We tend to think that most if not all seniors are okay during the COVID pandemic, but many aren’t. Or need an extra boost. Perhaps you know some seniors that could use these programs. Some have also been impacted by market losses. Here’s what’s on or being planned.
Initially, on May 12, the Liberal government announced an added element to the Old Age Support program called the Guaranteed Income Supplement payment. Now they are adding additional support measures.
Guaranteed Income Supplement (GIS)
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.
This one-time payment for seniors is available to individuals eligible to receive the OAS or GIS supplement as of June 2020. It can be paid directly to a bank account, assuming they’re enrolled for direct deposit. Otherwise, a standard cheque will be issued and mailed out. This special payment is non-taxable so 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.
CERB For seniors still working
As 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.
Seniors with lower and middle incomes should have 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 nice little top-up, that provided an average of $375 for singles and $510 for couples. Close to 85 percent of single seniors and almost half of senior couples benefited from this payment.
Tax return filing deadlines
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, 2020.
RRIF Minimum amounts
Do you turn 71 by the end of the year? Then you must either convert your Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund (RRIF) to continue the tax deferral, de-register the RRSP and pay the resulting taxes, or you can 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. You should probably contact the financial institution you registered with.
Please note: this is not formal financial advice, simply a listing of available programs. Please contact your financial advisor or institution for further information. All programs listed here are subject to change.
Author: Alex Hurst is a staff writer for HUM@Nmedia for Optimyz and Silver Magazine.