What Is The Guaranteed Income Supplement (GIS) & How to claim it?

Those receiving Old Age Security (OAS) and residing in Canada who have a low income may be eligible for a monthly non-taxable benefit from the Guaranteed Income Supplement (GIS). To be eligible for the GIS benefit, you must be a legal Canadian resident and receive an old-age security pension. It is an income-tested benefit, which means that your previous year's yearly income (or combined income for couples) is used to determine eligibility. The maximum annual income amount is available on the Service Canada website.

What Is Considered to Constitute Income?

Because GIS is a senior poverty reduction program, its impact rapidly decreases when alternative income becomes available. You and your spouse or common-law partner must present the following income when applying for the GIS benefit:

Benefits from the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP). Death payments from the CPP are not included.

  • Personal pensions and retirement savings schemes
  • Registered Retirement Income Fund (RRIF) withdrawals and foreign pension income (lines 115 and 116). A tax compact with the nation where you get your pension counts as receiving a foreign pension.
  • Registered Retirement Savings Plans (RRSPs) that you redeemed throughout the year (line 129).
  • benefits from employment insurance, including benefits for workers' compensation. Lines 119 and 144.
  • Interest and other investment income (line 121) (line 121)
  • Any capital gains or taxable dividends (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120 and 127) (lines 120).
  • Does any employment income exceed $3,500?
  • Workers' compensation payments, alimony, and other sources of income
  • Other deductions, such as union dues, RRSP deduction, relocating fees, and other job expenditures,

Benefit Payment Amounts

Service Canada's website is the best place to find out how much you'll get in benefits based on your GIS income.

The GIS benefit payment levels are evaluated regularly and are adjusted to the Consumer Price Index. Your monthly payments will not go lower if the cost of living goes down.

If you want to wait to get OAS until you are 65 years old to obtain a larger OAS amount, it won't boost your monthly GIS payment amount.

For example, as of July 2017, the maximum GIS payment for a single person is $840.86 per month, if there is no income that is being looked at for GIS.

The following would be eligible to receive GIS in 2022, depending on 2021 income:

  • Single people with a total income of less than $17,544.
  • Married/common-law couple, both OAS retirees, with a combined total income of less than $23,184
  • OAS pensioners whose spouse/common-law partner is not getting OAS, with a total yearly income of less than $42,048
  • Every year, $1 is deducted from the GDP for every $2 that an individual earns.

Relationships

If you and your spouse or partner have to separate because of something that happened outside of your control (like needing long-term care), you may be able to get more benefits based on your income. This is the case for couples who get both the GIS and the allowance as of January 1, 2022.

Your husband or common-law partner and you must fill out the Statement – Spouses or Common-Law Partners Living Apart for Reasons Out of Their Control, which explains your living situation and says when you were first forced to live apart.

Approval of a Supplemental Income Guarantee

You must apply in writing for the Guaranteed Income Supplement using the Guaranteed Income Supplement or Statement of Income for the Allowance or Allowance for the Survivor application form (ISP3025) (ISP3025). Send the form to the closest Service Canada office.

Apply for your GIS three months before your 65th birthday if you are automatically enrolled in the OAS pension. You may also acquire an application form by calling Service Canada at 1-800-277-9914. Documentation requirements vary according to your marital status, application type, and if you are applying for the first time.

In the application kit, you'll find a list of papers you'll need to submit. If you are married, you may be asked to submit a marriage certificate. There are times when a "statutory declaration" and other paperwork are required if you and your common-law spouse (whether of the same or the opposite sex) are living together.

Service Canada will notify you in writing whether or not your application was approved.They will also let you know if more information or evidence is needed to make a decision on your application.

Maximizing Benefits

The Guaranteed Income Supplement is based on your yearly income, or the combined annual income of you and your husband or common-law partner, and that annual income might fluctuate from year to year. By April 30, GIS will be automatically renewed by just completing an income tax return by April 30. There is an exception to the rule that GIS payments are based on income from the previous calendar year if you have lost or reduced an ongoing source of income, such as job income, a pension, or employment insurance (EI) benefits. This exception applies to all payment years (July to June).

