# Question about Guaranteed Income Supplement and TFSA



## gibor365 (Apr 1, 2011)

You may or may not receive GIS depends on your income, for example if you are single and your income $17,088 or more, you won't receive GIS.
The question is if TFSA income/withdrawal included in income calculations or not? I believe that it's not included consifering that you don't report this income when filling taxes, but not sure 100%.
Also I'm not clear about "for individuals receiving a full Old Age Security (OAS) pension" statement that appears on GIS calculators... so what happen if I get 80% of full OAS? Will be GIS higer or lower?

And last think I don't get... for TABLE 4 of CRA calc (Amounts for individuals receiving a full Old Age Security pension and their spouse or common-law partner aged 60 to 64) http://www.servicecanada.gc.ca/eng/services/pensions/oas/payments/tab4-21.shtml
I see 3 columns: 
Monthly GIS with Maximum OAS Pension, Combined Monthly OAS Pension and GIS and Monthly Allowance.
What Monthly Allowance means?


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## Dogger1953 (Dec 14, 2012)

gibor said:


> You may or may not receive GIS depends on your income, for example if you are single and your income $17,088 or more, you won't receive GIS.
> The question is if TFSA income/withdrawal included in income calculations or not? I believe that it's not included consifering that you don't report this income when filling taxes, but not sure 100%.
> Also I'm not clear about "for individuals receiving a full Old Age Security (OAS) pension" statement that appears on GIS calculators... so what happen if I get 80% of full OAS? Will be GIS higer or lower?
> 
> ...


gibor - First, TFSA withdrawals will not affect GIS at all, as they are not income.
Second, if you are receiving a partial OAS you will get more GIS. In the example that you give of someone receiving 80% of full OAS, their GIS would be approx. $111.74 more than someone who is receiving 100% OAS and having the same income. The formula is simple; whatever OAS they are missing gets added to their GIS, so that if they have no other income both people will receive the same minimum income level. Some people (myself included) believe this is not the way that it should be, but it is what it is.
Third, the monthly Allowance is something that is paid to that age 60 to 64 year-old spouse of the pensioner.


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## gibor365 (Apr 1, 2011)

Dogger, thank for info....
just to clarify.... my mother considering her income if she would have max OAS would receive: Monthly GIS with Maximum OAS Pension $420.59 and Combined Monthly OAS Pension and GIS $984.33.
But when she supposed to start getting OAS, she will be leaving in Canada for only 10 years, so if I understand correctly her OAS will be max OAS possible 563.74/4 = 140.93 and she will get $843.4 GIS so total will be again $984.33?


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## Dogger1953 (Dec 14, 2012)

gibor said:


> Dogger, thank for info....
> just to clarify.... my mother considering her income if she would have max OAS would receive: Monthly GIS with Maximum OAS Pension $420.59 and Combined Monthly OAS Pension and GIS $984.33.
> But when she supposed to start getting OAS, she will be leaving in Canada for only 10 years, so if I understand correctly her OAS will be max OAS possible 563.74/4 = 140.93 and she will get $843.4 GIS so total will be again $984.33?


gibor - You are 100% correct!


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## gibor365 (Apr 1, 2011)

Dogger1953 said:


> gibor - You are 100% correct!


Thanks again Dogger...you are a big help!


> Some people (myself included) believe this is not the way that it should be, but it is what it is.


 maybe it's not really fair, but in every normal country there is "living minimum"... there is no another solution ... just in my example , my mother will start getting pension I wrote above after she leave in Canada 10 years, me and my wife will be living at that time about 22 years, so all those 22 years we paid and will continue to pay high taxes and in many cases such moms "helping" their kids pay higher taxes as they help with grandchildren 
There are other ways to take advantage of the system... for example , before applying to OAS/CPP/GIS , spend all savings on luxiry travel around the world, buy very expensive house, max up TFSA etc... so your taxable income will be minimal, than apply for OAS/CPP/GIS and get all maximum possible. I think it's a very valid scenario....


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## sags (May 15, 2010)

It is a valid scenario and is happening already.

The Harper government hinted they would introduce changes to the GIS eligibility that would include all assets........rather than income testing.

The "hint" caused so much uproar, that they quickly gave up the idea.

That was when it was learned how many people are taking advantage of the system.

People could very easily be millionaires from assets, and still collect GIS. (Own a home and a cottage for example)

Kind of a weird situation.


