All About Canada’s Retirement System: The Guaranteed Income Supplement

In addition to OAS, the first pillar, there are additional supports for low-income seniors, including the Guaranteed Income Supplement (GIS), the Allowance, and the Age Credit.

This article will focus on the GIS—a monthly benefit for low-income seniors residing in Canada—to help you understand its eligibility criteria, benefits, and application process.

Disclaimer

The information shared in this article reflects the current laws, regulations, and rules applicable to Canadian residents as of the date of publication. While we strive for accuracy, please note that these rules may evolve, which could impact the relevance of the details provided. The content is intended for general informational purposes and should not be taken as personalized advice. For guidance tailored to your specific financial, legal, tax, or accounting situation, it’s essential to consult with qualified professionals in the relevant field.

I. GIS Eligibility

To qualify for GIS, you must:

• Be 65 or older,
• Receive the Old Age Security (OAS) pension,
• You are a Canadian citizen or a legal resident,
• You live in Canada
• Have an income below the maximum annual threshold established by the government.

To determine your eligibility, please read this article.

II. Applying for the Guaranteed Income Supplement

Service Canada may send you a letter indicating that you qualify for GIS, and payments will begin automatically. However, if you’re not automatically enrolled, you can apply using one of these options:

1. Online Application: Through your My Service Canada Account.
2. Paper Application: Complete form ISP-3550 (for OAS and GIS) or ISP-3025 (for GIS only) and mail it or bring it to a Service Canada office.

For subsequent years, once you file your tax return, your GIS eligibility is reassessed automatically. Note that eligibility for GIS will be suspended if you are incarcerated for two years or more.

To get an estimate of your OAS and GIS see the Old Age Security Benefits Estimator.

III. Types of Income Considered for GIS

The GIS amount you receive is based on your income and marital status. Only income other than OAS and GIS is considered, with some key sources listed below:

• Considered Income: CPP or QPP benefits, workplace pensions, RRSP withdrawals, investment income, rental income, and certain other government benefits.
• Exempt Income: OAS, GIS, Allowance payments, up to $5,000 of employment/self-employment income, TFSA withdrawals, and certain deductions like union dues and RRSP contributions.

This income threshold adjusts quarterly, and for couples, the combined annual income is used to determine eligibility.

IV. GIS Income Exemption

The 2019 Federal Budget increased the GIS income exemption amount from $3,500 to $5,000 and extended it to self-employment income. Now, up to $10,000 of combined employment and self-employment income can be partially exempted, with a 50% exemption applied on income above the $5,000 threshold.

V. GIS Clawback

The GIS is income-tested, and its benefit reduces by 50% for every additional dollar of income, often referred to as the “GIS clawback.” For some income levels, especially in higher income brackets, the clawback can reach 75% or more.

Example: Suppose a retiree earning $8,000 from CPP withdraws an additional $960 from an RRSP. This extra income reduces GIS by 50% or $480 annually, starting from the following July. Monthly GIS payments will decrease by $40/month over the year to reflect this.

At a certain income level, the GIS benefit will be reduced to zero. This income level varies depending on your marital status and other factors.