Renewing your license will be as simple as filling out an application form and mailing it in. Even if you submit a tax return, if you get a renewal form, you must complete it and ship it back as soon as you obtain the relevant income information.

You will get a letter in July each year informing you of the new monthly payment amount depending on your income from the previous year.

  • In July of the current year, if your income from the previous year was too high to qualify for GIS, you will not get GIS. Your payment will be discontinued as specified in the letter.
  • If your income will be lower in the future because of a decrease or cessation of pension income, you should contact Service Canada. In these cases, Service Canada may calculate your GIS by projecting your income for this year instead of using last year's income.
  • If you are out of the country for more than six months, your GIS payment will be suspended.
  • If you do remain outside Canada for more than six months, you may re-apply when you return to reside in Canada.

The GIS benefit is calculated on a per-capita basis, not on the basis of assets. It's possible to have considerable assets and yet get a GIS benefit.

Gains from benefits diminish the amount of income you get from the GIS by half for every dollar you earn. The Alberta Seniors Benefit is reduced by 18 cents for every dollar earned in Alberta, for a total of 68 cents. There is still a "tax" rate of 68 percent even if you don't pay any income tax. People who make a lot of money can get medical benefits as well.

To maximize your GIS benefit, you may take several steps to see whether you qualify. You have to decide, based on your own situation, which, if any, of the proposals to use.

Where should your savings be? The following list is from greatest to worst:

  • Income earned within a Tax-Free Savings Account (TFSA) and withdrawals from a TFSA has no effect on your benefit.
  • taxable account. Your income is taxable and decreases your benefit.
  • RRSP, or another retirement account. Your total value is taxable and decreases your benefit when withdrawn.

The ideal investment is to purchase the next Google in your TFSA and collect GIS while it multiplies 100 times. For the most part, this isn't conceivable. Once your funds surpass the TFSA limit, most of your investment income will be taken back through lower benefits.

One option to avoid the clawback is to own your own house. The house can increase in value. And maintenance expenditures should be less than continually growing rent.

Plan for your GIS several years before you start getting money from the program.

  • If feasible, you might try collecting CPP early.
  • If you have a tiny RRSP, you may want to consider withdrawing the funds a year or two before you reach the age of eligibility for the Guaranteed Income Supplement (GIS).
  • If you have assets with unrealized capital gains, you may sell them. Since there is no cosmetic benefit, you may sell them back quickly.

As soon as you're qualified for GIS, you'll want to develop a strategy to keep your income below the threshold each year. As a result, you get no benefits. It would be preferable to maximize your income for one year, followed by no benefits. And then they have a couple of years of decreased income and collecting benefits.

A few years after being eligible for GIS, you may be able to pay out any RRSPs or RRIFs you still have. Place the funds in a tax-advantaged savings account. Alternatively, if you wish to turn your RRSP into an annuity, you might collapse the account and use the non-registered funds to purchase a prescribed annuity. Only the interest part of the annuity will cut your GIS benefit.

Conclusion

The GIS is an income-tested benefit. You must be a legal resident of Canada and be receiving an old-age security pension in order to qualify. GIS is an anti-poverty program. Service Canada's website has the maximum annual income amount. GIS payment for a single individual is $840.86 per month if no income is included.

Couples receiving both GIS and allowance as of January 1, 2022, may be eligible. The GIS is dependent on your annual income. By April 30, GIS will be renewed automatically by filing a tax return. The GIS benefit is calculated per people, not per asset. To maximise returns, buy the next Google in your TFSA and collect GIS while it triples.

The TFSA cap is reached, most investment income is reclaimed. Plan for your GIS several years before the programme pays you.

Written By:
Salman Rundhawa
Salman Rundhawa is the founder of Filing Taxes. Salman provides valuable tax planning, accounting, and income tax preparation services in Toronto, Mississauga, Oakville, and Hamilton.

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