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## Dogger1953 (Dec 14, 2012)

gibor said:


> Thanks again Dogger...you are a big help!
> maybe it's not really fair, but in every normal country there is "living minimum"... there is no another solution ... just in my example , my mother will start getting pension I wrote above after she leave in Canada 10 years, me and my wife will be living at that time about 22 years, so all those 22 years we paid and will continue to pay high taxes and in many cases such moms "helping" their kids pay higher taxes as they help with grandchildren
> There are other ways to take advantage of the system... for example , before applying to OAS/CPP/GIS , spend all savings on luxiry travel around the world, buy very expensive house, max up TFSA etc... so your taxable income will be minimal, than apply for OAS/CPP/GIS and get all maximum possible. I think it's a very valid scenario....


gibor - I won't argue that there's some merit in setting a minimum amount that anyone over age 65 and living in Canada should be expected to live on, but it might have been better implemented than by simply adding any missing OAS to the GIS column. 

One of the consequences to doing it in this way is that the maximum income threshold for GIS is also extended for the person receiving a partial OAS. The result is that a person with 40+ years of residence in Canada receives no GIS once their other income exceeds $16,944, whereas someone with only 10 years of residence in Canada can receive some GIS right up to having other income of $28,000. 

Another consequence is that since OAS is taxable and GIS isn't, the 10-year resident potentially pays less tax than the 40-year resident, even though they both might receive the identical combined amount of OAS/GIS and other income.


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## bgc_fan (Apr 5, 2009)

sags said:


> It is a valid scenario and is happening already.
> 
> The Harper government hinted they would introduce changes to the GIS eligibility that would include all assets........rather than income testing.
> 
> ...


Not unexpected though. You may have some retirees who bought their house 30 years ago and just with certain markets, it increased to a million. Do you really expect that its fair to force them to sell their house and downsize so they can get their OAS? It's bad enough that they are already paying property taxes based on a valuation, i.e. it is not a guarantee that they would be able to sell their house for that


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## naysmitj (Sep 16, 2014)

So just to be clear, as a society we have our young trying to buy a first house which is many times their joint annual earnings to raise their families. Yet, we are taking tax money from them and giving it to people in the form of GIS who have a house worth more than a million dollars plus what ever else. Does that really make sense?


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## carverman (Nov 8, 2010)

sags said:


> It is a valid scenario and is happening already.
> 
> The Harper government hinted they would introduce changes to the GIS eligibility that would include all assets........rather than income testing.
> 
> ...


 I agree. I own a home,and pay income taxes, property taxes, property maintenance, utilities and upkeep (repairs) as required.

Even though the house is an asset, and I may have a small TFSA, the monthly financial outlay to stay in my home far exceeds my OAS, and in some cases even my CPP. 
However. I do realize that if I was renting at this time, even an reasonable 1 bedroom apt would be almost equivalent to both my reduced CPP and OAS.. which is a bit over a $1k per month ($12,120 per year).



> Maximum income for GIS calculations ($12,120.00 - $12,143.99) max GIS	$206.59 Maximum combined GIS with OAS $770.33


If all I got was that for my "maxmum yearly income" according to currrent GIS guidlines, it would put me below the "poverty line" today, certainly unable to continue to live in my own home with property taxes going up each year and insurance, heating and electricity for much longer and I would have to dip into my savings or borrow. 
I would probably have to eat more Kraft Dinner. :biggrin:

I don't qualify for GIS because at the moment, I am still collecting a REDUCED NORTEL company pension which is in the process of windup, but in the future, if my maximum income shrinks even more due to company pension being eliminated, I wouldn't want the government to tell me..
"sorry you don't qualify for any GIS because you still have some savings in a TFSA (tax free) and you own a principle residence property (also tax free on sale).

From:
http://www.servicecanada.gc.ca/eng/services/pensions/oas/payments/index.shtml


> If you are a single, widowed or divorced pensioner	$764.40 (maximum) and $17,088 (individual MAXIMUM income)


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## cheech10 (Dec 31, 2010)

bgc_fan, why wouldn't it be fair to expect individuals with significant assets to have to sell those assets prior to receiving government support that comes from general revenues (ie. not at pension plan)?


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## bgc_fan (Apr 5, 2009)

cheech10 said:


> bgc_fan, why wouldn't it be fair to expect individuals with significant assets to have to sell those assets prior to receiving government support that comes from general revenues (ie. not at pension plan)?


Quite frankly, my view of counting housing as an asset in this type of calculation is flawed, since you can't sell parts of a house to pay for living expenses. Basically, you're advocating that anyone who has a significant net worth tied to their house will have to sell and rent for the rest of their life before receiving government support. 

I've already pointed out that property taxes are already rising so they are already getting punished for keeping an appreciating asset that draws no income.


