Most Canadians approaching retirement know that they will have some retirement income through the Canada Pension Plan (CPP) and Old Age Security (OAS) programs. Many, however, are unaware that there is a third federal program, the Guaranteed Income Supplement (GIS), which provides an additional monthly income amount to eligible individuals. While there is no need for an individual to apply to receive an Old Age Security benefit, anyone who wishes to receive the GIS must apply to do so. Automatic enrollment in GIS is something that is planned for future implementation, but is not yet in place. Finally, while the OAS benefit is a standard amount for most recipients, the rules governing eligibility for GIS, and the amount an individual will receive, are more complex.
The first and most basic rule of GIS eligibility is that GIS is paid only to individuals who are already receiving the Old Age Security benefit. Canadians can begin receiving such OAS benefit at age 65, or can defer receipt of that benefit up until the age of 70. However, regardless of the age at which an individual chooses to begin collecting OAS, he or she cannot receive the GIS until that OAS benefit has started.
There is a perception that GIS benefits are available to only the lowest income seniors. While it is true that eligibility for the GIS is tied to income, the current reality is that in the first quarter of 2017, nearly 2 million Canadians, or nearly one-third of those who collect OAS, also received GIS benefits.
The basic rule is that single (or divorced or widowed) individuals who have less than $17,688 in net income for the previous year are eligible to receive at least partial GIS benefits each month. Once net income exceeds the $17,688 threshold, eligibility for GIS is eliminated. That figure is somewhat deceiving, however, as not all income sources are treated the same way when it comes to determining net income for purposes of assessing GIS eligibility. When determining such eligibility, the sources from which income is received is nearly as important as the amount of that income.
Generally, in calculating net income for purposes of determining GIS eligibility, the following income amounts are included:
- Canada Pension Plan or Quebec Pension Plan amounts;
- Amounts received from a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF);
- Amounts received from a registered pension plan (i.e., an employer-sponsored pension plan); and
- Investment income (interest, dividends, etc.) from all sources.
The following income amounts are not included in net income for purposes of determining GIS eligibility:
- Old Age Security amounts; and
- Withdrawals from a Tax-Free Savings Account (TFSA).
Finally, many retirees work part-time, whether out of financial need or for social reasons. In calculating net income to determine GIS eligibility, an exemption is provided for the first $3,500 in employment income earned each year.
In 2017, an individual who is single, divorced, or widowed and is eligible for a full GIS amount will receive $871.86 per month. That amount is reduced as income increases and is eliminated entirely where the individual’s net income exceeds the $17,688 cut-off.
A similar calculation is required for taxpayers who are married. The net income calculation is the same, but the cut-off amount above which GIS eligibility for both spouses is eliminated, where both spouses are receiving OAS, is $23,376. Where one of the spouses does not receive OAS, the combined income threshold for GIS eligibility is $42,384. More information on the benefit and income cut-off amounts for the current quarter (July to September 2017), as well as links to tables which will show the exact amount of GIS payable at different income levels, can be found on the Canada.ca website at https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/payments.html.
A final note — where individuals receive the Guaranteed Income Supplement, whether the full benefit or partial amounts, all such amounts received are non-taxable.