Paul Delean: How Life Abroad Affects OAS Payments

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Last week’s column on improvements to Old Age Security (OAS) generated more questions on the subject from readers. This is what they wanted to know.

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Q: I am a retired Canadian in Ecuador. The government recently announced an increase for all Canadians receiving payments from the OAS. Will they apply to retired Canadians outside of Canada or only to those who live in the country?

A: In general, OAS beneficiaries who move to other countries are entitled to the same amount they would receive if they still lived here. Depending on where they’ve moved, they might even have the option to have the payment automatically converted to the local currency.

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But you must live in Canada for at least 40 years after age 18 to get the maximum OAS benefit at age 65. If you moved after living here less than 20 years, the rules are different.

“OAS pensioners who leave Canada and do not meet the 20-year requirement are entitled to OAS pension payments for the month of departure and the following six months, but the payment does not continue beyond that point,” says Employment and Social Development Canada. .

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However, OAS payments can be resumed if the person returns to reside in Canada.

The Guaranteed Income Supplement (GIS), an extra boost for low-income seniors, is permanently cut off six months after the beneficiary settles outside of Canada.

“The six-month grace period ensures that GIS and allowances continue to be paid to low-income retirees who are only leaving Canada on a temporary basis,” the agency said. They can also be reinstated if the individual returns.

Q: A friend of mine is turning 75 in September. He wonders if he will get the 10 percent OAS raise in October or just in July 2023. And will everyone over 75 get the same amount?

A: The 10 percent increase in OAS for Canadians age 75 and older takes effect this month, but continues. It applies the month after someone turns 75, in her friend’s case, October.

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All recipients get the same percentage increase, but not necessarily the same amount. Those who have not lived in Canada for at least 40 years after age 18 get a lower benefit than someone who has. An older adult who waited past age 65 to start collecting OAS gets more than someone who took it as early as possible. Seniors in higher tax brackets can get some or all of their OAS entitlement back.

Q: Finance Minister Chrystia Freeland was recently quoted as saying that the (federal) government would provide some kind of special assistance to tenants. How do you qualify for that?

A: We do not know yet. The government has stated that it will pay a one-time “housing affordability payment” of $500 to nearly 1 million low-income Canadian renters in 2022, but has so far provided no further details or a timeline for the payment.

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It will be interesting to see how the government establishes that potential beneficiaries are actually renters in 2022, or simply sends a check to anyone whose income falls below a certain threshold.

Q: You recently wrote that children or spouses living in a home owned by your spouse or parent could exempt that property from capital gains tax, even if the home is not the owner’s primary residence.

What about a parent of the owner who lives in an upper duplex, with the owner in the lower? When the superior is sold, does the relationship allow for the capital gains exemption?

A: A duplex is, by definition, two residences. If the building has one owner, he or she cannot occupy both units at the same time, so only one may be eligible for the primary residence capital gains tax exemption when the building is sold. If the parent owned the upper duplex, both units would be eligible for the exemption.

The Montreal Gazette invites readers to ask questions about taxes, investments, and personal finance. If you have a query you would like addressed please email Paul Delean at [email protected]