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Does OAS count as income for GIS? Understanding the Exclusions

6 min read
Retirement Government benefits Pensions

According to Service Canada, your Old Age Security (OAS) pension is specifically excluded from the calculation of your Guaranteed Income Supplement (GIS) benefit. The question of “Does OAS count as income for GIS?” is a common concern for low-income seniors, as it significantly impacts their eligibility and benefit amount. This article clarifies how these two vital Canadian benefits interact.

Quick Summary

Old Age Security (OAS) is not included in the income calculation for the Guaranteed Income Supplement (GIS). Your GIS entitlement is based on your other annual net income and marital status, separate from your OAS benefit. To receive GIS, you must be a low-income senior already receiving OAS.

Key Points

  • OAS is not GIS income: The Old Age Security (OAS) pension is explicitly excluded when calculating your income for the Guaranteed Income Supplement (GIS).

  • GIS is non-taxable: While OAS is a taxable benefit, the GIS is a non-taxable monthly payment for low-income seniors.

  • File taxes annually: To ensure your GIS payments continue, you must file your income tax return each year so Service Canada can automatically reassess your benefit.

  • Most other income sources count: Income from sources like the Canada Pension Plan (CPP), private pensions, and RRSP withdrawals do count when determining your GIS eligibility.

  • Report income changes: If your income has recently dropped, such as after retirement, you can inform Service Canada to have your GIS benefit potentially increased sooner.

  • Eligibility based on net income: The amount of GIS you receive is determined by your annual net income, and if you are in a relationship, your combined household income.

  • OAS is a prerequisite: You must be eligible for and receiving OAS in order to qualify for the GIS, but the OAS amount itself does not count against your income for GIS.

In This Article

Understanding the Relationship Between OAS and GIS

Many Canadians assume that since both Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) are federal benefits, one must affect the other in a direct, taxable manner. However, a key distinction exists in how income is assessed for GIS purposes. The GIS is specifically designed to provide a financial top-up to low-income seniors who are already receiving OAS. The amount of GIS you receive is determined by your net income from the previous year, with your OAS payments being a key exclusion from this calculation. This ensures that your eligibility for the supplement is based on your other financial resources, rather than reducing the overall support you receive from the government.

How your GIS is Calculated

To determine your GIS entitlement, Service Canada uses the net income reported on your annual tax return. This calculation considers most sources of income, but explicitly excludes payments from OAS, GIS, and other related benefits. Your marital status is also a critical factor in this process, as combined household income is used for couples. The lower your other reportable income, the higher your potential GIS benefit, up to the maximum amount for your situation.

What income is considered for GIS?

While your OAS is not counted, numerous other income sources are used to determine your GIS eligibility and amount. It is crucial to report all relevant income to the Canada Revenue Agency (CRA) by filing your annual income tax return. This process allows Service Canada to automatically recalculate your benefit for the upcoming year based on your financial situation. Some common income sources that are considered include:

  • Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits: Unlike OAS, benefits received from CPP are considered income for GIS purposes.
  • Private or Foreign Pensions: Any other pension income you receive from former employers or foreign governments is included.
  • RRSP Withdrawals: Income from Registered Retirement Savings Plans (RRSPs) that were cashed during the year counts towards your total income.
  • Employment and Self-Employment Income: For those who continue to work, certain amounts of employment income are considered. However, there are specific earnings exemptions that can help maximize your GIS benefit.
  • Investment Income: Interest and other investment income are included in the calculation.
  • Employment Insurance (EI) benefits: Any EI payments received are also counted.

Comparison Table: OAS and GIS

Feature Old Age Security (OAS) Guaranteed Income Supplement (GIS)
Funding Federal government general tax revenues, not contributions. Federal government general tax revenues.
Eligibility Requirement 65+ years old and a Canadian citizen or legal resident, with specific residency requirements. Must be 65+, live in Canada, receive OAS, and have income below a certain threshold.
Counted as Income for GIS? No, explicitly excluded from the GIS income calculation. No, the benefit itself is not counted towards income.
Tax Status Taxable, based on your income level. Subject to a clawback for higher earners. Non-taxable.
Purpose A universal pension for seniors based on residence, not employment history. A monthly supplement for low-income seniors to help cover living costs.
How to Apply Automatic enrollment for many. Paper application required if not automatically enrolled. Automatic for most OAS recipients. May require an application if income has decreased or not automatically enrolled.

