How receiving a partial OAS pension affects GIS amounts

As you may be aware, seniors who have limited income aside from their OAS pension may be eligible for the Guaranteed Income Supplement (GIS), which is part of the Old Age Security (OAS) program.

If you have ever looked at the GIS rate tables on Service Canada’s website, you may have noticed that the rates shown apply only if you are receiving the “full OAS pension.” The rate tables don’t really explain how much GIS you will receive if you’re receiving only a partial OAS pension (due to having fewer than 40 years of residence in Canada after age 18).

Receiving a partial OAS pension affects the amount of GIS that a pensioner will receive in two ways:

  1. A pensioner receiving partial OAS will receive more GIS than someone receiving a full OAS pension, to make up for their lesser amount of OAS.
  2. A pensioner receiving partial OAS will receive GIS up to a higher income, compared to someone receiving a full OAS pension

Why does someone receiving a partial OAS pension receive more GIS?

Asset AllocationThe intent of the GIS program is to ensure that anyone who is eligible for OAS receives at least a minimum level of income on which to live. There are various minimum monthly income levels established, depending on a pensioner’s marital status

Related article:  Understanding Guaranteed Income Supplement 

For example, as of October 2014, the minimum monthly income level for a single OAS pensioner has been set at $1,328.14. If someone is receiving a full OAS pension ($563.74 for October 2014) and they have no other source of income aside from their OAS pension, that means that they will be entitled to GIS in the amount of $764.40 ($1,328.14 – $563.74).

However, if they are receiving only a partial OAS pension, that means that they must receive more GIS in order to reach that same minimum income level of $1,328.14.

Let’s use the example of Peter to see how this works. If Peter has resided in Canada for only 25 years when he becomes eligible for OAS, he will receive a partial OAS pension of $352.34 (25/40ths of $563.74). If he has no other income aside from OAS, he will be entitled to GIS in the amount of $975.80 ($1,328.14 – $352.34).

Why can someone receiving a partial OAS pension have a higher income before losing eligibility for GIS?

 For the most part, the amount of GIS that someone is entitled to is reduced by 50 cents for every dollar of income that the person has from other sources (excluding the OAS). (The GIS rate tables actually function by reducing GIS by $1.00 monthly for every $24.00 of annual income.) If someone receives more GIS because they’re receiving only a partial OAS, it therefore follows that it requires a higher threshold before they lose all of their GIS entitlement.

Let’s use the above example of Peter to demonstrate how this works.

If a single pensioner receiving a full OAS pension has income of more than $17,088 annually from other sources, they won’t be eligible for any GIS. However, they will still receive their full OAS pension of $563.74.

If Peter has income from other sources totaling $17,088, he will need to receive GIS in the amount of $211.40 ($563.74 – $352.34), in order to be at the same overall income level as someone receive a full OAS pension.

Since his GIS will continue to be reduced by 50 cents for every dollar of other income that he has, that means that his GIS entitlement won’t be fully eliminated until he has a further $5,064 of income from other sources ($211 x 24). This means that the threshold for Peter to receive GIS is $22,152 ($17.088 + $5,064).

Is this situation fair?

It seems that the GIS top-up and higher income threshold for pensioners who have had their GIS topped up may put people who have lived their whole lives in Canada at a disadvantage, particularly since OAS payments are taxed and the GIS is not.

I have my own thoughts about the fairness of this situation, but I’m interested in hearing what other Retire Happy readers think.

Written by Doug Runchey

Doug Runchey worked for the Income Security Programs branch of Human Resources and Skills Development Canada for more than 32 years, and was a specialist in the Canada Pension Plan and Old Age Security legislation, regulations and policy areas. He now runs his own company, DR Pensions Consulting, which provides pension advice, including detailed calculations for CPP retirement planning and “credit splitting” purposes. Doug can be reached by email @ [email protected] or check out his website at http://www.drpensions.ca/.

48 Responses to How receiving a partial OAS pension affects GIS amounts

  1. Great explanation of how the system works Doug! Having to deal with immigrants all the time, it makes it a lot easier to explain to them the benefits they are eligible for.

