Is OMERS Pension Taxable?

The tax treatment of OMERS changes between your working years and retirement. Contributions receive favourable tax treatment while you are building your pension, but the pension income you eventually receive is taxable. OMERS pension payments are taxable income in Canada. OMERS normally deducts income tax from your monthly pension before paying you and issues a T4A showing your pension income and tax withheld. The final amount of tax you owe depends on your total taxable income and the deductions and credits available to you.

How Tax Is Deducted From Your OMERS Pension

OMERS withholds income tax directly from pension payments. The amount withheld reflects your monthly pension, the federal and provincial TD1 information on file and any additional withholding you have requested.

Withholding is therefore not a separate fee charged by OMERS. It is income tax being collected during the year toward your eventual tax liability. If you expect the standard withholding to be insufficient because you have substantial income from other sources, you can ask OMERS to deduct an additional amount. The OMERS tax and pension payment information explains how to change your tax information or request additional withholding.

Your actual tax bill is settled when you file your income tax return. A person receiving employment income, CPP, OAS, RRIF withdrawals or other taxable income alongside an OMERS pension can therefore owe more or less than the amount OMERS withheld.

How You Report an OMERS Pension on Your Tax Return

Canadian residents receiving an OMERS pension are issued a T4A. The slip records the pension paid during the previous calendar year and the income tax deducted from it.

Registered pension plan lifetime retirement benefits reported in box 016 of a T4A are generally reported on line 11500 of the Canadian income tax return. The federal rules for reporting pension and superannuation income provide the tax-return treatment for these payments.

The tax withheld during the year does not determine whether you ultimately receive a refund or owe additional tax. Your return combines the OMERS pension with your other taxable income and then applies the tax rules relevant to your overall situation.

Can OMERS Pension Income Qualify for the Pension Income Amount?

Eligible registered pension plan income can qualify for the federal pension income amount. For the 2025 tax year, the federal credit is based on up to $2,000 of eligible pension income, subject to the applicable eligibility rules.

Unlike some other retirement income, registered pension plan lifetime retirement benefits can qualify even when the recipient is under 65. The federal pension income amount rules identify the qualifying pension types and conditions. This tax credit does not make the OMERS pension itself tax-free. It is a non-refundable tax credit that can reduce federal income tax otherwise payable.

Can You Split OMERS Pension Income With Your Spouse?

OMERS pension income can generally qualify as eligible pension income for Canada’s pension-income-splitting rules. An eligible couple can jointly elect to allocate up to 50% of qualifying pension income to a spouse or common-law partner for tax purposes.

The election does not require OMERS to physically redirect half of your monthly pension. It is made for tax purposes using Form T1032, and the associated income tax withheld is allocated in the same proportion as the pension income being split. The federal pension-income-splitting rules explain the eligibility requirements and filing process.

Splitting pension income can also change income-tested amounts calculated separately for each spouse, including the OAS recovery tax. It therefore should not be judged solely by the reduction in one spouse’s taxable income.

Are OMERS Contributions Taxed While You Are Working?

The tax treatment before retirement helps explain why the pension becomes taxable later. Your employee OMERS contributions are deducted from gross income through payroll, reducing the employment income on which tax is calculated at source. Employer contributions are not included in your income as a taxable benefit.

Membership also creates a pension adjustment that reduces the RRSP contribution room generated for the following year. The pension adjustment represents the deemed value of pension benefits earned rather than the amount you personally contributed. The contribution mechanics themselves, including how much employees and employers pay, are covered separately under OMERS contribution rates.

Is the OMERS Bridge Benefit Taxable?

The temporary OMERS bridge benefit forms part of the OMERS pension paid before age 65 rather than being a separate tax-free government benefit. OMERS pension payments are subject to applicable income-tax withholding.

When the bridge ends at 65, the amount of OMERS income you receive changes. Any CPP or OAS income you receive has its own tax treatment and reporting rules, so the end of the bridge should not be interpreted as a tax adjustment to the remaining lifetime OMERS pension.

What If You Receive OMERS Outside Canada?

OMERS issues an NR4 rather than a T4A when the pension recipient resides outside Canada.

Tax treatment can then depend on Canadian non-resident withholding rules, the country where you reside and any applicable tax treaty. A pensioner moving outside Canada should therefore not assume that the withholding treatment used while living in Canada will continue unchanged.

For a Canadian resident, however, the central rule is straightforward: your OMERS pension belongs in your taxable retirement income. When estimating what you will actually have available to spend, use the after-tax amount rather than treating the gross pension shown by the OMERS pension calculation as take-home income.

Other Tax Questions About OMERS Pensions

Does OMERS deduct provincial as well as federal income tax?

The withholding calculation uses the federal and provincial income tax information OMERS has on file for Canadian residents. You can update that information by submitting the applicable TD1 forms.

Can a retroactive OMERS pension payment have more tax withheld?

A retroactive lump-sum pension payment can have tax withheld differently from ordinary monthly payments. The final tax treatment is determined when all of your income and tax paid for the year are included on your return.

Are OMERS survivor pension payments taxable?

OMERS survivor pensions are pension income and can be subject to applicable income tax. The rules governing who receives the underlying benefit are covered separately in OMERS pension death benefits.

Does OMERS indexing create a separate tax?

There is no separate tax simply because your pension receives an inflation adjustment. The increase changes the amount of pension income you receive, which then forms part of your taxable income under the ordinary pension-income rules.