[finiki] Guaranteed Income Supplement (GIS)

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
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[finiki] Guaranteed Income Supplement (GIS)

Post by Peculiar_Investor »

Back when finiki was launched, the Guaranteed Income Supplement - finiki, the Canadian financial wiki article was created, but it had fallen out of date.

A reader used the article feedback tool (AFT) today to indicate a number of the links were dead. As a result, I've reworked the page to eliminate the dead links and reference current Service Canada and CRA information. My challenge is I'm far from eligibility age for CPP/OAS/GIS, but I don't have any hands-on experience with these programs to guide me when updating the article. I've taken my best shot, but ...

For those that have hands-on experience any feedback/updates/comments are most welcome, either via this topic, or using AFT on finiki article, or best of all, be bold and edit the finiki article yourself (PM me if your are not yet an editor).
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Dogger1953 »

Brian - One of the issues with GIS that is commonly overlooked, is that while GIS for any payment year (July to June) is normally based on income from the previous calendar year, there is a provision for basing it on an estimate of your current income IF you have had a loss or reduction in a regularly recurring income such as employment earnings, pension, EI etc.

Here is a copy & paste from one of the Service Canada weblinks at (http://www.servicecanada.gc.ca/eng/serv ... s/oas/gis/ )that explains it a bit more (see the first bullet):
**************************************************************************************************************************************
You must contact us if one of the following situations occurs, since it might change the amount of your GIS payment:
•You or your spouse or common-law partner has a lower annual income due to a retirement or a reduction of pension income (in such cases, we can calculate your GIS by estimating your income for the current year instead of using last year's income).
•Your spouse or common-law partner is incarcerated.
•You marry or separate, or your spouse or common-law partner dies.
•You and your spouse or common-law partner are both receiving the Old Age Security pension and are living apart for reasons beyond your control: for example, one of you is in hospital or living in a nursing home (in these cases, each of you may be allocated the GIS at the single rate if that gives you a higher monthly payment and is to your advantage).
**************************************************************************************************************************************
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Peculiar_Investor »

Thanks. Information has been added.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by DenisD »

Added a section on optimizing benefits based on this post: http://www.financialwisdomforum.org/for ... 60#p182660
Hope to continue working on it in the next few days.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Zeide »

Is money from a RRIF considered when calculating the income level for receiving the GIS?
All I see is funds from cashing in an RRSP but not income from a RRIF. Zeide
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by DenisD »

Income from RRIF or other pension plan reduces GIS. OAS does not. Return of capital income from a prescribed annuity does not. TFSA income or withdrawals do not.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by DenisD »

DenisD wrote:Added a section on optimizing benefits based on this post: http://www.financialwisdomforum.org/for ... 60#p182660
Hope to continue working on it in the next few days.
I've finished for now. Have at it.
http://www.finiki.org/wiki/Guaranteed_I ... g_benefits

I've added a new section, provincial benefits, with no information for now. Just a reminder that, if you qualify for GIS, you probably qualify for provincial benefits too.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by epson600 »

I'm helping someone out with a GIS application and I have a question that I couldn't find the answer to.

Lets say that someone turns 65 in April of 2015. If they apply using the July2015-Jun2016 form (uses income from 2014) does that mean they would miss out on GIS payments from April until July?

Using the July2014-Jun2015 form would look back at 2013 which would disqualify them because of a spike in income due the their RRSP being collapsed. The application form does have a field where they ask "Was there or will there be a reduction in your pension income", with "Other pension income" being shown as "Superannuation, RRIF's, Foreign Pension, etc". A reduction in other types of income like interest, dividends, capital gains, rental, other (aka RRSP) are not explicitly asked for.

GIS app form, ISP-3025
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by gsp_ »

Some issues with the finiki article:

-As pointed out by Zeide above, RRIF withdrawals are not listed in the What is considered to be income? section.

