Seniors and low-income families suffer tax hit

Full article: Seniors and low-income families suffer tax hit

The combination of taxes and GIS clawbacks mean the effective tax rates for seniors can reach 100% for seniors, the C.D. Howe Institute says.

By Jonathan Chevreau
April 28, 2011

Financial Post

Briefly:

"Despite a decade of falling personal income tax rates, low income families and seniors face effective tax rates of 50% or more if they supplement government benefits with work, a C.D. Howe brief released Wednesday says. As soon as families start earning money or seniors withdraw money from retirement funds, benefits may be taxed or "clawed back." The Marginal Effective Tax Rate or METR is one of those odd concepts that views reductions in government benefits as a sort of additional tax. The classic case is poor seniors losing the Guaranteed Income Supplement as their dubious "reward" for saving in RRSPs. These ultimately become forced taxable withdrawals from RRIFs. The combination of taxes and GIS clawbacks can reach 100% for seniors, the institute says."