Who qualifies for the Guaranteed Income Supplement?

GIS is for OAS recipients aged 65+ whose income — not counting OAS itself — falls below annually set thresholds. A single senior with little income beyond OAS can receive over $1,000 a month. The amount shrinks as other income rises and disappears entirely above roughly $22,000 of income for a single person.

Do RRSP withdrawals reduce my GIS?

Yes. RRSP and RRIF withdrawals count as income for GIS and cut it by roughly 50 cents on the dollar. TFSA withdrawals don't count, which is why lower-income retirees often draw from a TFSA — or melt down an RRSP before 65 — to protect their GIS.

The Guaranteed Income Supplement (GIS), explained

The Guaranteed Income Supplement is the most valuable benefit most people have never heard of. For a lower-income senior it can add more than $1,000 a month, tax-free, on top of OAS. It's also the most easily sabotaged: a modest RRSP withdrawal can quietly claw back GIS at a rate that rivals the highest tax bracket in the country. If your retirement income is modest, GIS deserves a place in the plan.

What GIS is

GIS is a monthly, tax-free top-up for OAS recipients aged 65 and older with low income. Two things make it unusual:

It's income-tested every year. Your GIS is set from last year's income (from your tax return), so filing on time matters even if you owe nothing.
OAS doesn't count against it, but almost everything else does. CPP, RRSP/RRIF withdrawals, pension income, and investment income all reduce GIS. Roughly, you lose 50 cents of GIS for every dollar of other income.

That 50% reduction is the whole story. On top of any regular income tax you pay, losing GIS acts like an extra tax — which is how a retiree with a small RRSP can face an effective marginal rate above 50% on withdrawals.

The trap — and the fix

Because RRSP and RRIF withdrawals count but TFSA withdrawals don't, where your money sits in retirement changes how much GIS you keep. A retiree living off a TFSA can qualify for full GIS; the same person drawing the same amount from a RRIF might get little or none.

The planning moves follow directly:

Melt down the RRSP before 65, in your low-income early-retirement years, so there's less RRIF income later to claw back GIS once it starts. This is the same RRSP meltdown that helps with tax generally — it just matters even more here.
Favour the TFSA for spending once GIS is in play, since those dollars are invisible to the income test.
Mind CPP timing. A larger CPP is guaranteed income, but it also counts against GIS — so for someone relying on GIS, the CPP-start decision has an extra layer worth modelling.

Who this is for

GIS isn't only for people who were low-income their whole lives. Plenty of middle-income Canadians qualify in the early years of retirement — after they stop working but before CPP, OAS and RRIF minimums fully ramp up. Those few years are a real window, and drawing from the wrong account can cost thousands in forgone GIS. The way to see it clearly is to model your income year by year and watch where GIS phases in and out.