CVITP Assist: Old Age Security, GIS and GAINS for seniors

OLD AGE SECURITY, GIS, and GAINS for SENIORS

Old Age Security:

OAS is a taxable monthly pension for eligible seniors. Unlike CPP, no prior contributions are required. The pension is subject to a clawback once income exceeds a set threshold. The OAS program aims to provide a stable financial base for older Canadians, contributing to their security and dignity in retirement.

Eligibility for OAS

To qualify, an individual must:^[1]

Be 65 or older (payment begins the first full month after turning 65).
Have been resident in Canada for a total of at least 10 years after age 18 (the 10 years does not have to be consecutive).
If the total period of residence is less than 20 years, the individual must be legally resident in Canada at the time of application approval.

Key points:

OAS can be received even if the person never worked in Canada, or if they continue to work after age 65.
If a person leaves Canada, OAS payments continue for at least six months after the month of departure.
If the recipient had 20 or more years of Canadian residence after age 18 at the time of application, payments will continue beyond six months even if the individual ceases to be a resident of Canada.

OAS Amounts (before clawback):

As of December 2024, the maximum OAS pension is:

$727 per month ($8,724 per year) for recipients aged 65–74
$800 per month ($9,600 per year) for recipients aged 75 and older

To qualify for the full OAS pension, an individual must have 40 years of Canadian residence after age 18 at the time of application.

If a person has lived in Canada for between 10 and 40 years, the maximum pension is pro-rated based on the number of years of residence. For example, a person with 30 years of residence at the time of application would receive ¾ of the full maximum (i.e., ¾ × $727 or $800). This calculation is finalized when the application is submitted; additional years of residence after application will not increase the pension.

Deferral Option:
Recipients can choose to defer OAS payments for up to five years beyond age 65 to increase their monthly pension. The pension increases by 0.6% for each month deferred, up to a maximum increase of 36% at age 70.

Inflation Adjustment:
OAS payments are indexed quarterly to inflation, based on the Consumer Price Index (CPI).

OAS clawback:

Clients of the tax clinic typically have incomes too low to trigger the OAS clawback.

In any given tax year, if a person’s net income (line 23400) exceeds the threshold and they received OAS during that year, the pension is subject to recovery.

The 2024 threshold is $90,997.
The clawback is calculated as:

(Net income − Threshold) × 15%

Any clawback is reported on Line 42200, which will reduce a refund or increase tax owing.
The person’s final net income (line 23600) is reduced by the clawback amount.

Applying for OAS:

There is an application process but Service Canada can waive that requirement. For most people registration for OAS is automatic without the need to apply, and Service Canada will simply send a notification when payments start.

If Service Canada suspects a person has not been resident in Canada for at least 40 years after age 18, they will request a formal application. Applicants must provide details of any periods outside Canada longer than six months.

Based on the information provided, Service Canada may request additional documentation, such as:

Passport copies
CBSA travel records
IRCC records

For some applicants—particularly those who immigrated as adults—this process can take many months and may be time-consuming and frustrating.

Guaranteed Income Supplement:

The GIS is a non-taxable monthly supplement to the Old Age Security (OAS) pension, intended for seniors with low income. Only individuals who are entitled to OAS can receive GIS. GIS amounts are reported on T4(OAS) slips, Box 21.

Who qualifies for GIS?

Any Canadian resident age 65 or older who qualifies for OAS is potentially eligible to receive GIS. However, because of the way GIS is calculated, only low income individuals and families will receive it.

If a person leaves Canada for more than six months, entitlement to GIS ceases starting the first day after the six months. Entitlement can resume upon return, provided the person is still a Canadian resident or regains Canadian residency.

How much is GIS?

The GIS calculation is complex, and since its greatly dependant on the amount of OAS received, it is best to consider OAS and GIS together:

Single person with no other income: OAS + GIS ≈ $1,850/month ($22,200/year)
Couple with no other income: OAS + GIS ≈ $1,400/person/month ($16,800/year)

Service Canada provides an online calculator to estimate payments. The calculation considers:

Marital status
Whether OAS was deferred
Net income
Income sources (employment vs other)
Spouse’s OAS status

It can be helpful to think of the aim of GIS: to guarantee seniors a minimum income to cover basic living expenses. If a low income individual is entitled to only a partial OAS, GIS is higher to compensate.

The maximum GIS is clawed back at a rate of 50 cents on the dollar for each dollar of net income, but excluding OAS, GIS, assistance payments from the municipal, provincial or federal level, and RDSP payments.^[2] As well, the first $5,000 of employment income is excluded, and 50% of the next $10,000 is excluded. Therefore a senior can earn some income without clawback.

