What the govern­ment is of­fer­ing se­niors dur­ing the pan­demic

Calgary Herald - - FINANCIAL POST - JAMIE GOLOMBEK Tax Ex­pert Jamie.golombek@cibc.com Jamie Golombek, CPA, CA, CFP, CLU, TEP is the man­ag­ing di­rec­tor, Tax & Es­tate Plan­ning with CIBC Pri­vate Wealth Man­age­ment in Toronto.

Some se­niors have ex­pe­ri­enced sig­nif­i­cant fi­nan­cial chal­lenges dur­ing the COVID-19 pan­demic, from the in­creased costs associated with home de­liv­ery for gro­ceries and take­out meals, to the drop in the value of re­tire­ment port­fo­lios as a re­sult of re­cent mar­ket vo­latil­ity.

On May 12, the govern­ment an­nounced ad­di­tional sup­port for se­niors in the form of a spe­cial, in­creased Old Age Se­cu­rity (OAS) and Guar­an­teed In­come Sup­ple­ment (GIS) pay­ment.

Let’s re­view the new re­lief be­ing of­fered, along with other po­ten­tial re­lief that may be avail­able to as­sist se­niors dur­ing this chal­leng­ing time.



The OAS pen­sion is a monthly pay­ment avail­able to those aged 65 and older who meet the Cana­dian le­gal sta­tus and res­i­dence re­quire­ments. OAS can be deferred for up to 60 months (five years) af­ter age 65, in ex­change for a higher monthly amount of 0.6 per cent for ev­ery month, up to a max­i­mum of 36 per cent at age 70.

OAS is tax­able and the cur­rent max­i­mum monthly pay­ment is $614. The OAS pen­sion is sub­ject to a “claw­back” based on in­come, such that in 2020 it is re­paid at a rate of 15 per cent when net in­come (be­fore cer­tain ad­just­ments) is above $79,054, and is fully elim­i­nated once in­come is more than $128,137.

The GIS is avail­able to low-in­come se­niors and comes in the form of a monthly, non-tax­able ben­e­fit that’s added to the OAS pen­sion. The max­i­mum monthly GIS for a sin­gle se­nior is cur­rently $916. It’s also in­come-tested and re­duced at a rate of 50 per cent when ad­justed in­come tops $18,600, and is elim­i­nated once in­come is over $40,593.

The govern­ment on May 12 an­nounced an ad­di­tional $2.5 bil­lion in fi­nan­cial sup­port for se­niors in the form of a one-time, tax-free pay­ment of $300 for those el­i­gi­ble for the OAS pen­sion, and an ad­di­tional $200 for those el­i­gi­ble for the GIS. There are cur­rently 6.7 mil­lion se­niors el­i­gi­ble for the OAS pen­sion and 2.2 mil­lion el­i­gi­ble for the GIS.

The one-time pay­ment for se­niors is avail­able to in­di­vid­u­als el­i­gi­ble to re­ceive the OAS or GIS sup­ple­ment in June 2020 and will be paid di­rectly to se­niors’ bank ac­counts, as­sum­ing they’re en­rolled for direct de­posit. Other­wise, a cheque will be is­sued. The spe­cial pay­ment is non-tax­able and, as a re­sult, se­niors will re­ceive the full amount (ei­ther $300 or $500) with no with­hold­ing. A tax slip will not be is­sued and the money does not need to be re­ported on the 2020 tax re­turn.

No date has been con­firmed for the pay­ment, which the govern­ment said will be is­sued “as soon as pos­si­ble.”


Lower and mid­dle-in­come el­i­gi­ble se­niors should have also re­ceived a one-time spe­cial pay­ment in April 2020 through the Goods and Ser­vices Tax Credit (GSTC), which dou­bled the max­i­mum an­nual pay­ment amounts for the 2019-20 ben­e­fit year. More than four mil­lion se­niors ben­e­fited from this top-up, which pro­vided an av­er­age of $375 for sin­gles and $510 for cou­ples. Close to 85 per cent of sin­gle se­niors and al­most half of se­nior cou­ples ben­e­fited from this pay­ment.


