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Welfare (Ontario Works) Legal Guide
(20 June 2021)

Chapter 6 - Income Rules

  1. Overview
    (a) Income Concepts
    (b) Income Allocation
  2. Income Reporting
  3. Earnings Income Treatment
    (a) Overview
    (b) Source Deductions
    (c) Basic Earnings Exemption
    (d) Child Care Expense Exemption
    (e) Categorical Exemptions
    . Overview
    . Training Program and Adult Secondary School Income
    . Labour Disputes
    (f) Recent and Returning Applicants
    (g) 'Loss of Income' Damages: London (City) v. Medina Isovic (Ont Superior Court, 2009)
    (h) Federal COVID (CERB) Payments [March-September 2020]
    (i) Federal COVID (CRB) Payments [October 2020 forward]
  4. Rent Paid to a Claimant
    (a) General
    (b) Lodging
    (c) Boarding (with meals)
    (d) Renters
    (e) Adequacy of Rent Amount
    (f) Income Exemption For Children and Grandchildren on Social Assistance
    on their Own
  5. Immigration Sponsorship Income
    (a) Overview
    (b) Current Treatment
  6. Canada Child Tax Benefit (CCTB) and Ontario Child Benefit (OCB)
    (a) Overview
    (b) Calculation of Past CCTB Chargeability
    (c) Other CCTB Treatment
    (d) Ontario Child Benefit (OCB) July 2008)
    (e) Transition Child Benefit (TCB) (under the OCB Program)
    . Overview
    . Categories of Recipients Not Eligible for TCB
    . Amount of TCB
    . Shared Custody Splitting of TCB
    . Repayment of TCB on Receipt of Retroactive OCB and/or CCTB
  7. Exempt Government Income
    (a) Payments from Ontario
    (b) Payments from Canada
  8. Other Exemptions from Income
    (a) Rent Received From a Child or Grandchild in Receipt
    (b) Hardship Payouts under Pension Benefits Act
    (c) Pain and Suffering Awards
    (d) Special Agreements
    (e) Administrator-Approved Expenditures from Asset-Sale Funds
    (f) Charitable Donations
    (g) $10,000 Gift or Voluntary Payments Exemption
    (g.1) Specific Gifts or Voluntary Payments
    (h) Long-Term Care Home Special Services
    (i) Home and Vehicle Modification Grants
    (j) Disaster Relief Committee Payments
    (k) Insurance Pay-outs
    (l) Registered Disability Savings Plan (RDSPs) Income
    (m) Court-Ordered Payments Applied to Approved Uses
    (n) Energy Efficiency Grants, Items or Services
    (o) Transplant Patient Expense Reimbursement Program Payments
    (p) Nova Scotia Home for Colored Children Settlement Agreement
    (q) Child Support Payment
    (r) Juror's Fees and Allowances
  9. "Loans" as Income
    (a) The Legal Status of Loans as "Income"
    . "Income" Defined
    . Rubino v Metro Toronto
    . 1993 Post-Rubino Amendments
    . Present Law and the Implied Exclusion Argument
    . Summary
    (b) Exempt Loan Income
  10. Student and Education-Related Income
    (a) Overview
    (b) Student and Education-Related Income Treatment
    (c) Earnings and Training Income (Dependents)
    (d) Earnings and Training Income of Post-Secondary Students (Any Benefit Unit Member)
  11. Common Income Situations
    (a) Motor Vehicle Accident (MVA) Settlements and Awards
    . Overview
    . Case Law
    . Handling Undifferentiated Settlements
    (b) Child and Spousal Support
    . Overview
    . Child Support
    (c) Business Income Treatment
    . Overview
    . Background
    . Case Law
    (d) Interest on Retroactive Lump Sum Payments
    . Overview
    . Case Note re Mule v Director, ODSP


1. Overview

(a) Income Concepts

Generally, monthly "income" for a benefit unit is the total value all payments, items and services received by (or on behalf of) or available to any and all members of the benefit unit in that month [Reg s.48] There are however numerous exemptions and special treatment rules, which make up the bulk of this chapter.

