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Dale Jackson

Personal Finance Columnist, Payback Time


It has become a fact of life that seniors live longer, work longer, and vote. With that in mind the federal Liberal government introduced two new measures in this year’s budget aimed at providing financial relief for working seniors.

The first is a hike in the threshold for triggering the Guaranteed Income Supplement (GIS) clawback. Starting in 2020, seniors and their spouses can earn up to $5,000 a year before their GIS benefits are rolled back.

The GIS is a tax-free benefit available to low-income Canadians who receive Old Age Security (OAS).

The earnings limit is currently $3,500 a year and only applies to seniors who are employed. Self-employed seniors are currently not entitled to the exemption.    

In addition, half of any income between $5,000 and $15,000 would be tax exempt.

The level at which all GIS benefits would be rolled back would rise to just under $30,000 from around $20,000 (depending on whether the senior is employed or self-employed).

The second new budget measure aimed at working seniors is the introduction of advanced life deferred annuities (ALDA). Annuities are insurance products that pay out a set amount starting at a specific date.

ALDAs would allow retirees to move some savings out of their registered retirement funds to an annuity deferred until age 85. Current tax rules require an annuity purchased with registered funds to begin after the annuitant turns 71.

The measure allows seniors to defer taxation longer and save more money for later in retirement.

ALDAs would be allowed to occupy up to 25 per cent of registered retirement holdings, for a maximum lifetime dollar value of $150,000. They would also not be included when calculating how much seniors over 71 must withdraw from their registered retirement income funds (RRIF) every year.