Q – I’m a bit confused on what counts as income for guaranteed income supplement (GIS) calculations. Money Sense has an article that reads: CPP, interest, and RRSP withdrawals are all counted dollar for dollar, so these items will cost you $0.50 per $1 received.

How can this be? It’s impossible to be dollar for dollar and also $0.50 on the dollar. Which is correct?

Dividends will cost you $1.40 per dollar so should we avoid dividends? – Joe

A – Bureaucracy can be confusing at times, and this is an example. What it really means is that any income you receive from the sources you named (plus others like RRIFs, EI benefits, Old Age Security, etc.) is included at the full amount in calculating your income for purposes of determining GIS eligibility. So, $1,000 worth of RRSP withdrawals adds $1,000 to your total income – dollar for dollar.

As for dividends, you have to use the grossed-up amount of any such payments in your calculations, which is where the $1.40 number comes from. That may not seem fair but it’s the law.

I should note that withdrawals from a Tax-Free Saving Account do not count as income for GIS purposes.

For every dollar you receive as income, your GIS eligibility is reduced by $0.50. That means if your total income from all qualified sources is $10,000, your GIS payments would be reduced by $5,000.

The maximum monthly GIS payment for a single person in 2023 is $1,026.96 but remember that will be reduced by $0.50 for every dollar of other income you receive. To qualify, a single person’s income cannot exceed $20,832. – G.P.