Canada’s seniors, like many Canadians, are incurring higher costs of living these days in light of the COVID-19 pandemic. Groceries and pharmaceuticals have increased in price and, in light of their health concerns perhaps new, additional fees such as delivery fees or COVID-19 surcharges are being incurred.
Seniors have to rely on their remaining retirement savings, Canada’s Pension Plan and Old Age Security programs, and, if lucky enough, a workplace defined benefit pension plan to cover such costs. While financial markets have rebounded from late March, 2020 downturns, seniors’ income and cash flow sources may be stretched to cover the additional costs. The strain on their retirement savings coupled with their growing unease over potential market swings has been a significant source of anxiety for many.
Resources:
Here is a summary of Canada’s COVID-19 measures for seniors, sourced from the Canada.ca website:
| Name and Description | Ongoing/ One-time | Need to apply/ Automatic | Taxable/ Tax-free receipt |
|---|---|---|---|
Old Age Security and Guaranteed Income Supplement Seniors eligible for OAS will receive an additional $300, and those that are also eligible for GIS will receive an additional $200 (total $500), the week of July 6th, 2020. The purpose of the additional supplement is to cover increased costs of living due to COVID-19. Due to filing extension of 2019 Personal Tax Return (T1) (outlined below), eligible seniors will receive their OAS/GIS monthly payments based upon their 2018 T1 – up until September, 2020. Necessary adjustments will be made to future quarterly OAS/GIS based upon the 2019 T1 filed. |
One-time | Automatic | Tax-free |
| Ongoing until Sept, 2020 | Automatic | OAS – Taxable GIS – Tax-free |
|
GST/HST Credit Amount – Seniors that were eligible for 2019/2020 GST/HST Credits based upon their 2018 Personal Tax Return (T1) had their April, 2020 payment doubled. $443 to $886 for a single senior, and $580 to $1,160 for married or common-law seniors. Due to filing extension of 2019 T1 (outlined below), eligible seniors will receive their July, 2020 quarterly GST/HST payment based upon their 2018 T1 if their 2019 T1 has not been assessed yet. Necessary adjustments will be made to future quarterly GST/HST payments based upon the 2019 T1 filed. |
One-time | Automatic – based upon filing 2018 T1 | Tax-free |
| One-time | Automatic – if 2019 T1 has not been assessed | Tax-free | |
Individuals entitled to the Disability Tax Credit (DTC) – In June, 2020 the government proposed seniors that are eligible for the DTC (Canada Revenue Agency has approved submitted Form T2201 – Disability Tax Credit) will receive $100 if eligible for OAS and GIS, $300 if eligible for OAS only, and $600 if not eligible for OAS nor GIS. We are proposing a special one-time-tax payment to individuals who are certificate holders of the Disability Tax Credit (DTC) as of June 1, 2020, as follows: $600 for Canadians with a valid DTC certificate. $300 for Canadians with a valid DTC certificate and who are eligible for the Old Age Security (OAS) pension. $100 for Canadians with a valid DTC certificate and who are eligible for the OAS pension and the Guaranteed Income Supplement (GIS). |
One-time | Automatic – based upon DTC eligibility and receipt of OAS/GIS | Tax-free |
| 25% reduction in 2020 minimum RRIF withdrawals – announced in mid-March, due to market volatility and to preserve retirement savings, the 2020 minimum RRIF (and LIF) withdrawal rates were reduced by 25%. | One-time for the 2020 tax year | Need to apply – financial institution that holds RRIF must be directed to reduce RRIF 2020 payment(s) as it is optional | RRIF payments - Taxable |
| 2019 Personal Tax Return Filing and Tax Balances Due Extensions – the filing deadline for 2019 T1’s was deferred until June 1st, 2020 – meaning the T1 return had to be filed and no late filing penalties assessed if taxes are owing. Any new income tax balances due, or 2020 tax instalments can be deferred until August 31st, 2020 without incurring interest or penalties. | One-time for the 2020 tax year | Automatic | Not applicable |
| Canada Economic Response Benefit (CERB) – a benefit of $2,000 every 4 weeks for up to 24 weeks to eligible workers who have stopped working or whose work hours have been reduced due to COVID-19 | Ongoing for up to 24 weeks | Need to apply | Taxable |
Investors with questions about their finances should work with their tax specialist and advisor.
This document is provided for information purposes only and is not intended to provide specific individual financial, investment, tax, accounting or legal advice and should not be relied upon in that regard and does not constitute a specific offer to buy and/or sell securities. Investors should seek professional investment advice and/or the advice of a tax advisor for a comprehensive review of their personal situation prior to implementing any strategies contained in this article. Information contained in this document has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to its timeliness or accuracy.
© Sun Life Global Investments (Canada) Inc., 2020.Sun Life Global Investments (Canada) Inc. is a member of the Sun Life group of companies.