    As far as it being fair or not, it doesn’t seem very fair to have different clawback thresholds. They could set a hard cap that all pensioners have to adhere to, no matter the amount of OAS they are receiving. The GIS should be reserved for those who really need to support their basic lifestyle, and Peter in your example is not one of those people.

  2. You can argue the income level(need) but is it fair that a married or common law couple each with 65,000 incomes can then each get the full OAS with no claw back, but then if one dies and the survivor has 130,000 income all OAS is fully clawed back. In this case household after tax income drops from 114,000 to 93,000 just because one partner died.

    Make no mistake about it the OAS clawback is simply taxation of the few for the benefit of many. While I support helping our truly needy giving OAS to 95% of seniors before any clawback is ridiculous.

    Canada should immediately lower the clawback to start at 71,000 for joint (couple) incomes and half of that for singles. (Just to be clear this would also directly effect me).

  3. I would like to bring Assets into the Picture. The Big Picture. Is it true that in Australia, one, not only files an Income Statement – like a first time GIS Application but also a statement of Assets and their equivalent of RRSPs (Super etc)?
    And if the Assets Exceed AUD $400,000.00 Agers (OAS) is not payable!!
    Introduction (or re-introduction) of Paul Martin Jr’s SENIOR BENEFIT – a 100 % GIS based on all sources of income would streamline the system by eliminating the residency calculation – Pensioners merely have to reside for full Ten Years and file regular tax returns declaring their world income.Get rid of tables so people don’t have to lie about whether they are a couple or not by establishing a ceiling of 50,000.00 each to get the Seniors Benefit.
    BTW the Elephant in the room is the Canada Pension Plan. The Death benefit ought to be $7500.00 and the Monthly Max ought to be $1750.00 a month.
    The Employers share of CPP contribution is Never shown on the Statement of Contribution. Is it factored in as contributions when calculating benefits? Also Over-contributions resulting from Employees switching jobs over the years – the Employers share is never returned to them – where or in what “CPP accounts” are they deposited.(I am guessing amounts in the millions)
    A lot of the GIS recipients will howl not out of joy because the “enhanced” benefits will result in little or no tax free GIS. Even a Dollar of GIS opens the doors to other monetary and non-monetary benefits from other levels of Gov’t. Some municipalities will forgive a part or even postpone collection of Property taxes etc etc.There are other subsidies all primarily to the gis recipient.

  4. Dave, you are making a big assumption! When one partner dies it does NOT necessarily mean that the survivor will receive the same total income. Not even close. First, some income goes away in total or in part and Second, the survivor is then subject to much higher taxation, taking away even more income. Last, but not least, you have changed the focus of the discussion…away from rules and results of GIS calculation and maximum income for eligibility. In my view, regardless, maximum income for eligibility should be the same in both situations. As it is, the system seems to favour those who have not lived in Canada for at least 40 years.

  5. Sorry wasn’t trying to hijack the discussion only expand upon it.

    The two theoretical 65K income people likely have max CPP each so yes additional income is lost because of the max CPP normal/survivor rule. This is also unfair but maybe that’s for another day! So then the household income drops even more when a partner dies.

    Of course single income tax rates apply to the survivors total income. My calculations showed that but highlighting it for others was likely helpful.

    All of which makes the partial OAS/GIS rules even more disturbingly unfair for those who lived and worked their 40 years in Canada. (Among them many immigrants for sure).

    Again I say the OAS clawback threshold needs to be greatly reduced.

  6. One possible rationale for the differential is the role of NAFTA and increased number of Canadians spending extended periods working in the United States or Mexico. Should these people fall on hard times in their later years, the fallout from a denial of a basic pension could prove a political hot potato.

    • Peter’s example is very good, but there is one more scenario that you could explaine,, mine and my husband’s:
      We both are 65, in Canada 21 year – started receiving OAS;
      receiving CPP ($ 185 for me and $ 205 for my husband).

      Since we still work, we will not receive any GIS.
      My question is how much money in total we can expect to receive, once we stop working.
      Thank you in advance,

      • Nena

        Once you both retire and have CPP and OAS as your only incomes, your combined income for GIS purposes will be approx. $4,680 (12 x $185 and 12 x $205).