The govern­ment has an­nounced that it will be tem­po­rar­ily ex­tend­ing pay­ments for the GIS and the Al­lowance for an el­i­gi­ble spouse, aged 60 to 64, if a se­nior’s 2019 in­come in­for­ma­tion has not yet been as­sessed. This will en­sure that el­i­gi­ble se­niors con­tinue to re­ceive their ben­e­fits up to Sept. 30 even if their 2019 re­turns have not yet been filed. To avoid a fu­ture in­ter­rup­tion in ben­e­fits, the govern­ment is en­cour­ag­ing se­niors to sub­mit their 2019 in­come in­for­ma­tion as soon as pos­si­ble, and no later than Oct. 1, 2020. Any taxes ow­ing for the 2019 year are due by Sept. 1.


Many se­niors con­tinue to work, ei­ther full or part time dur­ing re­tire­ment, po­ten­tially mak­ing them el­i­gi­ble for the Canada Emer­gency Re­sponse Ben­e­fit (CERB) pro­gram, pro­vided they earned at least $5,000 in (self-)em­ploy­ment in­come in 2019 or in the 12 months prior to ap­ply­ing. The pro­gram pays a tax­able ben­e­fit of $2,000 ev­ery four weeks for up to 16 weeks to el­i­gi­ble work­ers, in­clud­ing se­niors, who have lost in­come due to COVID-19. Pen­sion in­come does not af­fect el­i­gi­bil­ity for the CERB, and you can earn up to $1,000 of (self-)em­ploy­ment in­come per four-week pe­riod and still be el­i­gi­ble.


By the end of the year you turn 71, you must ei­ther con­vert your Reg­is­tered Re­tire­ment Sav­ings Plan (RRSP) to a Reg­is­tered Re­tire­ment In­come Fund (RRIF) to con­tinue the tax de­fer­ral, dereg­is­ter the RRSP and pay the re­sult­ing taxes, or pur­chase a reg­is­tered an­nu­ity. Once you con­vert to a RRIF, you must start tak­ing min­i­mum with­drawals from it in the year af­ter it’s es­tab­lished. Min­i­mum with­drawals are cal­cu­lated as a per­cent­age of the fair mar­ket value of your RRIF as­sets at the be­gin­ning of the year, and the per­cent­age is based on your age. RRIF with­drawals are tax­able.

For 2020, the govern­ment has re­duced the re­quired min­i­mum RRIF with­drawals by 25 per cent “in recog­ni­tion of volatile mar­ket con­di­tions and their im­pact on many se­niors’ re­tire­ment sav­ings.” This will pro­vide needed flex­i­bil­ity for se­niors con­cerned they may be re­quired to liq­ui­date more of their RRIF as­sets than they need in or­der to meet the cur­rent leg­is­lated min­i­mum with­drawal re­quire­ments.

If you’ve pre­vi­ously set up reg­u­lar monthly or quar­terly RRIF min­i­mum with­drawals based on the pre-ad­justed per­cent­ages, you may wish to con­tact your fi­nan­cial in­sti­tu­tion to re­quest re­duced with­drawals for the bal­ance of 2020 if you don’t need the cash.


In Septem­ber 2019, in the run up to the fed­eral elec­tion, the Lib­er­als promised to in­crease OAS by 10 per cent once a se­nior turns 75, and boost the Canada Pen­sion Plan sur­vivor ben­e­fit by 25 per cent. Sur­vivor ben­e­fits could in­crease up to $2,116, while in­creases to the OAS would mean $736 more each year for el­i­gi­ble se­niors. The changes were sup­posed to take ef­fect in July and be in­dexed to in­fla­tion, but the govern­ment hasn’t in­di­cated whether it’s on track to im­ple­ment th­ese prom­ises by that time.

Fi­nally, as I dis­cussed in a prior col­umn, some se­niors are call­ing on Ot­tawa to per­mit lim­ited tax-free RRSP with­drawals. Struc­tured sim­i­lar to the ex­ist­ing Home Buy­ers’ Plan and Life­long Learn­ing Plan, it would al­low taxfree bor­row­ings from your RRSP, up to a cer­tain dol­lar limit, re­payable over a set num­ber of years. There has not been any word yet on whether the govern­ment is con­sid­er­ing such a move.

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