The Guaranteed Income Supplement (GIS) is a social safety net for low-income seniors in Canada. As the name implies, it’s a program meant to supplement your income up to a guaranteed minimum level.
When talking with clients, many are aware of the existence of GIS, yet almost all of them share the same questions: Who qualifies for the GIS benefit? How much can you receive? How can a person maximize potential benefits?
Who Qualifies:
In order to qualify for GIS payments, you must already be receiving Old Age Security (OAS) income. The programs are intertwined; so if you’ve applied for OAS then your qualification for GIS will be considered at the same time and reviewed each year. OAS benefits can begin as early as age 65 or as late as age 70, meaning you must be at least 65 years old in order to start receiving GIS.
The second factor in qualifying, after age, is your taxable income (excluding OAS benefits). GIS benefits are income-tested but also classified based on your household situation. There are four main household scenarios for calculating GIS:
- If you’re single, widowed or divorced, your annual income must be less than $19,248 to receive any GIS support.
- If your spouse/common-law partner receives full OAS benefits, your combined incomes must be less than $25,440 to receive GIS support.
- If your spouse/common-law partner doesn’t receive OAS or GIS, your combined incomes must be less than $46,128 to receive GIS support.
- If your spouse/common-law partner receives GIS themselves, your combined incomes must be less than $46,128 to receive GIS support.
How Much Can You Receive?
The short answer is: it depends! The long answer is there is a wide range of monthly (tax free) income options, ranging from less than $1 up to a maximum of $948.82 (as of October 2021). GIS benefits are clawed back very quickly as your taxable income grows, starting from the very first dollar. To understand how much you could be eligible for, check out the Government of Canada Website and search for the household scenario and income level applicable to you.
GIS benefits are adjusted for inflation and increased according to the Consumer Price Index each quarter to keep up with the cost of living.
How Can A Person Maximize Potential Benefits?
Given GIS is meant as a social safety net, relying on the program likely shouldn’t be a main focus of your retirement plans. However, you may find you can anticipate some earning years that flirt with the GIS limits. In these years, you might just be able to adjust your taxable income to capture some additional retirement resources. You can lower your income for a year or more by:
- Deferring the start date of your Canada Pension Plan benefits past the age of 65.
- Deferring receiving income from RRSPs or a Pension to a future year.
- Deferring receiving salary or dividends from a closely held corporation.
- Taking withdrawals from Non-Registered accounts or TFSAs to cover expenses.
If your retirement assets afford you the luxury of timing out incomes correctly, you may be able to boost your overall retirement plan by tapping into the GIS benefit for a year or more. This program is the perfect example of the importance of strategizing your retirement income sources, years in advance. If you take the wrong steps, the benefits are easily out of reach. If you take the right steps, you may find you have more money in retirement than you ever anticipated!
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