Government Insurance Benefits
Posted date : Nov 7, 2017.
Dear Bird Talk,
Every time we receive CSA News, we make it a point to read all the interesting articles from cover to cover and we wish to thank you and your collaborators for articles that are very interesting and hitting some of the points that are a concern to the members.
In the last issue, number 31, in your article on Government Insurance Benefits, you close your article this way, and I quote: “Now the benefits don’t exist unless you are close to poverty income levels they are “clawed” back in what is basically a 100 per cent tax.”
Unless we do not get in Quebec the same treatment as in the balance of Canada, in the last French version of the income tax guide, it is stated that the “clawback” starts at the level of an income of $53,215.00 at a rate of 15 per cent.
In my modest opinion, that level of income is very far from poverty level income and I can state, without fear of being wrong, that a very large portion of retired persons would not mind to give back a certain portion of their Old Age Security Pension to get that kind of income which represents over $100,000 per year for a couple. The majority of retired couples probably never made that kind of money during their working years.
Maybe, a little correction in the next edition would be necessary.
R. Paquet
Otterburn Park, QC
Response:
Here are the points that we were trying to make:
If an individual is at the 35 per cent marginal tax rate and the clawback is 15 per cent of each additional dollar, it raises your tax rate to over 50 per cent on income over $53,215.
The age credit clawback for those 65 or older is clawed back at income of $25,921 or more. Hardly the income of a rich Canadian, when the poverty line for a couple is $21,000.
The personal amount supplements are clawed back after net income exceeds $6,956.
The Care Givers Tax credit of $400 to those looking after an aged or infirm spouse or parent is clawed back after the income of the person being cared for exceeds $11,500.
The government has made clawbacks a way of life, in order to keep seniors who have been responsible in their retirement planning, at or close to the poverty line and punish them for being successful even at middle-income level. This is the point of the paragraph that you questioned.