The first of these "exceptions" is to make sure that the monies "received" actually satisfy the definition of "income" above. For instance, in the case of Director (ODSP) v Favrod [2006] OJ #653 (QL), an ODSP disabled adult recipient lived with her mother, who was not herself receiving social assistance. The separated father made payments to the mother originally styled as "child support", which the Director wanted to deduct in accordance with normal practice that the support was being paid "on behalf" of the offspring. The Tribunal held - later supported by the court - that the "support" was in fact income to the mother to assist her as a care-giver with the extraordinary duties which she faced - and not income to the recipient, thus avoiding deduction of the income from the recipient's income support.

The concept of "chargeable" income is used to refer to the actual amount of income, after reductions from gross income for any parts of it that may be exempt income, that will be deducted from budgetary requirements (see Ch.3: "Basic Assistance") in order to reach the actual amount of assistance paid. In short, if income is "chargeable", it comes off your cheque.

Take the example of a single person with rent of $400 and chargeable (not gross) income in the month of $600. The maximum shelter component for such a person is $372, so they will get that plus the basic allowance flat amount of $227, so together their "budgetary requirements" are $599 ($372 plus $227). But the deductible income is $600, which is greater than $599 - so all the "budgetary requirements" are "satisfied" (at least in legal terms) and the recipient will be disentitled for that month.

If however the next month the deductible income is only $200, then they will get a cheque for $399 ($599 - $200)(assuming no overpayment deductions). They will continue to get assistance (and the important "benefits") as long as "budgetary requirements" exceed chargeable income.

There are some "extensions' of health benefits that may apply even where chargeable income exceeds budgetary requirements (see Ch.4 "Benefits").
(b) Income Allocation

The case of Director, ODSP v Passaro (Div Ct, 2010), while considering an asset (not an income) exemption, can be read as authority for the proposition that the income exemptions set out in this chapter should be read narrowly, and not expanded outside of their specific terms, That is, for an exemption to apply in favour of a recipient it must fall squarely within these listed exemptions. The Passaro case is at odds with long-standing statutory interpretation law from the Supreme Court of Canada that any ambiguity in the interpretation of benefits-conferring law should be read in favour of the benefits-claimant: Rizzo v Rizzo Shoes (SCC, 1998).

The normal rule is that any payments received are treated as income in the month in which they are received (and as assets if they are still retained after that month). However not all income comes in regular monthly payments, so rules have been developed to address this.

If income paid in a lump sum relates to a number of months (eg. back-pay), then it is re-allocated or 'spread' over those months [Reg s.48(3)]. Note that an earlier exception to this rule for Canada Child Tax Benefit (CCTB) income was ended in July 2008, putting CCTB income under the 'normal' spreading rule from that time forward.

Where income received in a lump sum is attributable in whole or part to periods when the recipient was not receiving welfare, then those portions should not be assessed as income for welfare purposes - even if the income was actually received while welfare was being paid. Remember though that any lump sum back payments received, while they are "spread" for purposes of income treatment, must still be considered for their impact of the recipient's asset situation if they are still retained the month after receipt (see Ch.7 "Asset Rules").

For example, if a recipient started collecting welfare on 01 June, and in August receives a retroactive (back) employment insurance (EI) cheque for the months from March to July, then only the portion of the cheque that relates to June and July must be considered for its welfare income 'chargeability'. However, in September the total remaining assets still held by the recipient - from EI and otherwise - must be assessed under the asset rules.

2. Income Reporting

It is a "condition of eligibility" (ie. disentitlement can result from non-compliance) that recipients provide information to the welfare administrator regarding a recipient's income and potential income [Reg s.14] (see the extensive discussion in Ch.5 "Information Eligibility").

