Personal Finance

Can A Gov't Employee Lower Someone's Monthly Pension At Will?

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  • Jul 25th, 2016 12:13 pm
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Penalty Box
User avatar
Oct 19, 2012
3359 posts
421 upvotes
Toronto

Can A Gov't Employee Lower Someone's Monthly Pension At Will?

My aunt just got pensioned after reaching 65 back in October. She received various letters and was told she would receive $1,900/month which she did for 8 months. Now she receives a letter that her pension will be lowered by $200 a month to $1,700 because some bureucrat at the CRA thinks she's getting too much. Is this right? How did they calculate $1,900 a month anyways? How can a lone individual wantonly lower someone's pension at will? She will fight this and I want some directions to take if there are any.
6 replies
Deal Addict
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Dec 17, 2008
2781 posts
2300 upvotes
Winnipeg
Sounds like she wasn't having enough tax taken at source last year... And when she filed her taxes she now owes taxes... And CRA is asking for $200 a month to pay the back taxes...in the form of a garnishment order.

She is still getting 1900 most likely... She's just paying back taxes... Also if she doesn't ask for more taxes at source be taken off and will be in this boat next year too

Or... CRA had her call Service Canada and have her ask them to take $200 in tax off her payments so she doesn't have arrears next year.it's hard to tell based on your post.
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Deal Addict
Apr 4, 2013
1274 posts
410 upvotes
We need more information. As the previous poster stated, pension amounts are determined by Service Canada, not the CRA. The CRA collects taxes and cannot lower the pension amount received. The CRA can collect taxes on the pension amount, and while this will have a net affect on the amount received, it does not reduce the pension amount.

The CRA has an appeals process that should have been provided on the letter that you received. But, as the previous poster mentioned, pension amounts are taxable and those that are not taxed at source generally result in taxes owing. The CRA will not want this amount owing every year and will require that the aunt either arrange to have taxes deducted at source or for your aunt to remit quarterly payments.
Penalty Box
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Oct 19, 2012
3359 posts
421 upvotes
Toronto
Okay thanks guys..... Here's some snippets of the letter she received.... BTW my aunt was wrong it was not the CRA that sent her the letter but the Ministry of Finance/Service Canada.


(snip) The monthly amount shown above is based on your current marital status and your 2015 income. (snip) Using your new federal amount, your monthly income will be higher than the income level now guarantee by the Province of Ontario. Therefore as of July 2016, you will not qualify for payments from Ontario's Guaranteed Annual Income System (GAINS)
Deal Addict
Jan 2, 2015
1633 posts
639 upvotes
Toronto, ON
Gammatron wrote: Okay thanks guys..... Here's some snippets of the letter she received.... BTW my aunt was wrong it was not the CRA that sent her the letter but the Ministry of Finance/Service Canada.


(snip) The monthly amount shown above is based on your current marital status and your 2015 income. (snip) Using your new federal amount, your monthly income will be higher than the income level now guarantee by the Province of Ontario. Therefore as of July 2016, you will not qualify for payments from Ontario's Guaranteed Annual Income System (GAINS)
You are talking about the Guaranteed Income Supplement (and GAINS). Service Canada pays an amount of GIS from July to next June based on the net family income from the previous year's tax return. In effect, her 2015 family income was higher than the previous year, so the amount of GIS she gets goes down. This is determined by law, which has a built-in formula. No government employee made that decision, instead a group of MPs made that decision decades ago. The calculation for an individual taxpayer is made in late June or early July and the letter mailed to the pensioner so they know what they can expect.

GAINS is a top-up from the Province of Ontario. It's at most $1000 and only really applies if you are a senior and have no CPP or private income at all.
Deal Addict
Nov 6, 2015
1353 posts
1022 upvotes
Guelph, ON
There's no "lone individual wantonly lowering someone's pension", it's just an adjustment based on how the numbers add up. And as mentioned, GIS isn't a "pension", it's basically welfare for seniors.
Deal Addict
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Mar 3, 2005
1087 posts
832 upvotes
Mississauga
OP, I think your title is misleading. You seem to imply that a Government employee has arbitrarily decided to harm you aunt and arbitrarily lower her pension.


A Government employee CAN correct someone's pension calculation if it has been incorrectly calculated or the facts have changed.

A Government employee CAN correct another benefit that's payable (not a pension - GIS etc. ) if it has been incorrectly calculated or the facts have changed.

A Government employee CAN recommend someone have additional tax deducted at source if it's being done incorrectly and will result in a substantial amount owing to CRA at the end of year.

For all of these things - there will be official processed to notify and ultimately appear if someone is unhappy.

PHT

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