Many retirees depend on Outdated Age Safety (OAS) to assist cowl rising prices, however the Canada Income Company (CRA) is watching extra intently than ever. Three crimson flags might elevate eyebrows and result in a clawback or audit. In case you’re making an attempt to stretch your revenue safely, it’s price realizing what to keep away from and which investments might truly make it easier to avoid hassle. Three dividend-paying shares like Brookfield Asset Administration (Tsx: bam), Trade Revenue (TSX:EIF), and Canadian Tire (TSX:CTC.A) might assist defend your monetary well being whereas giving your portfolio a lift.
Don’t be extreme
The primary crimson flag the CRA is monitoring is extreme taxable revenue from non-registered accounts. As soon as your internet revenue hits $93,454, your OAS begins getting clawed again for the 2025 tax yr. Many Canadians unintentionally journey this wire by relying too closely on curiosity revenue or capital beneficial properties.
That’s the place dividend shares in a Tax-Free Financial savings Account (TFSA) are available in. BAM is a strong instance. Within the first quarter (Q1) of 2025, BAM reported fee-related earnings of US$577 million, with belongings beneath administration rising to US$924 billion. It additionally pays a 3.19% dividend, up 10% from the prior yr. Holding BAM in a TFSA shelters your dividend from taxes and avoids tipping you into clawback territory.
Thoughts what you are promoting
The second crimson flag is failing to correctly account for enterprise or aspect revenue. Retirees working small consulting gigs or rental revenue operations generally underreport income or overclaim bills, which the CRA is cracking down on. That makes it all of the extra necessary to maintain passive revenue really passive.
EIF is a main candidate right here. In Q1 2025, it delivered file income of $656 million and internet earnings of $20 million. It pays a month-to-month dividend at 4.21%, which involves $2.74 yearly. The dividend inventory generates dependable revenue with out the CRA complications that come from working your individual enterprise.
A lot an excessive amount of
The third crimson flag is taking up an excessive amount of funding threat that results in giant one-time withdrawals. These might come from panic promoting or giant shifts in taxable accounts. That’s the place a blue-chip identify like Canadian Tire can provide peace of thoughts.
In Q1 2025, the dividend inventory reported income of $3.46 billion, with normalized diluted earnings per share (EPS) of $2.00. It pays a dividend of $7.10 per share, which interprets to an annualized yield of roughly 3.83%. That revenue can keep constant even throughout market dips, serving to retirees keep away from the entice of huge withdrawals that spike revenue for a single yr.
Backside line
Whereas the CRA is tightening its watch, there are good methods to earn revenue with out elevating crimson flags. Holding these dividend shares in a TFSA retains your revenue tax-free and regular. It additionally avoids the necessity to chase higher-yielding belongings that will include extra threat or taxable occasions. And since every of those corporations is rooted in several sectors, you additionally get diversification. That helps with revenue reliability and capital stability.
Brookfield Asset Administration offers international publicity with sturdy development potential, EIF presents month-to-month money with a defensive enterprise combine, and Canadian Tire provides model energy with retail attain. All three provide dividend revenue, however extra importantly, they provide peace of thoughts. You don’t must get inventive with deductions or aspect hustles. You simply must construction your portfolio in a means that delivers regular returns with out crossing CRA strains.
So, when you’re an OAS pensioner or planning to be one quickly, consider carefully about how your revenue exhibits up on paper. The CRA isn’t seeking to penalize retirees who plan properly, however it’s going to crack down on those that don’t. By staying beneath the revenue threshold, avoiding questionable deductions, and utilizing tax shelters like a TFSA, you possibly can maintain your advantages intact. These three dividend shares might assist make that simpler.