Tag Archives: GIS

Low Income in Retirement: a Roundup of Articles about the G.I.S.

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I haven’t looked at the statistics but I have looked around me and I’ve concluded that most Canadians will be facing a low income in retirement. I know far more people that rent apartments than that own homes, and that work in retail than that work in high-paying corporate jobs. Our own income will take a serious nose dive in retirement, if we actually stop working. As a consequence, I usually read articles I find on low income living in retirement. Sometimes I write them, too.

Previous articles I have written about the Guaranteed Income Supplement include:

Reading around the internet I have found other interesting articles as well.

The Marilyn Denis show offers sound succinct “Advice on TFSAs vs RRSPs for low income earners.”

Michael James on Money helps a older couple decide how to best collapse their RRIF to minimize the loss of the GIS in “Handling RRSPs and RRIFs for Low-Income Seniors.”

An older article on CBCnews explains why TFSAs were needed not just wanted. Low income earners should generally be saving for retirement in a TFSA rather than a RRSP to prevent harsh claw backs of benefits including health benefits and the GIS in retirement. See: “Clawbacks: How governments give and take”
Some other benefits of TFSAs are explored more recently in: “Tax-free savings accounts are flexible, convenient but underused.”

Solving the Money Puzzle explores a likely low income retirement in How To Budget For Big Expenses In Low Income Retirement?

The Canadian Association of Retired Persons (CARP) website has some useful information for those facing a low income in retirement. You may wish to start with Retiring on a low income – A Helpful Toolkit by John Stapleton
It includes links to valuable articles such as “Determining OAS and GIS (Guaranteed Income Supplement) eligibility for people who come to Canada as adults: A toolkit”

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Do you or does someone you know receive the GIS? Do you have any tips to share with others? If so, please leave a comment.

What is the Guaranteed Income Supplement, GIS, and Will I Get It?

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Canada has two income support programs for older persons which have similar sounding names: the OAS and the GIS. The Old Age Supplement, OAS, is a payment made to older Canadians based on how long they have lived in this country. But what is the GIS and who gets it?

Guaranteed Income Supplement, GIS, is a Minimum Income Guarantee

First just let me say I hope you don’t ever get the GIS. I’m not being mean. It’s just that only people with a very low income get it.

The strange name for this payment is an attempt to summarize why it exists. The GIS was and is intended to “top up” an elderly person’s income to a minimum level. It is intended to “guarantee” elderly people have enough money to survive on. (Not live on, mind you, just survive.)

The amount of GIS a person can receive is based on their income from all sources.

In 2013, the GIS is intended to ensure a single elderly person has an income of  $16,679.99 plus the OAS.

Why was the GIS Introduced?

One major reason that GIS was needed is that many pensions, especially private employment pensions, are not indexed for inflation. When inflation was in the 8-12% range for several years, that meant a person’s pension dropped in real value by 20-60%! A pension that seemed quite reasonable at retirement could no longer pay even the basic bills.

According to the History of Pensions, in 1967, in an attempt to reduce elderly poverty the GIS was introduced as a temporary measure. It soon became permanent.

The Maximum Income You Can Have and Still Get GIS Payments Varies for Singles and Couples

The income test changes each year based on inflation and other factors. Check the Service Canada website for the most recent limits.

The following limits were in effect in October 2014:

For single persons including widows and widowers:
“If your yearly income exceeds $17 088, you do not qualify for the Guaranteed Income Supplement.”

For married and common law partners, both receiving the OAS:
“If your combined yearly income exceeds $22 560, you do not qualify for the Guaranteed Income Supplement.”

For married and common law partners, where the other partner is not receiving the OAS:
“If your combined yearly income exceeds $40 944 you do not qualify for the Guaranteed Income Supplement.”

Am I Eligible to Get the GIS?

To be eligible to receive the GIS, you need to

  • be eligible and receiving the OAS
    (that means you have to have been a resident of Canada for a certain number of years after you turned 18; be 65-67 or older; etc.)
  • have a low income below the threshold. If married or living common law, there is a different threshold for the combined income of the spouses or partners.
  • apply each year by sending in a form or by completing and filing their federal annual income tax return by April 30

The eligibility rules for sponsored immigrants are complicated. If you are in this category, please contact Service Canada for a detailed explanation.

What “Income” Does the CRA Count When Deciding Who is Eligible to Get the GIS?

The “income” the CRA uses to decide if you are eligible to receive the GIS is a bit different than the “income” you report on your tax return.

According to the Service Canada website for GIS calculations, income includes
all the sources of income reported on your tax return

  • earnings-related retirement pension income
  • foreign pensions
  • interest income
  • dividend income
  • rent income
  • wages (you are allowed to earn $3500 a year though and to contribute to CPP and EI without penalty)
  • worker’s compensation payments, etc.

If in doubt, you can contact Service Canada to inquire about the details.

Is the GIS Taxed?

Unlike the OAS, the GIS is not taxed!

Can I Get the GIS If I Leave Canada?

No. You can get payments for 6 months after you leave Canada, but after that payments cease.

Related Reading

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Have you or a friend or relative discovered any quirks on the GIS system? Please share your experiences with a comment.