The Importance of Filing Taxes for GIS

Since Service Canada relies on information from the Canada Revenue Agency (CRA) to assess your GIS eligibility annually, filing your income tax return on time is critical. Failure to file can lead to a suspension of your GIS payments because Service Canada won't have the necessary income information to recalculate your benefit. Furthermore, if your income has recently dropped significantly (e.g., due to retirement), you can notify Service Canada directly to have your benefit reassessed using your current year's lower income.

Conclusion

In summary, the answer to the question, "Does OAS count as income for GIS?" is no. Canada's Old Age Security pension is purposefully excluded from the income calculation for the Guaranteed Income Supplement. This is a deliberate policy design to ensure that low-income seniors receive a minimum guaranteed income, with the GIS acting as a non-taxable top-up to their OAS pension. By understanding what income is included versus what is excluded, seniors can better navigate their financial planning for retirement. It is vital for all GIS recipients to file their income taxes annually to ensure uninterrupted benefits, and to report significant income changes to Service Canada promptly.

Frequently Asked Questions (FAQs)

What is the Guaranteed Income Supplement (GIS)?

The Guaranteed Income Supplement (GIS) is a monthly, non-taxable payment provided by the Canadian government to low-income seniors aged 65 and over who receive the Old Age Security (OAS) pension.

Do I have to pay tax on GIS payments?

No, GIS payments are non-taxable, meaning you do not have to pay income tax on the amount you receive from the supplement.

How does my marital status affect my GIS?

Your marital status determines the income threshold you must fall under to receive GIS. For couples, Service Canada uses the combined net annual income of both partners to determine eligibility and the benefit amount.

What if my income has decreased significantly since last year?

If you have experienced a major drop in income, such as from retirement, you can inform Service Canada. They can recalculate your GIS benefit for the current year based on your new, lower income, which may result in a higher monthly payment.

What happens if I don't file my income tax return?

If you are a GIS recipient and do not file your income tax return, Service Canada will suspend your GIS payments. They need the income information from your tax return to automatically renew your benefit for the upcoming year.

Is the Allowance for the Survivor counted as income for GIS purposes?

No, similar to OAS and GIS benefits, the Allowance for the Survivor is not considered income when determining eligibility for the Guaranteed Income Supplement.

Does the new 10% OAS increase for seniors aged 75+ affect my GIS?

No, the 10% increase in the OAS pension for seniors 75 and older does not affect the calculation of your Guaranteed Income Supplement. OAS payments themselves are already excluded from the GIS income test.

Citations

Frequently Asked Questions

No, your Old Age Security (OAS) pension is not considered income in the calculation of your Guaranteed Income Supplement (GIS) benefit. The GIS is designed to supplement the income of low-income seniors who are already receiving OAS.

GIS eligibility is determined based on your net annual income from sources other than OAS, GIS, and related allowances. For couples, combined net income is used. Your marital status is also a factor.

No, the Guaranteed Income Supplement is a non-taxable benefit. You do not have to pay income tax on the GIS payments you receive.

For most recipients, GIS payments are automatically renewed based on your annual income tax return. You must file your taxes on time for Service Canada to reassess your eligibility and payment amount for the next year.

If your income decreases significantly, for example due to retirement, you should notify Service Canada. They can recalculate your benefit based on your lower current income, which may increase your GIS payments.

Income from the Canada Pension Plan (CPP), private pensions, RRSP withdrawals, employment, investments, and Employment Insurance (EI) benefits are all considered when calculating your income for GIS.

No, to receive the Guaranteed Income Supplement, you must live in Canada. Eligibility for OAS can differ for those living abroad, but GIS requires Canadian residency.

References

  1. 1
    Service Canada Benefits for low-income seniors
  2. 2
    Guaranteed Income Supplement: How much you could receive
  3. 3
    Guaranteed Income Supplement Explained - Wealthsimple
  4. 4
    Guaranteed Income Supplement (GIS) Payment Dates & Eligibility

Related Topics

#Service Canada #OAS #seniors benefits #GIS #Guaranteed Income Supplement #Old Age Security #Canadian Retirement #income calculation

Medical Disclaimer

This content is for informational purposes only and should not replace professional medical advice. Always consult a qualified healthcare provider regarding personal health decisions.