Eligible individuals who receive Old Age Security (OAS) and reside in Canada, and have a low income, may qualify for the Guaranteed Income Supplement (GIS). The GIS is a monthly benefit that is non-taxable. To be eligible for the GIS, you must be a legal resident of Canada and be receiving an old-age security pension.
The GIS benefit is income-tested, meaning that your income from the previous year (or combined income for couples) is assessed to determine eligibility. The maximum annual income threshold can be found on the Service Canada website.
What types of income are considered for the Guaranteed Income Supplement (GIS) eligibility?
When applying for the GIS benefit, you and your spouse or common-law partner need to provide information on the following sources of income:
- Benefits received from the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP). Please note that CPP death payments are not included.
- Personal pensions and retirement savings plans.
- Withdrawals from Registered Retirement Income Funds (RRIFs) and foreign pension income (reported on lines 115 and 116). If you receive a pension from another country with a tax agreement with Canada, it is considered foreign pension income.
- Withdrawals from Registered Retirement Savings Plans (RRSPs) made during the year (reported on line 129).
- Employment insurance benefits, including workers’ compensation benefits (reported on lines 119 and 144).
- Interest and other investment income (reported on line 121).
- Capital gains and taxable dividends (reported on lines 120 and 127).
- Employment income exceeding $3,500.
- Other sources of income, such as workers’ compensation payments, alimony, and other deductions like union dues, RRSP contributions, relocation expenses, and job-related expenses.
These are the types of income considered when determining GIS eligibility.
How much will I receive in GIS benefits?
For specific benefit payment amounts based on your GIS income, it is recommended to visit Service Canada’s website. The payment levels for GIS are regularly evaluated and adjusted according to the Consumer Price Index. It’s important to note that your monthly payments will not decrease if the cost-of-living decreases.
Delaying your Old Age Security (OAS) until the age of 65 in order to receive a higher OAS amount will not increase your monthly GIS payment.
As an example, as of July 2017, the maximum monthly GIS payment for a single person with no other income considered for GIS is $840.86.
For the year 2022, the following income thresholds apply for GIS eligibility based on 2021 income:
- Single individuals with a total income of less than $17,544.
- Married/common-law couples where both are OAS retirees, with a combined total income of less than $23,184.
- OAS pensioners whose spouse/common-law partner does not receive OAS, with a total annual income of less than $42,048.
Additionally, for every $2 an individual earns, $1 is deducted from the GIS payment.
To get the precise benefit amounts for your specific situation, it is recommended to consult the official resources provided by Service Canada.
If you and your spouse or partner are forced to separate due to circumstances beyond your control, such as requiring long-term care, you may be eligible for additional benefits based on your income. This applies to couples who receive both the Guaranteed Income Supplement (GIS) and the Allowance as of January 1, 2022.
To document your living situation and the date you were first compelled to live apart, both you and your spouse or common-law partner must complete the Statement – Spouses or Common-Law Partners Living Apart for Reasons Out of Their Control.
Applying for the Guaranteed Income Supplement To apply for the Guaranteed Income Supplement, you must submit a written application using the Guaranteed Income Supplement or Statement of Income for the Allowance or Allowance for the Survivor application form (ISP3025). Send the completed form to the nearest Service Canada office.
If you are automatically enrolled in the Old Age Security (OAS) pension, it is recommended to apply for the GIS three months before your 65th birthday. You can request an application form by calling Service Canada at 1-800-277-9914. The documentation requirements may vary depending on your marital status, application type, and whether you are applying for the first time.
The application kit will include a list of documents you need to submit. If you are married, you may be asked to provide a marriage certificate. In some cases, a “statutory declaration” and other documentation may be required if you and your common-law partner (regardless of gender) are living together.
Service Canada will inform you in writing about the approval status of your application. They will also let you know if any additional information or evidence is required to make a decision.
The Guaranteed Income Supplement (GIS) is calculated based on your annual income or the combined income of you and your spouse or common-law partner, which may vary from year to year. To automatically renew GIS, simply complete your income tax return by April 30. There is an exception to the income-based calculation if you have experienced a loss or reduction in ongoing income sources, such as job income, pensions, or employment insurance (EI) benefits. This exception applies to all payment years from July to June.
Renewal of your GIS can be done easily by filling out and mailing an application form. Even if you submit a tax return, if you receive a renewal form, it must be completed and returned promptly with the relevant income information.
Each July, you will receive a letter notifying you of the new monthly payment amount based on your income from the previous year. If your income from the previous year was too high to qualify for GIS, your payment will be discontinued as stated in the letter.
If your future income is expected to decrease due to a reduction or cessation of pension income, it is advisable to contact Service Canada. In such cases, Service Canada may calculate your GIS based on projected income for the current year instead of using the previous year’s income.
If you are outside of Canada for more than six months, your GIS payment will be suspended. However, when you return to reside in Canada, you can re-apply for GIS.
The GIS benefit is determined based on per-capita income, not assets. It is possible to have significant assets and still be eligible for GIS.
Earnings from other benefits reduce the amount of income you receive from GIS. For each dollar earned, the GIS amount is reduced by half. The Alberta Seniors Benefit is reduced by 18 cents for every dollar earned in Alberta, resulting in a total reduction of 68 cents. Even if you do not pay income tax, there is still an effective “tax” rate of 68 percent. High-income individuals may still be eligible for medical benefits.
To maximize your GIS benefit, consider various steps to determine your eligibility based on your specific situation.
Regarding savings, the order of preference from greatest to least impact on benefits is as follows:
- Income earned within a Tax-Free Savings Account (TFSA), which does not affect your GIS.
- Income from taxable accounts, which is taxable and reduces your GIS.
- Retirement accounts such as RRSPs, which are taxable upon withdrawal and decrease your GIS.
One strategy to avoid the GIS clawback is to own your own home, as its value can increase, and maintenance costs are typically lower than increasing rent.
Plan ahead for your GIS eligibility several years before you start receiving payments. Consider options like collecting CPP early or withdrawing funds from a small RRSP a year or two before you become eligible for GIS. If you have assets with unrealized capital gains, selling them quickly can also be beneficial.
Once you qualify for GIS, develop a strategy to keep your income below the threshold each year to maximize benefits. This may involve maximizing income for a year without benefits, followed by a couple of years with reduced income and collecting benefits.
A few years after becoming eligible for GIS, you may consider withdrawing any remaining RRSPs or RRIFs and placing the funds in a tax-advantaged savings account. Alternatively, collapsing the account and using non-registered funds to purchase a prescribed annuity can be an option if you wish to convert your RRSP into an annuity. Only the interest portion of the annuity will impact your GIS benefit.
The Guaranteed Income Supplement (GIS) is an income-tested benefit that requires you to be a legal resident of Canada and receive an old-age security pension to qualify. Service Canada’s website provides information on the maximum annual income allowed. For individuals with no additional income, the monthly GIS payment is $840.86.
Couples who receive both GIS and the allowance may be eligible for additional benefits starting January 1, 2022. GIS payments are based on annual income, and automatic renewal is done by filing a tax return before April 30. It’s important to note that GIS is calculated per person, not based on assets. To maximize your returns, consider investing in high-growth opportunities within your Tax-Free Savings Account (TFSA) while still receiving GIS benefits.
Keep in mind that once the TFSA contribution limit is reached, most investment income will be deducted from your GIS. It is advisable to plan for your GIS eligibility several years in advance.