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## cheech10 (Dec 31, 2010)

There are other ways to access the equity in a home than selling. And the decision to tie up assets in real estate rather than income producing investments is a lifestyle decision. I'm still not sure why the public should be subsidizing the lifestyle of wealthy (from a net worth perspective) retired homeowners.


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## fatcat (Nov 11, 2009)

cheech10 said:


> There are other ways to access the equity in a home than selling. And the decision to tie up assets in real estate rather than income producing investments is a lifestyle decision. I'm still not sure why the public should be subsidizing the lifestyle of wealthy (from a net worth perspective) retired homeowners.


except income and assets and the allocation of the two is a complex and unwieldily beast with every situation slightly different from the rest ... you end up with a government bureaucrat sitting down with people and telling them what to sell and why or telling them how to invest their assets ... the whole thing is a can of worms

compare them to people who moved here at age 55 with say no assets at all and started getting oas and gis at age 65, some would say that is a larger misuse of the system than people who have lived here all their lives and paid taxes and are drawing gis

i have no problem with some special assessment to verify that the income is being honestly reported but we are talking about people living on 16K a year, i don't see that as a huge gaming of the system


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## cheech10 (Dec 31, 2010)

None of this changes the fact that income alone is a poor method of means testing. Example:

Person A has a $1,000,000 house and no investments.
Person B rents, and has $1,000,000 in income producing investments.

Person A gets OAS, but Person B may not get much at all (especially with the dividend gross up) despite them having essentially equal wealth, or means.


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## sags (May 15, 2010)

The current rules punish those who provide themselves with their own "income".........even before retirement.

(no Ontario tax credits, no child care benefits)

Thank goodness they haven't taken the age 65 tax deduction away from us yet.


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## bgc_fan (Apr 5, 2009)

cheech10 said:


> None of this changes the fact that income alone is a poor method of means testing. Example:
> 
> Person A has a $1,000,000 house and no investments.
> Person B rents, and has $1,000,000 in income producing investments.
> ...


I've already pointed out that Person A still pays property taxes anywhere from 1-3%. On a million dollar home that's $10-30k. If their only source of income is GIS and OAS, they're already behind the eight ball.

In this case, Person A is being taxed on assets, while Person B is taxed on income.


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## gibor365 (Apr 1, 2011)

bgc_fan said:


> I've already pointed out that Person A still pays property taxes anywhere from 1-3%. On a million dollar home that's $10-30k. If their only source of income is GIS and OAS, they're already behind the eight ball.
> 
> In this case, Person A is being taxed on assets, while Person B is taxed on income.


I've read somewhere that seniors with low income are getting discounts on property tax... is it true? I know that in Israel all seniors have a really huge discounts on property taxes..... What is about Canada?
Also you don't take in account TFSAs, mine and my wife TFSAs currently have income from TFSAs around $3,700 per year....in 15-20 years it will be much more...
So buying a big house in Victoria, BC just before applying for OAS/GIS can be a big benefit....in this case goverment can prevent it only by making restrictions on number of years between buying house and applyig for OAS/GIS..
But if you think , there are many other ways to "get rid" of high income.... for example buying very expensive diamonds or paintings just before applying for benefits.... so you keep you wealth, but don't have income... and if you sale it after, you also shouldn't report it as income, should you?!
Another way, travelling around the worlds couple of years before retirement....


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## fatcat (Nov 11, 2009)

gibor said:


> I've read somewhere that seniors with low income are getting discounts on property tax... is it true? I know that in Israel all seniors have a really huge discounts on property taxes..... What is about Canada?
> Also you don't take in account TFSAs, mine and my wife TFSAs currently have income from TFSAs around $3,700 per year....in 15-20 years it will be much more...
> So buying a big house in Victoria, BC just before applying for OAS/GIS can be a big benefit....in this case goverment can prevent it only by making restrictions on number of years between buying house and applyig for OAS/GIS..
> But if you think , there are many other ways to "get rid" of high income.... for example buying very expensive diamonds or paintings just before applying for benefits.... so you keep you wealth, but don't have income... and if you sale it after, you also shouldn't report it as income, should you?!
> Another way, travelling around the worlds couple of years before retirement....


in bc we get an additional discount on property tax if you are over 65

the problem with your theory gibor is that nobody could maintain a "big" house in victoria on the gis, nobody

the gis amounts to zero if you make like 16K or something ... you can't maintain a house, eat, buy clothes and get around the city on 16K ... not easily anyway

a "big" house requires taxes, utilities and upkeep that amounts to a fair bit of money in victoria


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## gibor365 (Apr 1, 2011)

fatcat said:


> in bc we get an additional discount on property tax if you are over 65
> 
> the problem with your theory gibor is that nobody could maintain a "big" house in victoria on the gis, nobody
> 
> ...


