Luann Bannister, who turned 65 in March, was overjoyed to be able to discover the appropriate rental house in the downtown Edmonton neighborhood where she grew up.
She had carefully estimated how much she could afford to pay for rent as a single senior, a figure that included the federal guaranteed income supplement (GIS), a monthly benefit of up to $950 that is provided to approximately 4.5 million seniors across the country.
However, just as Bannister was getting ready to move into the house she’d rented, Ottawa ripped the fiscal rug from under her.
“I get a notice from the government telling me that my GIS has been depleted,” Bannister said in an interview this week. “So that was panic city. All of a sudden I signed a lease and I don’t have money to cover the bills.”
And now, as winter approaches, she’s facing a dark, cold season as she tries to keep her utility bills as low as possible.
“Well, the lights don’t go on once it gets dark, that’s for sure. The heat is so low it’s freezing to death. I have to plan how many trips I make when I’m driving. A gourmet meal is Kraft Dinner,” she said. “It’s to the point where I just don’t know how I’m going to survive.”
Bannister is not alone. There are tens of thousands of low-income seniors across the country like her who received notice over the last few months that their GIS payments would be cut. Why? Because the pandemic benefits those seniors received in 2020 — benefits like the Canada Emergency Recover Benefit (CERB) — put them temporarily into a higher-income bracket and made them appear to Revenue Canada as if they were no longer “low-income” seniors.
“This is a very serious problem for low-income seniors across Ontario and across Canada,” said Graham Webb, a lawyer and executive director for the Toronto-based Advocacy Centre for the Elderly.
“These people rely on the GIS to pay the rent, to buy groceries, for transportation, for medicine, for all of the expenses they have. And when they’re low-income to begin with, if you reduce their income by $100, $200, $400, $600 per month, as we’re seeing, it has a devastating effect to force them into extreme poverty, often with no other means or avenue of support.”
Webb said this could get even worse. A senior with no GIS may be forced, for example, to cash in all their savings in an RRSP that they might otherwise have hoped to convert later into a RIF or other vehicle that would offer a small monthly payout over several years. But a massive withdrawal from an RRSP would be counted as income in this year — and could, again, push a low-income senior into a higher income bracket and out of GIS eligibility for yet another year. And that would be another GIS-less year with the RRSP well already dry.
The full GIS payment of $950/month is paid out to seniors who have less than about $20,000 a year income (not including Old Age Security payments). Once past that threshold of $20,000, the GIS is clawed back until it disappears. For every $2 of net income over $20,000, seniors lose $1 of their GIS.
The CERB and its successor benefit programs known as the Canada Recovery Benefit paid as much as $2,000 a month, so 425,000 low-income seniors who were receiving the GIS could easily find themselves over the $20,000-a-year income threshold for 2020 when they filed their tax returns in the spring of this year. It was that tax form that prompted the kind of notification letter sent over the summer to Bannister and tens of thousands of other seniors saying their GIS had been reduced because their 2020 income was too high.
Any Canada Recovery Benefits those seniors were receiving ended late last month and now they cannot re-qualify for GIS payments until their 2021 tax return is assessed sometime in the spring of 2022.
Worse, seniors claim that while they were notified that the CERB was a taxable benefit, they were never warned that obtaining the CERB in 2020 could jeopardize their GIS payments.
“They were always startled across the board,” Webb added. “They had no idea,” says the narrator. While they were receiving CERB, many of them had no notion what it was about. And now that CERB is done, they won’t know until the last week of July 2021 that they’ll be losing money, that they’ll be losing their supplement.”