As the definition of "income" (above) includes "available" income (such as debts owing to the recipient, or legal claims against others by the recipient), that too is subject to reporting duties. The administrator is both interested to ensure that such monies are realized (so that they may reduce assistance paid) and as well may want to exercise it's right to establish a security interest over such potential monies before they are received (see Ch. 5 "Asset Rules").

Failure to promptly report income is the major area of welfare fraud prosecution (see Ch.10 "Fraud and Prosecutions"). Claimants who reason that the income 'will be exempt from deduction anyway' and therefore 'it does not need to be reported' are risking a great deal and quite often deluding themselves. Remember that it is not "chargeable" income that must be reported - but "income" (ie. gross income), and it is for the administrator to decide (subject to appeal) what is chargeable and what isn't.

The safest approach for a recipient is to:
  1. report all income as soon as it is received (in writing, keeping a copy);

  2. report all claims and future potential income (in writing, keeping a copy) as soon as the claim or the potential arises or as soon thereafter as is reasonable in the circumstances (eg. report a motor vehicle accident promptly after it occurs);

  3. income received should not be spent until welfare has a chance to rule on its treatment.
Generally, administrators expect income to be reported in the same month that it is received.

Let the administrator make it's determination on how it will treat the money (ie. as chargeable in whole, part or not at all). If the recipient disagrees with that determination then that should be appealed (see Ch.10: "Appeals and Other Remedies") to the Social Benefits Tribunal through the normal procedure. In my experience welfare usually make the right call the first time around, and in fact are often generous in their interpretation of the law and policy in favour of the recipient. That is, inadequate welfare rates are caused primarily by absurdly-low budgetary requirement levels, and not by aggressive administrator application of the chargeable income rules.
In fact, this sometimes generosity can actually be a problem if a later file review reverses the administrator's earlier position, and an overpayment is assessed. Administrators no longer (they used to under the old General Welfare Assistance Act) accept 'their error' as a defence to an overpayment (an exception to the above-mentioned generosity).
The above practices should protect the recipient from income-related fraud allegations.

3. Earnings Income Treatment

(a) Overview

"Earnings" for the following purpose includes both gross employment and training program income (ie. wages before source deductions) and/or net income (income minus legitimate expenses) from self-employment (ie. a business) [for a detailed discussion of the law respecting business income treatment - esp. regarding expense treatment - see s.9 below: "Common Income Situations: Business Income Treatment"].

'Earnings' however does not include benefits or payments under any income replacement scheme or program, such as "employment insurance benefits and benefits or payments under the Canada Pension Plan and the Workplace Safety and Insurance Act, 1997." [Reg 49(2,3)].

Three staged levels (ie. applied in succession) of exemptions apply to earnings income. These staged exemptions reflect a policy of encouraging and assisting recipients to work by allowing them to keep some of their earnings free from 'chargeability' [Reg s.49].

The three stages of earnings exemption are:
  • source deductions;
  • flat-rate deduction;
  • child-care deductions.
There are also some categorical income exemptions explained in subsection (e) "Categorical Exemptions") below.

(b) Source Deductions

This deduction reduces gross earnings income by amounts for: income tax, CPP, employment insurance, pension contributions and union dues.

For employees, this is really just a determination of "net" employment income (ie. after "source deductions"), and is usually as simple as looking at the amount payable on a paycheque. For business income it involves more complex (and estimated) determinations of year-end liability for income tax and CPP contributions.

(c) Basic Earnings Exemption

The first $200 of any net employment earnings (what you have left after you apply the source deduction exemption, above) by each adult member of the benefit unit are exempt income. After that, 50% of the remainder is also exempt.

For variations on the "basic earnings exemption" for new and returning welfare applicants, see sub-section (f) below "Recent and Returning Applicants".

(d) Child Care Expense Exemption

This exemption is applied to earnings income left after applying the "source deductions exemption" and the "basic earnings exemption", above.

