What Canadian seniors need to know about COVID-19 and their finances.
February 17, 2022
The COVID-19 pandemic has impacted everyone around the world in various ways. No matter your income, age or family situation, there has been a lot of information to take in and the information is changing all the time as well.
But don’t worry! H&R Block has done the legwork to help keep you up-to-date with everything you need to know as a Canadian senior. As the COVID-19 situation continues to change, there are some things that could affect you and your finances. We'll cover the big three factors you need to be aware of. You can use this list below to navigate the article:
New extra payment for Old Age Security (OAS)
Back in June 2021, eligible seniors (those born on or after June 30, 1947) received a one-time OAS extra payment of $500 as long as they met the age requirement. Since then, there is an additional extra payment. This one-time payment is taxable, but it was not subject to clawback.
Since this new bonus payment is not subject to clawback, this means that, if you make above a certain net income, you won’t be subject to the 15% OAS recovery tax that is usually applied. This extra payment will be reported in a new box in the T4A slip instead of being included with the regular OAS benefits. It is also not included in your income when it comes to determining eligibility for the Guaranteed Income Supplement (GIS) - Allowance.
Increase in permanent payments
Effective July 2022, OAS payments will be permanently increased by 10% for seniors 75 or older. This means that eligible seniors can now receive an increase of $770.70 per year, which is higher than the previous $642.25 in past years.
This is the first permanent increase to the OAS pension since 1973!
Reduced GIS payments due to CERB
Many seniors who received the GIS and got CERB back in 2020 got a shock when their benefit entitlement was reduced in July 2021 because of the additional income. Seniors who applied for CERB though Service Canada, can apply to have their GIS benefit recalculated based on their current employment, self-employment, or pension income.
But it is worth noting that this re-calculation option isn’t available to those who applied through the Canada Revenue Agency (CRA). This is because EI benefits - but not COVID-19 benefits - are defined as “pension” for this arrangement.
Back in December of 2021, the government announced it would make a one-time payment to help GIS recipients compensate for this financial hardship. July 2022 payments and COVID-19 benefits will also be excluded from the GIS calculation.
Additional Provincial Measures
Many Canadian provinces created additional financial assistance programs for seniors, to help them through this difficult time. We recommend you review your provincial government’s website to find out additional details that are relevant to you:
How H&R Block Can Help
If you have any questions about the impact of these changes, or if you want to prepare and file your taxes for any tax year but aren’t sure where to start, H&R Block Tax Experts are here to help. If you’re ready to file your taxes now, find the H&R Block office nearest to you to get started today.