        At that income level and with you both receiving OAS, you are guaranteed an OAS/GIS total of $966.60 each.

        If you were receiving the full OAS, that $966.60 would be comprised of $563.74 OAS and $402.86 GIS.

        Because you’re both receiving partial OAS of 21/40ths, you will each be eligible for $295.96 OAS and $670.64 GIS, for the same total OAS/GIS of $966.60.

        • I am receiving EI $874, CPP $279 and OAS $142.42 and my wife CPP $64.87 and OAS $136.90.
          They will stop to pay me EI in February 2016.
          1. Are we illegible to receive GIS starting 2016 ?
          2. if Yes how much we can have with my wife?
          Thank you

          Sargis

          • Sargis

            Yes, you should be eligible for GIS effective March 2016 once your EI stops, and you probably even qualify now.

            Effective March 2016, your combined OAS/GIS would each be approx. $995.39, based on your combined CPP income only.

  7. Could you please explain how the GIS is affected by income earned by a partner who is still in full-time employment?

  8. My wife and I are the same age. Assuming there is no other income and we don’t start our CPP until age 70.
    What would our combined total benefit of OAS and GIS be when we reach age 65 (based on today’s rates)
    Every chart I look at seems to show amounts only for single people.

    Thank you

  9. My wife and me live in Canada for 33 year when we reach 65 for OAS. If we have combined other incomes, such as RRSP & CPP about $23,000 annually, do we qualify for GIS?It seems we are over the limit of $22,848 but from your article I think we will have a higher threshold because we do not live in Canada more than 40 years. Can you clarify this. Thanks a lot.

    • Paul

      Yes, if you will both have 33 years of Canadian residence and both be receiving OAS, you will still be eligible for GIS up to approx $27,648 of combined income from other sources.

      For a combined income of $23,000, you would each be eligible for GIS of approx. $95.88 monthly.

  10. Hi Doug, what’s the 2016 minimum monthly income level for a single OAS pensioner? Is there a link in a government site that states this? how is this figure determined globally in Canada? Thank You.

    • Tim

      As long as someone has at least 10 years of residence in Canada, they would be guaranteed a minimum combined OAS/GIS of $1,344.12 monthly.

      Sorry, but I don’t have a government link for you.

      • Thank You. Despite, all the comments above this is a relief for my aging mother who does not have CPP (only survivor’s CPP) and only been in Canada for 24 yrs before receiving partial OAS. My father who was the sole income for both passed earlier this month. Although there’s a 9 months backlog at service Canada, at least I know she will make her monthly dues (incl. rent) when she gets the top up. Thank You!

  11. Hi Doug,
    Me and my wife would be completing 10 years in Canada shortly and eligible for OAS and GIS and by then I would be 70 and my wife 65 .Our combined income on completion of 10 years would be $20000.How much GIS per head would be given to us in addition to OAS $141 per head .
    Is there any other point which effects GIS like having loan on the house or having a self occupied house,RRSP,TFSA etc .
    At what level of income GIS becomes zero with 10 years of residency?

    • KS – If you and your wife are both approved partial OAS of 10/40ths ($142.63 each) and have a combined income of $20,000 from other sources, you will each be eligible for GIS of $487.44. Of the additional factors that you list, only RRSP income would affect the amount of your GIS. With 10/40ths OAS, GIS for a married couple becomes zero at a combined income of approx. $43,392.

  12. If one has a property ( a house or a condo unit for example), would she be eligible for a GIS if she has a low income of $12000 annually.

  13. Hi Doug,

    My parents came to Canada as permanent residents in 2006. Their only source of income is their old age pensions from Britain (approx. $1,300 monthly for my dad and $400 monthly for my mum). I should mention that this pension amount is frozen in GBP.
    Now that they are approaching 10 years of residency in Canada, my understanding they will be eligible for 10/40 of the OAS pension (which I think unfairly does not increase with each additional year of residency).

    Would they qualify for a GIS topup on their OAS pension?

    Thanks,
    Graham

  14. Hi Doug,

    Very informative site, thank you for all the useful info.

