# GIS income based on current year provision



## martik777 (Jun 25, 2014)

Under what conditions is GIS based on current year's income rather than the normal previous years income?

For example, if one makes a large RRSP withdrawal this year at age 64 which would disqualify him from GIS in 2019 but his income in 2019 is within the GIS threshold, can the 2019 income be used instead of the previous 2018 year?

Section F of the application form is worded as follows:

If you or your spouse or common-law partner had a reduction in pension
income* after January 1, 2015 or will have a reduction in pension income
before June 30, 2018, insert date:

It only refers to "pension income" which is what confuses me.


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## OnlyMyOpinion (Sep 1, 2013)

GIS is based on the previous year's income. Sometimes that works to your favour, sometimes against. Your RRSP withdrawl is 'other income' and will have to be reported and may reduce the amount otherwise payable. 
As far as I know, the provision for basing GIS on a current estimate only applies where employment or pension income is a reduced amount. An RRSP withdrawl is not considered pension income (while RRIF income is).

I would suggest you call and ask them to be sure though. It is worth checking.


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## martik777 (Jun 25, 2014)

Employment income will end in 2018 so I should be ok even with the RRSP withdrawal.


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## Dogger1953 (Dec 14, 2012)

martik777 said:


> Employment income will end in 2018 so I should be ok even with the RRSP withdrawal.


Unfortunately (for you), it doesn't work that way. It was anticipated that some people might attempt to manipulate their income in this fashion, so the OAS legislation prescribes that only the employment and/or pension income from the previous year will be replaced by current-year estimated income. Other income such as interest, RRSP, etc from 2018 will still be counted against you when determining your GIS entitlement for the period of July 2019 thru June 2020.


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## martik777 (Jun 25, 2014)

Well, so much for that strategy.

So, if I withdraw 10k from my rrsp this year and my income next year is 8k, 18k will be used to calculate GIS?

I will be eligible in Jan/19. What years income (previous or current) is used to calculate GIS for Jan-Jun/19?


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## Dogger1953 (Dec 14, 2012)

Easy answer first - 2016 income would generally be used to calculate GIS for July 2018 thru June 2019. Again, that changes though when something like retirement occurs, so it could be a blend of 2016 income along with some 2018 or 2019 income, depending on the retirement date.

Not so easy question - It depends a bit on the timing of the retirement and the source(s) of that 8k, but probably Yes. It can get quite complicated though, and you might want to check with Service Canada before you make any decisions.


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## Dogger1953 (Dec 14, 2012)

Sorry for the inaccurate response above, but the edit function isn't working so I'll try to correct myself this way!

The above should read "2017 income would generally be used to calculate GIS for July 2018 thru June 2019 .... it could be a blend of 2017 along with some 2018 or 2019.


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## martik777 (Jun 25, 2014)

Retirement date will be Jan 1 2019 but could be changed if beneficial. The 8k is CPP

Contacting Service Canada is impossible lately, they don't even place you on hold. I guess I could correspond through the mail. 

Thanks for your help.


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## Dogger1953 (Dec 14, 2012)

martik777 said:


> Retirement date will be Jan 1 2019 but could be changed if beneficial. The 8k is CPP
> 
> Contacting Service Canada is impossible lately, they don't even place you on hold. I guess I could correspond through the mail.
> 
> Thanks for your help.


Unless you're actually going to work on Jan 1st and have some employment earnings to report for 2019, I would suggest that you consider yourself to have retired on Dec 31st, 2018 instead. Withdrawing RRSP monies any time in 2018 or 2019 is going to complicate your GIS calculation, and it could be counted actually count against your GIS for two payment years. Unless you really need the money now, from a GIS perspective I'd strongly recommend that you postpone any RRSP withdrawal until 2020 or later. You will probably lose half of it to a GIS reduction that way, but that's better (in my opinion) than possibly losing all of it.


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## martik777 (Jun 25, 2014)

Thanks, I will leave the RSP alone. Someone mentioned RRIF income would not count against me. What are your thoughts on that?


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## Dogger1953 (Dec 14, 2012)

martik777 said:


> Thanks, I will leave the RSP alone. Someone mentioned RRIF income would not count against me. What are your thoughts on that?


RRIF income is considered exactly the same as RRSP withdrawals for GIS purposes, except that if you have established a pattern of regularly occurring RRIF withdrawals and that RRIF account becomes fully depleted, you should be able to treat that the same as if a private pension plan ceased and have your GIS based on your current income excluding that final year of RRIF withdrawals.

For instance, if you withdrew $10,000 from your RRIF every year for 10 years and then your RRIF was finally depleted in Dec 2017, your GIS effective Jan 2018 could be based on your income excluding the RRIF income. I don't think this would work however, if you took 10 monthly withdrawals of $1,000 to fully deplete a $10,000 RRIF in one year.


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