-Clawback is no longer a uniform 50% of income since the 2011 introduction of the top up. It goes up to 75% in a limited range based on the recipient's marital status as shown in this chart. First saw this mentioned in this blog post.

After age 65, you want to avoid having your income just above the cutoff every year. Suggested minor edit of a sentence towards the end of the article.

Thanks for the thread and article.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Dogger1953 »

epson600 wrote:I'm helping someone out with a GIS application and I have a question that I couldn't find the answer to.

Lets say that someone turns 65 in April of 2015. If they apply using the July2015-Jun2016 form (uses income from 2014) does that mean they would miss out on GIS payments from April until July?

Using the July2014-Jun2015 form would look back at 2013 which would disqualify them because of a spike in income due the their RRSP being collapsed. The application form does have a field where they ask "Was there or will there be a reduction in your pension income", with "Other pension income" being shown as "Superannuation, RRIF's, Foreign Pension, etc". A reduction in other types of income like interest, dividends, capital gains, rental, other (aka RRSP) are not explicitly asked for.

GIS app form, ISP-3025
Epson - If they are turning 65 in April, it's just two months (May & June) that they will be missing out on. You are right that those 2 months would be based on 2013 income, and RRSP withdrawals are NOT one of the items that count as "other pension income" under the loss or reduction formula.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by gsp_ »

Dogger1953 wrote:You are right that those 2 months would be based on 2013 income, and RRSP withdrawals are NOT one of the items that count as "other pension income" under the loss or reduction formula.
Could this couple have avoided this issue by converting their RRSPs to RRIFs before draining them?
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Peculiar_Investor »

gsp_ wrote:-As pointed out by Zeide above, RRIF withdrawals are not listed in the What is considered to be income? section.
It is not specifically broken out on Sources of income and deductions - Service Canada under the "Other pension income" bullet. So I checked the actual application form and it is specified there. Now included in a finiki update. Thanks.
Thanks for the thread and article.
You are welcome and thank you (and the other posters) back for your contribution to the article.

Remember, the goal of finiki is pulling together the collective knowledge of FWF'ers in a more manageable format with better search capability. As we've all experienced, lots of great information has been posted on the forum, but the forum's search capabilities leave much to be desired. Think of it as crowdsourcing or open financial education that captures the best of FWF. It is expected that the finiki article will lead to other discussion (like here), which may lead to further article updates. Rinse, lather and repeat.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by epson600 »

Dogger1953 wrote: Epson - If they are turning 65 in April, it's just two months (May & June) that they will be missing out on. You are right that those 2 months would be based on 2013 income, and RRSP withdrawals are NOT one of the items that count as "other pension income" under the loss or reduction formula.
thanks Dogger
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Dogger1953 »

gsp_ wrote:
Dogger1953 wrote:You are right that those 2 months would be based on 2013 income, and RRSP withdrawals are NOT one of the items that count as "other pension income" under the loss or reduction formula.
Could this couple have avoided this issue by converting their RRSPs to RRIFs before draining them?
gsp - No, simply converting the RRSPs to RRIFs and then immediately withdrawing the money (if that can even be done?) would not enable the couple to avoid the impact on their GIS. The option to be paid on your lower current income instead of your higher previous year's income is intended to only cover situations where there has been a loss or reduction of some type of regularly recurring income, not any type of one-time or lump sum payment from an RRSP or a quickly-depleted RRIF. A normal RRIF depleted over several years would be a different story.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by gsp_ »

