Seniors -> Guaranteed Income Supplement
Guaranteed Income Supplement (GIS) for Canadian Seniors, and the Allowance
Old Age Security Act Part II s. 10-18
COVID-19 Update: On May 12, the Prime Minister announced a one-time tax-free payment of $300 for seniors eligible for the Old Age Security pension, with an additional $200 for seniors eligible for the GIS. This means, of course, that high-income seniors will also be receiving the $300 additional OAS payment. GIS and Allowance payments will be temporarily extended if seniors' 2019 income information has not yet been assessed. As per One-time tax-free payment for seniors, seniors eligible to receive the OAS or GIS in June 2020 will receive the tax-free payment. As per a June 4, 2020 announcement, the payment will be received during the week of July 6th. See all COVID-19 Financial Relief Resources.
The Federal Guaranteed Income Supplement (GIS) is available to low-income seniors living in Canada, who are receiving (or are eligible to receive) the Old Age Security Pension (OAS). An application must be filed to receive this supplement - it is not done automatically when you file a tax return.
Once a person is receiving the GIS, it will be automatically adjusted each year after the income tax return is filed. However, if there is a reduction in your pension or employment income, Service Canada may calculate your GIS benefit by estimating your pension and employment income for the current year, instead of using last year's pension and employment income. If you or your spouse or common-law partner have a lower income this year for either of these reasons, you should contact Service Canada. Your benefits may increase.
For April to June 2020, the maximum combined payment from OAS plus GIS is $1,514.78 ($613.53 OAS + $916.38 GIS) per month, for a single person. This maximum is reached if there is no income other than OAS and GIS. The $916.38 includes the top-up.
See the Old Age Security Payment Amounts to get an idea of how much you might receive from OAS and GIS. If you receive the maximum OAS pension, the amount you might receive from GIS can be estimated using the Service Canada interactive tables of rates on the same web page.
Income from OAS is taxable, but income from GIS, the Allowance, and the Allowance for the Survivor is tax-free. However, it is reported on Line 14600 (line 146 prior to 2019) of the personal income tax return, so is included in Line 15000 (line 150 prior to 2019), Total Income for Tax Purposes and Line 23600 (line 236 prior to 2019), Net Income for Tax Purposes. It is later deducted on Line 25000 (line 250 prior to 2019) of the tax return, so is not included in Taxable Income. See our article on Taxable Income for an explanation of how this affects your income tax and income-tested benefits.
The amount of GIS payable depends on marital status and total income for the prior year. Total income for GIS purposes for most people is income from line 23600 of the personal income tax return (this will include CERB, CRB, CRCB, CRSB and CESB payments received, none of which are classed as employment income), less
Each $2 of income reduces GIS by $1.
For exact details on what income from your tax return is included or excluded for purposes of calculating the GIS, see the GIS application form and instructions from the Service Canada OAS Forms page. Choose form Form ISP3026, which has a complete list of what is and is not included in income, and shows the tax return line numbers.
Form ISP3025 is the application form, which requires very little input.
Form ISP3056 is a Reference Guide for the application for the OAS pension and the GIS.
The exemption amount was increased from $3,500 to $5,000 by the Federal 2019 Budget and the exemption is extended to self-employment income beginning with the July 20-21 benefit year. The amendments also include a partial exemption of 50% to apply on up to $10,000 of annual employment and self-employment income beyond the new threshold of $5,000 for each GIS or Allowance recipient, as well as their spouse. This would increase the maximum total exemption for employment and self-employment income to $10,000 ($5,000 + 50% x $10,000). Enhancements to the GIS earnings exemption also begin with the July 20-21 benefit year. For more information see Improving the Economic Security of Low-Income Seniors in the Federal 2019 Budget.
GIS Exemption Examples:
The following examples apply starting with the July 20-21 benefit year:
- Senior with $4,000 of net employment and self-employment income would have an exemption of $4,000.
- Senior with $8,000 of net employment and self-employment income would have an exemption of $6,500 ($5,000 + 50% x $3,000).