I meant more not "big". but expensive...in the best area of the city... so you won't spend more on utilities than in regular house and will have discount for property tax...also you didn't take in consideration TFSA, in 20 years max contributions for couple, you may create significant income stream even without touching the principle... also as I mentioned, you may buy some diamonds or expensive paintings and sell it from time to time.... just some examples


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## sags (May 15, 2010)

Gold coins or bullion.........no income from them and they could be sold as needed.

A lot of pre-planning required..........just to screw the taxpayer though.


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## HaroldCrump (Jun 10, 2009)

bgc_fan said:


> Do you really expect that its fair to force them to sell their house and downsize so they can get their OAS?


It is not _*their *_OAS, unlike CPP.
OAS is a means-tested welfare payment based on the graciousness of the current crop of tax-payers.

OAS clawback starting point is already too high, and the full clawback income limit is too high as well.
To begin with, those two issues need to be addressed pronto.

Then we can look at redefining the means test to include, or not include, non income assets such as houses and vacation properties.
Perhaps a first step could be to include non primary residence properties such as cottages, vacation properties, land, etc.
That should take care of a large chunk of rich welfare retirees.

The OAS/GIS amount can also be made progressive with age i.e. it starts off less at 67, and gradually increases with age.
That would be in line with increasing life expectancy and longevity.

The good thing is that unlike CPP, OAS is not based on any investment fund, actuarial calculations, etc.
So it should be relatively easier to re-define the means test - financially speaking, of course, politics and vote banking is another matter altogether.


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## fatcat (Nov 11, 2009)

HaroldCrump said:


> So it should be relatively easier to re-define the means test - financially speaking, of course, politics and vote banking is another matter altogether.


i disagree ... i am not saying it wouldn't be _possible_ to redefine gis eligibility but i am saying it would not be _easy_
the mix of assets and income is complex and different from person to person

assuming that income is reported honestly (and this is a key assumption, i would support strong income verification and a more detailed gis application) ... i do not see a large number of people that have all these fancy assets supporting them on a gis limited income

vacation cottages, properties and land all have costs associated with them like taxes and upkeep and attorney fees and tax preparation and so on

the number of people that are liquidating assets just to live on their 16K and keep their gis cannot be a large number compared to say hidden wealth offshore

i suppose you could liquidate assets like a cabin to generate extra money but then you would have to do something with that money like invest it otherwise you end up putting 300K in a checking account or something but 300K invested could bring 12K a year which is more than gis brings

this doesn't make sense to me


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## HaroldCrump (Jun 10, 2009)

I was speaking primarily about OAS, not GIS.
I agree that it is highly unlikely that a large number of GIS recipients have vacation properties, cottages, etc.

My suggestion for progressive increase with age was for GIS, too.
But the changing of means testing rules would be primarily applicable for OAS recipients.


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## fatcat (Nov 11, 2009)

HaroldCrump said:


> I was speaking primarily about OAS, not GIS.
> I agree that it is highly unlikely that a large number of GIS recipients have vacation properties, cottages, etc.
> 
> My suggestion for progressive increase with age was for GIS, too.
> But the changing of means testing rules would be primarily applicable for OAS recipients.


right, got it ... 

the main discussion so far seems to be that large numbers of people are holding huge assets and drawing gis, to me the numbers don't add up, i don't see how you can maintain these assets (few people in their right mind are going to dump 200K worth of gold coins or something in the ground or an sdb just to draw gis, it makes zero sense to me)

the common case i could see would be someone who had lived in the same residence for many years and had a small income yet had a lot of value in their home and land simply by virtue of being in the right place and time

they shouldn't be denied gis or forced to sell just because their longtime home was valuable


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## Eclectic12 (Oct 20, 2010)

Then too, this Stats Can report indicates that in 2000, about 1.3 million received GIS, where 59% who needed to apply for it - were not applying.
http://www.statcan.gc.ca/pub/75-001-x/11005/8704-eng.htm

This Sept 2014 response indicates that despite HRDC automating the application process by using the income tax return filed with CRA to automatically renew for over 1 million GIS clients, the number receiving GIS has grown to 1.4 million.
http://www.esdc.gc.ca/en/reports/pension/gis_response.page


Unless there's something missing, there does not seem to have been a lot of growth.


Cheers


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