Seniors Get a Covid-19 Payment

Evelyn Jacks

Seniors who qualify for some portion of the OAS (Old Age Security) will receive a one-time tax-free payment of $300 from the federal government to help with COVID-related costs while GIS recipients will get $200 more. Further, another tax information filing extension was announced with this news on May 12: this time to October 1, 2020. For those who don’t need the money there are some interesting leveraging and sharing opportunities.

File a 2018 tax return.  While the government will be forgiving seniors who don’t have their GIS income information in on time. GIS applications must be made by October 1, 2020.  The new tax-free payments will be based on income information on the 2018 tax return. Those who failed to file those returns will miss out on the tax-free payments altogether, so now is the time to catch those filings up.

File a 2019 tax return.  Failure to file 2019 tax returns on time by June 1 will have other repercussions such as late filing penalties if taxpayers owe money to the government. Tax remittances on balances due are not required until September 1, but late filing penalties will not be forgiven.  In addition, failure to file the 2019 tax return will mean that seniors will miss out on provisions like GST/HST credits, refundable medical expense supplements (for those with some earned income) and other provincial programs.

How much is the OAS benefit?  The full amount of benefits paid are shown below for 2018 to the current quarter; note that the amounts are indexed.  Here are the benefits, 2018 to date:

Monthly

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Year Total

2018

$586.66

$589.59

$596.67

$600.85

$7,121.31

2019

$601.45

$601.45

$607.46

$613.53

$7,271.67

2020

$613.53

$613.53

 

 

 

 

Income testing?  The OAS benefits are income tested.  Seniors begin to lose their benefits at certain net income levels (this is individual net income, not family net income):

  • $79,054 in 2020
  • $77,580 in 2019 and
  • $75,910 in 2018

It is our understanding that seniors who qualified for any portion of the OAS will qualify for the tax-free benefit of $300.  That means seniors with relatively high income levels could be getting the one time benefit.  There are lots of ways to leverage that money.  See Six Pandemic Benefit Tips: Maximizing the One-Time Tax-Free Seniors’ Benefit.

Who Gets the GIS?  Given the extra boost to the GIS, it’s important to understand who qualifies.  The net pension (OAS) and benefit (GIS) and income levels are outlined in the chart below, taken from the Services Canada site.

Guaranteed Income Supplement (GIS)
For individuals receiving a full Old Age Security (OAS) pension

Single, widowed or divorced pensioner

$916.38

$18,600 (individual income)

If spouse* receives the full OAS pension

$551.63

$24,576 (combined income)

If spouse does not receive an OAS pension or Allowance

$916.38

$44,592 (combined income)

If spouse receives the Allowance

$551.63

$44,592 (combined income)

 

Allowance and Allowance for the Survivor amounts - April to June 2020

 

Maximum monthly payment

Maximum annual income

Allowance

If spouse receives the GIS & full OAS pension

$1,165.16

$34,416 (combined income)

Allowance for the Survivor

Surviving spouse or common-law partner

$1,388.92

$25,056 (individual income)

 

*includes common-law partner

 

Additional educational resources: Interested in learning more about the COVID-19 emergency relief benefits? Take the Emergency Pandemic Benefits Response Course online, which includes 9 recorded speaker sessions. You’ll earn 10 CE credits and be well-positioned to provide sound advice for tough times. This course features outstanding, detailed content on the tax and financial planning effects of an unprecedented event that will impact individuals, families and businesses alike today and in the future. The value is priceless: your clients want to know how to access support in their most difficult financial hours. Feel more confident and in-the-know about the government supports – and significant debt and audit risk – your clients might be signing up for.

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