- Senior with $15,000 or more of net employment and self-employment income would have the maximum exemption of $10,000 ($5,000 + 50% x $10,000).
It appears that a senior receiving GIS, who would have had up to a $10,000 exemption in 2020 for employment and self-employment earnings, but who instead received only CERB, CRB, CRCB, CRSB or CESB, will lose their exemption, because these earnings are not classified as employment or self-employment earnings. If we hear anything to the contrary, we'll revise this article.
Employees who had their wages subsidized by the Canada Emergency Wage Subsidy (CEWS) will not be affected, as it was the employer receiving the subsidy, not the employee.
GIS Eligibility Based on Income
The following would be eligible to receive GIS for October to December 2020:
Although the GIS is normally determined based on the previous year's income, if an OAS pensioner or spouse retires or has a reduction in income for some other reason, as per s. 14 of the Old Age Security Act, Service Canada may use an income estimate for the current year to determine eligibility. However, if the actual income is later determined to be different from the estimated income, s. 18 of the OAS Act allows for an adjustment of the GIS paid. This could result in additional GIS being paid, or excess GIS being deducted from future payments.
Applying for OAS and GIS
Proactive enrolment for OAS and GIS was implemented in a phased-in approach from 2013 to 2016, so that applying is longer be necessary for most people. Some people still must apply for the OAS and GIS. If you can be automatically enrolled, Service Canada will send you a notification letter the month after you turn 64. See Applying for the Old Age Security on the Service Canada website.
For more information, see Guaranteed Income Supplement on the Service Canada website.
Yes, this is true even if you have capital losses carried forward that will eliminate the capital gains, and is also true of the age amount clawback. This is because the GIS amount payable is calculated based on your net income before adjustments on line 23400 (line 234 prior to 2019) of your tax return. The capital losses (and non-capital losses) carried forward are deducted after this, on line 25300 (line 253 prior to 2019). The total taxable income is on line 26000 (line 260 prior to 2019) of your tax return. See our article on how to calculate Total Income For Tax Purposes, Net Income For Tax Purposes, and Taxable Income.
The Allowance is available to 60 to 64 year old spouses/common-law partners of OAS pensioners who receive the Guaranteed Income Supplement (GIS). The Allowance is available when 2019 combined annual income of both spouses (excluding OAS and GIS) is less than $34,416.
The Allowance must be applied for. For more information, see Allowance Program on the Service Canada website.
Allowance for the Survivor (ALWS)
The Allowance for the Survivor may be available if your spouse or common-law partner has died, you are 60 to 64 years old, and your 2018 annual income (again, excluding OAS and GIS, etc.) was less than $24,816. See the Service Canada web page on The Allowance for the Survivor.
Income from the Allowance is tax-free.
Allowance - Change in eligibility age
This was rescinded.
The Federal 2016 Budget was followed by Bill C-15 to increase the Guaranteed Income Supplement (GIS) top-up benefit for single seniors by up to $947 annually starting in July 2016, more than doubling the current maximum GIS top-up benefit. Single seniors with annual income (other than OAS and GIS supplement benefits) of about $8,816 or less would receive the full increase. The $8,816 does not include the first $3,500 of employment income.
The 2016 Budget also brought in higher benefits to senior couples who are living apart for reasons beyond their control, when they are recipients of GIS and the Allowance, by basing the benefits on their individual incomes. This situation is known as involuntary separation, and the new treatment became effective January 1, 2017. An example is when one spouse moves to long term care. Eligible GIS/Allowance recipients must advise Service Canada of their situation by submitting the Statement - Spouses or Common-law Partners Living apart for Reasons Beyond their Control.
The Budget also announced that the Government is looking at how a new Seniors Price Index that reflects the cost of living faced by seniors could be developed to be used as the index for increasing the OAS and GIS.
Government of Canada Resources
Ontario Guaranteed Annual Income System (GAINS) benefit rates - includes OAS and GIS, in Excel format
Revised: April 18, 2021
Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved. See Reproduction of information from TaxTips.ca