Child care expenses, to the maximums set out below, are deducted from earnings income for purpose of income chargeability if they meet all of the following conditions:
  • they are expended for dependent children or for children on behalf of whom temporary care assistance is being provided [see Ch.2, s.6 re "Minors in Temporary Care"],

  • they have not or will not be otherwise reimbursed,

    Payments made under the Ontario Child Care Supplement for Working Families Program (OCCSWFP) [.pdf] do not count as reimbusement for this purpose [Reg s.49(1)1.1].

  • they are necessary to enable a recipient, spouse or dependent adult (See Ch.2 "Claimants") in the benefit unit to engage in employment or employment assistance activities (workfare),

  • they are not paid to another member of the benefit unit, and

  • they have not been reimbursed under the Child Care Tax Credit under subsection 8 (15.2) of the Income Tax Act or otherwise.

    Note that any amount paid as an "up-front child care" benefit (see Ch.4: "Benefits") is not considered "reimbursement" for the purpose of determining deductions from income under this provision [Reg s.55(2)]. This means that the parent can receive this money and still claim the full child care employment earnings deduction set out in s.49(1)2). This rule increases welfare assistance, as it reduces 'chargeable' employment earnings.
Maximums per child:
  • the actual amount paid if it is paid to a person licensed under the Child Care and Early Years Act, 2014 or to a school board for an extended day program; or

  • otherwise, $600.
(e) Categorical Exemptions

. Overview

Some forms of earnings income are categorically exempt from chargeability.

. Training Program and Adult Secondary School Income

Training program earnings of both under 18 and adult members of the benefit unit are exempt income, as well as employment or training program earnings of an adult member [Reg s.49(1)5,6].

. Labour Dispute

Where income is reduced by a labour dispute (either a strike or a lock-out) - and even though no earnings are received - welfare will "deem" (ie. count as paid) income from that source in the amount that it was received in the month before the dispute. Strike pay will not be added to this deemed income.

This is practically very harsh but operates on the logic that the government does not want to subsidize a labour dispute on the side of the worker [Reg s.49(2)8,9]. However in the case of a lock-out - where the worker has no control over the employer's actions - the policy seems unfair.

If the employee involved chooses the terminate their employment on the occurence of a strike or lock-out then they may establish welfare eligibility if they are otherwise eligible and if the administrator views the termination as reasonable in the circumstances in accordance with normal "quit/fire" rules (see Ch.11 "Workfare").

(f) Recent and Returning Applicants

The $200 and 50% "basic earnings exemptions" do not apply to a new applicant for the first three months of eligibility, thus making it harder for new applicants to become eligible [Reg s.49(1)3,4].

However, this rule is itself excepted for "returning" applicants where all of the following apply:
  • the applicant has received either welfare of ODSP for at least three consecutive months in past;

  • that previous period of eligibility was cancelled within the last six months; and

  • at the date of cancellation the applicant has income from employment, a training program or income from an interest in or operation of a business.
(g) 'Loss of Income' Damages: London (City) v. Medina Isovic (Ont Superior Court, 2009)

This case is critically considered in depth in Ch.7, s.5(c). For present purposes though it stands for the proposition that retroactive litigation damages (by judgment or settlement) for 'loss of income' are not subject to the STEP deductions - rather they will be deducted dollar for dollar.

(h) Federal COVID (CERB) Payments [March-September 2020]

. Overview

Commencing March 2020 the federal government created the 'CERB' (Canada Emergency Response Benefit) program which allowed people earning more than $5,000 in the tax year 2019 to collect a flat $2,000 every four weeks. The province decided to claw-back these funds as income on roughly the same basis that they do earnings income. These ODSP income exemption rules also apply to "(e)mergency response benefits under Part VIII.4 of the Employment Insurance Act (Canada)" - and as well to 'Canada Emergency Student Benefit Act payments', the latter with the below 'Noted' exception [Reg 53.1(1), 53.2]. Collectively, I refer to these as 'federal COVID payments'.

