Canada’s tax and benefit system is making life harder for low-income seniors who continue working to pay the bills, according to a new report from the Montreal Economic Institute. The think tank is recommending the federal government overhaul how the Guaranteed Income Supplement, a benefit for this group of individuals, is clawed back.

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Eligible seniors can receive a little more than $13,000 a year from GIS. Once they work and earn more than $5,000, the federal government begins clawing that benefit back. For every additional dollar earned, GIS payments are reduced by 50 cents, before income tax and payroll deductions are applied.

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The clawback issue was recently flagged by another think tank. A November 2025 report from the C.D. Howe Institute found that Canadians with a modest pension income that includes CPP, as well as OAS and GIS, face some of the highest effective tax rates, often exceeding 75 per cent.

https://www.theglobeandmail.com/investing/personal-finance/retirement/article-canadas-tax-system-puts-low-income-working-seniors-at-a-disadvantage/