The Quebec government recently announced two important measures for seniors. Here’s what you need to know about it and how it could impact your earnings.
At the end of last year, the Ministère des Finances du Québec announced good news for seniors: the enhancement of the refundable tax credit for senior assistance. At the same time, beneficiaries of the Quebec Pension Plan (QPP) saw their pension increase by 6.5% from January 2023.
These two measures will help seniors in particular to cope with the rise in consumer prices due to inflation. What does this mean for your income, and more importantly, will it reduce the Guaranteed Income Supplement (GIS) if you are entitled to it?
Improvement of the tax credit
Olivier Levesque, director of taxation at Raymond Chabot Grant Thornton, explains that the government has increased the refundable tax credit for support for seniors, which was at a maximum of $400 in 2021.
“It will now climb to $2,000 for the 2022 tax year. This maximum can be reached by a senior 70 years and older, without a spouse and with income below $24,195,” he says.
If the income is higher, a reduction rate will apply to reduce the taxpayer’s credit, until it drops to zero from the maximum income of $64,195.
If it is a couple in which both members are eligible, then the credit can reach a maximum of $4,000, with a maximum income of $119,350. The credit granted will be $2,000 if it is a couple in which one of the spouses is not eligible, with a maximum income of $79,350.
Again, when the family income equals or exceeds the maximum income provided, the eligible senior or the couple will no longer be entitled to the tax credit. A reduction rate of 5% also applies from a threshold that varies according to the taxpayer’s situation (See table). Concretely, this means that for each additional dollar of income, we lose approximately $0.05.
“As the tax credit is refundable, if the amount of the credit is not fully allocated to offset the tax payable, it will be paid to the taxpayer. This amount will be added to the amounts already received from the two levels of government and, consequently, this will have no impact on the GIS,” specifies Olivier Levesque.
QPP increase
Since January 2023, retirees who receive the QPP have seen their pension increase by 6.5%, an increase that reflects inflation. You should know that QPP pensions are indexed each year based on the average of Statistics Canada’s Consumer Price Index.
The persons concerned are the beneficiaries of pensions for retirement, surviving spouse, disability, disabled contributor’s child and orphan.
But since the QPP is part of the income considered in the calculation of the GIS, will this increase reduce it? Olivier Levesque points out that the amount of the GIS ceiling is reviewed four times a year (January, April, July and October) and that it is also usually increased according to the cost of living. It therefore seems logical that the ceiling be revised upwards, thereby avoiding a reduction in the GIS benefits of eligible retirees.
As a reminder, here is the list of the main incomes included and those not included in the calculation of the GIS.
REVENUES INCLUDED
- QPP
- Pension funds
- RRSP withdrawals
- Employment Insurance
- Investment income
- Rental income
- Self-employment income
EXEMPT INCOME
- Old Age Security (OAS) Pension
- GIS
- Allowance for the survivor
- It is also possible to deduct RRSP deductions and union dues from your income.
THE NEW THRESHOLDS FOR THE REFUNDABLE TAX CREDIT FOR SUPPORT FOR SENIORS