Dogger1953 wrote:
gsp_ wrote:
Dogger1953 wrote:You are right that those 2 months would be based on 2013 income, and RRSP withdrawals are NOT one of the items that count as "other pension income" under the loss or reduction formula.
Could this couple have avoided this issue by converting their RRSPs to RRIFs before draining them?
gsp - No, simply converting the RRSPs to RRIFs and then immediately withdrawing the money (if that can even be done?) would not enable the couple to avoid the impact on their GIS. The option to be paid on your lower current income instead of your higher previous year's income is intended to only cover situations where there has been a loss or reduction of some type of regularly recurring income, not any type of one-time or lump sum payment from an RRSP or a quickly-depleted RRIF. A normal RRIF depleted over several years would be a different story.
Thanks Dogger. The situation I'm helping a family member with seems to be somewhere in the middle. Small RRSP is likely to be collapsed over 2 or 3 years as a bridge before reaching 65, do you think RRIF conversion would have any benefit? RRIF withdrawals would be significantly above the mandated minimum and serve the additional purpose of avoiding GIS clawback at 72. This person has very little C/QPP and no pension so will be eligible for a decent amount of GIS.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by DenisD »

Might be difference in withdrawal fee between RSP and RIF.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Dogger1953 »

gsp_ wrote:Thanks Dogger. The situation I'm helping a family member with seems to be somewhere in the middle. Small RRSP is likely to be collapsed over 2 or 3 years as a bridge before reaching 65, do you think RRIF conversion would have any benefit? RRIF withdrawals would be significantly above the mandated minimum and serve the additional purpose of avoiding GIS clawback at 72. This person has very little C/QPP and no pension so will be eligible for a decent amount of GIS.
gsp - It's been a while since I worked with these estimate cases for GIS entitlement calculations, but I think that if you had established a pattern of regular RRIF withdrawals for 2 or 3 years just before they turned age 65, this should qualify as a loss of benefits and allow them to be paid on an estimate of their current year income instead. It might be worth a phone call to Service Canada to get a current ruling though, especially if there may be an issue with fees as suggested by DenisD.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by gsp_ »

Thanks again, will suggest more regular(quarterly?) withdrawals and consider phoning in. Denis' reference is in favour of RRIF conversion.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Dogger1953 »

gsp - I think quarterly RRIF withdrawals for 2-3 years should likely qualify as a loss of regularly recurring income when it's fully depleted, but it would probably still be a good idea to call Service Canada before you start implementing that system. Wish I could be more definite.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by epson600 »

With the bump in the GIS amount; here is the rough clawback range for a single senior.

Code: Select all

$0-2000      50% (100% if you include the Ontario GAINS top up)
$2000-8500   75%
8500-        50%
Pretty sad that if someone only has OAS/GIS/CPP that a good chuck of their CPP will end up being clawed back by three quarters.


I've also attached a copy of the form needed to request GIS based on the current years estimated income instead of last years actual if anyone finds it useful. For some reason it is not listed on the servicecanada website.
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isp3041_2017.pdf
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by Shakespeare »

Pretty sad that if someone only has OAS/GIS/CPP that a good chuck of their CPP will end up being clawed back by three quarters.
Surely you mean GIS.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by epson600 »

Shakespeare wrote: 11 Jul 2017 19:22 Surely you mean GIS.
Well only if you want to get all technical about it. :) Either way it still ends up netting them about 25cents for every dollar of CPP.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by OhGreatGuru »

So you want it to be treated like OAS and not clawed back until your income is over $74k? It's supposed to be a supplement for low income people. You are trying to change the purpose of the program by complaining about the clawback rate.
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by AltaRed »

:thumbsup: Nor does it have anything to do with CPP. It is about needing less GIS as income increases. Sheesh! :roll:
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Re: [finiki] Guaranteed Income Supplement (GIS)

Post by epson600 »

Sweet. I'm gonna have to bookmark this thread as it's the first time I've been accused of being a bleeding heart. :D

Anyway, all I was really going for was to put out the updated numbers as the finiki site still lists it being as a flat 50%. It wasn't until I did up the table that I saw that the difference between someone who never worked a day in their life and someone entitled to a max CPP pension of 13k (but didnt save anything else) is about 4 grand.

Doesn't affect me so carry on :beer:

I'm gonna see if I can find some puppies to kick or cats to drown. :P
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