Guaranteed Income Supplement (GIS) and GIS Clawback

I received an email from a senior reader (married) recently who was wondering what he can do about avoiding the GIS clawback as he was soon due to convert his RRSP to an RRIF thus a forced withdrawal.

Before we get into the question, lets start with the basics.

What is Guaranteed Income Supplement (GIS)?

GIS is a non taxable benefit for low income seniors which basically tops up Old Age Security (OAS).   The maximum GIS benefit is approximately $7,800 per year, which combined with OAS (max $6,200/year) is around $14,000 per year.

In addition to the extra cash, there are other benefits as well like drug coverage.

Eligibility

To be eligible for GIS, the senior must qualify for OAS and meet the income requirements.  Note that old age security does not count towards income when calculating the GIS threshold.

What’s counted as income (from govt)?

  • Canada Pension Plan or Québec Pension Plan benefits
  • private pension income and superannuation
  • foreign pension income
  • RRSPs that you cashed
  • Employment Insurance benefits
  • interest on any savings
  • any capital gains or dividends
  • income from any rental properties
  • any employment income
  • income from other sources such as workers’ compensation payments, alimony, etc.

Income criteria for eligibility for GIS (from govt site):

  • If single, income for previous year must be less than $15,672
  • If couple with one not receiving OAS, income from previous year must be less than $37,584
  • If couple with both receiving OAS, income from previous year must be less than $20,688

What is the GIS Clawback?

Once the senior starts bringing in income, Guaranteed Income Supplement is clawed back at $0.50 for every $1 of income. It will continue to be clawed back until the maximum income threshold is met as indicated above.

So in the case of my reader question, once his RRSP is converted to an RRIF he will be forced into a regular (and increasing) withdrawal schedule which will be counted as income against his GIS benefits.  When the reader turns 71, 7.38% of his RRIF will be withdrawn as income.  If he has a $50,000 RRSP, $3,690 will be added as income which will reduce his annual GIS benefits by $1,845 (in addition to regular income tax).

With regards to reducing the GIS clawback, if the reader has a younger spouse, he can base the RRIF withdrawal rate based on the age of younger spouse.  That way, he can remain at the lowest withdrawal rate for a bit longer, thus delaying taxation.

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FT

FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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Linda
4 months ago

if you are receiving GIS and sell your primary residence do you lose your GIS

Editor
Kyle Prevost
4 months ago
Reply to  Linda

Not that I’m aware of Linda.

Rob
11 months ago

Need help to understand how GIS clawback works. I was eligible for GIS in 2019 based on 2018 income tax filing. My income actually increased by $15,000 during 2019. Will the government claw back any of the GIS I received in 2019 because of these extra earnings? Will they claw it back on my 2019 tax return or is there another method?
Many thanks for your help with this,
Rob

Vivian Hoeksema
1 year ago

My husband soon to be 65. He lives in an assisted living facility in Edmonton, Alberta. Both our incomes are low. We had a meeting with social worker. Husband will receive all provincial and federal benefits. We are now involuntary separated. I questioned what about my husband’s RRSP, I am the beneficiary. Can I withdraw from RRSP and apply it to my income tax next year to keep husband GIS not getting clawed back?
Both incomes combined is about 32,000.

Tara
2 years ago

Well, we are in 2018 so I hope I get answer.

My situation is simple but until I am told I am not sure:
I have only AOS and GIS as income, nothing else. I hav sold some of my belongings and have now $8,000.00 to keep in a saving account for my funeral expenses. My questions are:
1. Is government going to deduct this $8,000.00 from GIS?

2. I will have about $92.00 in interest in the end of the year, do government will deduct this $92.00 from my GIS?
3. Another thing is confusing for me: When any amount has to be deducted from my GIS, is it when I have earned any interest or my earned interest is above my maximum-income requirement?

Thank you in advance.

bETTY
3 years ago

If a couple receives only a small pension, qualifies for the GIS, and then one year receives $61,000.00 each for the sale of land they each owned a share of, how will this affect their GIS, and for how long?

KS
4 years ago

Hi ,
We migrated from India in 2009 to Canada.Me &my wife would be completing 10 years in 2019.I will be 69 My wife 65 yrs old in 2019.we will have foreign income of $ 25000 during 2019.No other income/ No RRSP.How much OAS & GIS we both would get?

Ann
4 years ago

I am 66 and receive CPP,OAS, Pensions of $13,000 and employment income of $22,000. My total earnings comes up to $37,000 excluding OAS. If I put $21,000 into RRSP will I qualify for the GIS? I am married but live in another province than my husband.

Jennifer
4 years ago

So how does it work with a spouse? “If couple with one not receiving OAS, income from previous year must be less than $37,584”

If $0.50 from every dollar is taken off the supplement, how can the income limit be $37,584?

For my husband and I, my husband will be 65 next fall, and is hoping to get CPP of about $350 (which he started getting at 60) OAS, and the GIS. That will be his income. I am 40, but disabled, and receiving CPP-disability of $630/month plus $400/month in rent from my disabled adult son.

So does that mean he would lose half of the $1380 of our combined monthly income from the GIS?

In that case, we could only have a combined income of $7800 x 2 = $15,600 before the entire amount of the GIS was taken off – not the $37,584 stated; or am I missing something?

On CPP-disability, I can’t make any more. I am on the disability for a reason (Autism and severe anxiety and PTSD issues) So what are we able to do if they will take of $0.50 for every dollar that I receive?

len
4 years ago

This gis is a little confusing..if I didnt work at all ever , never payed taxes..i would receive oas and gis, nice. but if i worked all my life at a lower paying job and between oas and cpp went over the max allowable to collect gis by $1, i would receive nada from the govt in gis? It is a slap in the face of every worker who falls into this scenario..unless i am mistaken and if so could someone tell me thanks

nedo
4 years ago

My Friend is receiving Partial OAS ( aprox. 16o C$) and received GIS last year. His wife is now with him and she is working par-time . She is not receiving OAS ( she is 56 years old). My friend would like to know : What is the limit that she could earn Before he looses GIS.
Appreciate your help