Tag Archives: OAS

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.

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Why the Government Should Say CPP is Failing and OAS Will be Ended

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When I graduated from university, just slightly after the last sabre-tooth tiger was exterminated and the cyber-tooth tygers were just emerging from their lairs, CPP was in trouble. The news was full of stories about how the plan was faltering. Underfunded, misunderstood and unappreciated the talk was not just about if CPP would go bankrupt but when it would be bankrupt.

This was also a time of high youth unemployment. I went through in Engineering rather than in what interested me because engineers were getting jobs. Some of my classmates told me they would have preferred to major in urban geography, history and pure chemistry. They had all put those hopes on hold in order to have a hope of getting a job at graduation.

When I graduated, I and most of my family and friends dispersed from our homes like heat-seeking missiles searching for the cities and towns in far-flung provinces and territories where there was work. None of us expected to get to stay near our parents. You had to be mobile to have a hope.

The Threat of CPP Bankruptcy Provides an Excellent Incentive

Against this background of determination and desperation, the warning cries about the CPP were heard. I, and many of my new hire friends, were watching our parents getting forced out of the work force by mandatory retirement and forcible “early retirement.”

Seeing their retirement financial needs led us to consider our own. They had CPP. But if we didn’t, what would we have?

Most of us, cynical and disbelieving in Ottawa’s ability to do anything useful, decided it would be up to ourselves to fund our own retirements. We started putting money in RRSPs. (There were no TFSAs.)

Early Investing Earns Dividends

The benefits of investing in our RRSPs in our early 20s are readily apparent now. All those annoying books are right: time does help investments grow.

So Why Should Ottawa Announce a Funding SNAFU for CPP?

Recently the news has been full of feel good stories about the CPP. The plan is financially sound for 75 years. The investment team is earning returns of 7% or better. Everyone should relax and applaud.

The problem with this news is it’s too good. Without fear or even better a genuine belief that CPP will be gone in 40 years, where is the incentive for an under-employed, student-loan-encumbered new graduate to save for retirement?

I waited 1.25 years after I started work to buy a TV. It wasn’t purchased, paid for in cash of course, until I’d maxed out my RRSP contribution for both of those years.

Are today’s graduates willing to live without a TV, or more realistically a cell phone, for over a year so they can save for a retirement 40 years from now? I doubt it.

What will motivate them to save?

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Are you motivated to save for retirement? Why? Please share your experiences with a comment.