The Office of the Superintendent of Bankruptcy received several requests for clarification regarding the treatment of the One-time Grant for Guaranteed Income Supplements (GIS) in an insolvency proceeding.
The One-time Grant for Guaranteed Income Supplement is a non-taxable payment to compensate Guaranteed Income Supplement and Allowance recipients who saw a reduction or lost their benefits since July 2021 due to receipt of pandemic payments in 2020. The GIS grant payment was issued automatically during the week of April 19, 2022, to all who were eligible.
The amount received is equivalent to the sum of benefits lost since July 2021 because the recipient received a pandemic benefit in 2020.
Under subsection 36(1) of the Old Age Security Act (OAS), a benefit (i.e., a pension, supplement, or allowance) “shall not be assigned, charged, attached, anticipated or given as security, and any transaction purporting to assign, charge, attach, anticipate or give as security a benefit is void.” Furthermore, pursuant to subsection 36(1.1) of the OAS “a benefit is exempt from seizure and execution, either at law or in equity”.
Paragraph 67(1)(b) of the Bankruptcy and Insolvency Act (BIA), has the effect of excluding exempt property from property divisible amongst the creditors. Since the one-time payment for Guaranteed Income Supplement is exempt, it is not property divisible among the creditors. However, it should be included in the surplus income calculation as per section 68 of the BIA since the benefit falls under the definition of “total income.” Licensed Insolvency Trustees should follow Example 5 of Directive No. 11R2-2022R, Surplus Income, to properly assess the amount to be attributed to the bankruptcy.