People told me I should apply for Old-Age Security [OAS] payments when I took a buy-out from The University of Western Ontario several years ago.
I didn't think I should bother because I was earning enough that the gubmnt would claw it all back.
Was I ever wrong. No foolin'.
Here's how it works.
Suppose you earn enough that you purportedly don't qualify for OAS. Instead of not paying you, the gubmnt pretends it pays you and then withholds the entire amount for income taxes. They say they've increased my income by $X and they have also increased the amount withheld for taxes by $X as well. But my tax liability on $X of extra income is only .45X or something like that. So the gubmnt says I've already paid an extra .55X toward the taxes on the rest of my income.
No foolin'. So the gubmnt reduces my taxes considerably with this procedure.
What a bizarre scheme. It sure seems like a boondoggle to me. But it reduced my tax liability quite a bit this year.