    Would you be so kind to give me a quick estimate of what I could hope for in the future, based on the following:

    I am currently 62 years old. When I reach the age of 65, it will be 26 years of living in Canada, uninterrupted.

    If I am to get an estimated $450 monthly amount from CPP, what can I expect to receive from OAS + GIS?

    How would this amount change, if I am to have other income, for example withdrawals from RRSP (let’s say $5000 yearly from RRSP)?

    Thank you in advance

    • Pedja – With 26 years of residence in Canada, your OAS will be 26/40ths of the full basic OAS of $570.52 = approx. $370.50 per month. If you are single and your only other income is CPP of $450 per month, your GIS will be approx. $695 per month. That amount will be reduced by about half of any other taxable income that you have, so RRSP of $5,000 per year would reduce your GIS by approx. $2,500 per year or $208 per month.

  15. Thank you, Doug.

    I assume those GIS amounts of $ 695 and $ 208 are GIS only, not the combined OAS + GIS.

    Cheers!

  16. Hi, Mr. Runchey: My wife and I are turning 64 by year end. We moved to the US in 1997 to work. My wife and I became landed immigrants in 1981 and Canadian citizens in 1986. We plan to retire when we turned 65 (in just over a year) and start receiving O.A.S. and G.I.S. (after applying next year before our 65th birthdays). We would like to continue living in the U.S. Our U.S. income will be U.S. social security benefits ($1400/mo for me and $700/mo for my wife). How much O.A.S. and G.I.S. do we expect to receive? Thanks for your help!

    • DL – The full basic OAS is currently $573.37/mo if you had 40 years of residence in Canada after age 18. You will receive approx. 23/40ths of that amount and your wife will receive approx. 18/40ths. Neither of you will be eligible for GIS, as you don’t reside in Canada. You should both be eligible for CPP if you both worked in Canada, although your U.S. SS will be reduced under their “Windfall Elimination Provision”.

        • DL – I won’t pretend to be an expert on the U.S. SS, but it’s my understanding that the WEP includes pensions from other countries where that pension is based on earnings and contributions (such as the CPP) and where you have fewer than 30 years of contributions to the U.S. SS. I just thought that you should be aware of that possibility.

  17. Hi, Mr Runchey:

    Just want to add some more info to my previous inquiry. I started living in Canada in 1974 and my wife in 1979.

    DL

    • Nestor – If you have resided in Canada (after age 18) for 20 years or more, OAS is payable outside of Canada until you die. If not, OAS stops after 6 months of absence from Canada.

  18. Please refer to Sergio’s comment. You said once the EI stopped in February they can start receiving GIS in March. Won’t that EI income used for the period July of one year to June of the following year for GIS purposes or do the Govt allow some type of option because an income has ceased?

  19. Hi Doug,

    Lots of useful information and you explain it very clear. We will reach 65 next year and just wonder how much OAS we can get. We lived in Canada for 33 years and based on the CPP statement our combined CPP payment is around $15,000 per year. I look up the OAS chart for that income and found out is $739.30 per month. Is that amount for both of us? Since we do not have 40 years residence, is that means we will only get 33/40th of the total? I just confuse on that. Thanks,

    Sam

  20. Hi Doug,
    My wife and I will be 65 next year, we have by then lived in Canada for 22 years. Our other income ($250 CPP for both of us + $150 from invesrment)
    My question is what will our threshold limit? because we may need to continue working as our pension going to be $315.
    Thanks

    • Noah – Your maximum combined annual income threshold will be approx. $35,328 (excluding OAS). But staying just under that threshold doesn’t mean that you will get the maximum GIS amount. GIS is paid on a sliding scale, with maximum GIS being paid at zero income and zero GIS being paid at maximum income.

  21. I am 58 and my 2015 SOC says if I am 65 today I will receive CPP $444. Could I assume if I work another 7 years until 65 at max YMPE my CPP will go up by another 7 X $25 to a total of current $444 + $175? I would have been in Canada continuously for 25 years if I turn 65. My OAS would be 25 / 40 * 570 = $356. What would be my GIS if I have no other income from 65 to 71? What would it be if I have $250 pm RRIF and $250 pm Interest and Dividends from 71? Thank you.

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