for OAS clawback), so save TFSA for years when you want to manage clawback exposure.
What is the OAS clawback and when does it apply?
The OAS recovery tax (clawback) reduces your OAS pension when your individual net income exceeds a CRA threshold, which is $90,997 for the 2024 tax year. For every dollar above that threshold, 15 cents of OAS is clawed back. High RRSP or RRIF withdrawals can push you into clawback territory, which is why shifting income to TFSA withdrawals can help keep OAS intact.
Is CPP income taxable?
Yes, CPP retirement pension benefits are fully taxable as ordinary income in Canada. You report them on line 11400 of your T1 return. You can request voluntary tax withholding from Service Canada so you do not owe a lump sum at tax time, similar to how employment income tax is withheld at source.
What is the maximum CPP monthly amount in 2025?
The maximum CPP retirement pension for someone who starts at age 65 in 2025 is $1,364.60 per month, according to Service Canada. Most retirees receive less than the maximum because the benefit depends on your contributions and the number of years you contributed to the plan. Delaying CPP past age 65 increases the monthly amount by 0.7 percent for each month deferred, up to age 70.