The 2024 tax return is used to calculate GIS monthly payments starting in July 2025. As with OAS, GIS is adjusted for inflation quarterly.

Examples of monthly payments as of December 2024 for different scenarios:

A single person age 65 to 74, with 40 years residency, with no income other than OAS and GIS:	$727 OAS + $1,086 GIS ($1,813 total)
A single person age 65 to 74, with 20 years residency, with no income other than OAS and GIS:	$363 OAS + $1,450 GIS ($1,813 total)
A single person 75+, with 40 years residency, with no income other than OAS and GIS:	$800 OAS + $1,087 GIS ($1,887 total)
A single person 75+, with 20 years residency, with no income other than OAS and GIS:	$400 OAS + $1,487 GIS ($1,887 total)
A single person 65 to 74, with 40 years residency, with annual CPP income of $10,000:	$727 OAS + $505 GIS ($1,232 total
A single person 65 to 74, with 40 years residency, with employment income of $10,000:	$727 OAS + $972 GIS ($1,699 total)
A single person 65 to 74, with 20 years residency, with annual CPP income of $10,000:	$363 OAS + $869 GIS ($1,232)
A single person 75+, with 40 years residency, with annual CPP income of $10,000:	$800 OAS + $504 GIS
A couple, both between age 65 and 74, both with 40 years residency, with no income other than OAS and GIS:	For each spouse: $727 OAS + $654 GIS ($1,381 total)
A couple, both between age 65 and 74, both with 20 years of residency, with no income other than OAS and GIS:	For each spouse: $363 OAS + $1,018 GIS ($1,381 total
A couple, both 75+, both with 40 years residency, with no income other than OAS and GIS:	For each spouse: $800 OAS + $654 GIS ($1,454 total)

Applying for GIS:

An application is required. When applying for OAS the GIS can be applied for at the same time. Or an application can be made later through Service Canada MyAccount, or by mailing in a form.

Ongoing entitlement is conditional on filing a tax return each year, and if the person has a spouse, the spouse must also file a return.

Suspension of GIS for not filing a tax return on time, triggering request for Form 3026

In May or June after the April 30th filing deadline, CRA transmits income information to Service Canada. If a person hasn’t yet filed their return by the time the transmission occurs, Service Canada will not have the necessary information to calculate GIS. Service Canada will then suspend GIS and send a letter to the person enclosing Form 3026, Statement of Income for the Guaranteed Income Supplement. Until that form is completed and returned, Service Canada will not resume GIS.

Once Form 3026 has been sent to a client, filing a return is not a substitute for submitting Form 3026. The client must submit Form 3026.

If a client does not have Form 3026 with them, they are available online.

If a client needs to reinstate GIS urgently, they can call Service Canada at 1-800-277-9914 and explain the situation.

Tax planning tip: Increasing GIS by melting down RRSP

If a person under age 65 has an RRSP, and they have a low taxable income such that they can withdraw RRSP without triggering tax, it may be advisable to withdraw RRSP in order to avoid or reduce taxable income after age 65. By doing so, they can maximize GIS income after age 65. If the person has room in their TFSA, the withdrawn RRSP funds can be deposited in a TFSA account.

Tax planning tip: Low income individuals entitled to CPP should consider starting their CPP at age 60.

By starting CPP early the person will get a lower CPP monthly benefit. However, when the person turns 65, the CPP reduction will be partly compensated for by a higher GIS. CPP income will reduce GIS by 50 cents on the dollar.

However this strategy may not work for persons on social assistance (Ontario Works or ODSP). If CPP is taken early at age 60, social assistance may be reduced.

The Ontario Guaranteed Annual Income System (GAINS):

GAINS is a non-taxable Ontario monthly supplement to OAS and GIS, available to low income Ontarians.

Who is eligible for GAINS?

Persons receiving OAS and GIS are eligible if they have private income of not more than $4,176 for a single senior or $8,352 combined for couples (as of 2024). Private income includes CPP, private pension, employment income, investment income, and other income from non-governmental sources.

How much is GAINS?

The GAINS amount for July 2024 to June 2025 is a maximum of $87 per month for single persons, and $174 for couples. The amount payable is dependent on marital status, age (65-74 vs. 75+), and level of private income.

Applying for GAINS:

No application is required. If a person is receiving OAS and GIS then Service Canada will automatically determine the GAINS amount based on tax return information. A tax return must be filed.

References:

[1] This document does not address the Allowance Benefit for spouses or surviving spouses age 60 to 64.

[2] See Old Age Security Act, 13(c)(v); Instruction Sheet of Form 3026, under the heading, Do Not Include.