. General Federal COVID Payment Rules

Like the earnings income exemption, the rules respect federal COVID payments are that (1) the first $200 is income exempt and (2) 50% of the balance are exempt. Unlike the earnings exemption however, if the amount deductible from the federal COVID payments "would result in a recipient becoming ineligible for assistance" they shall still receive $2.50 assistance payable (this allows them to maintain benefits such as drug card and dental) [Reg 53.1(2)].

Federal COVID payments are fully-exempt if they are received by a member of a benefit unit "who is in full-time attendance in a program of study at a post-secondary institution" [Reg 53.1(3)].
Note: COVID-era Applicant Rules:
In either of the above situations [described under Reg 53.1(2 or 3)], the federal COVID payment income exemptions do not apply to new applicants for (1) determining eligibility or (2) for calculating assistance for the first three months (calculating assistance where eligibility is granted) "where the effective date of eligibility of the applicant falls in March 2020 or later" [Reg 53.1(5)]. For benefits under the "Canada Emergency Student Benefit Act" the "effective date of eligibility" for (2) is May 2020 or later [Reg 53.2]. This means that the federal COVID payments are fully charged for income calculation in new welfare applications, and forces people who receive payments from the federal COVID programs to rely without welfare longer [the "COVID-era applicant rules"].
. Minors and Adults in Post-Secondary School Full-time

Federal COVID payments are fully-exempt if they are received by a member of a benefit unit [53.1(4)]:
  • who is a minor (under 18 years of age),

  • who is a person "who is an adult attending secondary school full time".
These persons, when making new applications, are not subject to the 'COVID-era applicant rules'.

(i) Federal COVID (CRB) Payments [October 2020 forward]

Starting 27 September 2020 the federal government replaced it's CERB program (above) with a new, similar 'Canada Recovery Benefits' (CRB) program. While the CERB welfare clawback was relatively generous (it treated CERB-income like earnings income, above), welfare harshened it's CRB clawback to effectively 100% starting October 2020. These new welfare deduction rules also apply to "payments made under the Employment Insurance Act (Canada), other than emergency response benefits under Part VIII.4 of that Act or a grant received under that Act and used for the purpose of purchasing a training course approved by the administrator." [Reg 53.3(1)].

Welfare did retain the CERB-era preservation of eligibility if the amount deductible from the CRB payments "would result in a recipient becoming ineligible for assistance", in which case they shall still receive $2.50 assistance payable (this allows them to maintain benefits such as drug card and dental) [Reg 53.3(2)]. However, it does not apply to a recipient whose welfare eligibility started 01 "October 2020 or later" [Reg 53.3(4)]. At the date of writing [15 April 2021] this '$2.50' concession applies to any CRB applicable to, or received by, 01 October 2021 [Reg 53.3(3)].

4. Rent Paid to a Claimant

(a) General

This section discusses the treatment of rent as income when it is charged by a recipient to a 'tenant', where the recipient is either a home owner or a "chief tenant" subletting to another person.

These rules are distinct from those that apply when that recipient's (the same person renting out premises) own shelter expenses are calculated (see Ch.3 "Basic Assistance: Renter/Owners: Shelter"). As well, there are rules discussed in Ch.3 about the allocation of rent expense paid by a recipient when they are "sharing" accomodation jointly with other people ("Shared Accomodation Shelter Expense Allocation"). While the same recipient will be subject to both sets of calculations: ie. a home-owner recipient (with shelter expenses of their own) rents premises to a tenant (who pays the recipient rent or income), the two different sets of rules apply independently of each other.

Recipients can receive rent from "tenants" who are lodgers, boarders or renters - or even by renting non-residential properties such as garages. The distinctions between these different categories of "tenants" are discussed in Ch.3 ("Basic Assistance: Shelter"), as they relate to their differing "shelter" treatments for purposes of assessing assistance amount.

For chargeability purposes, rental income to a recipient is calculated as 'chargeable' at a percentage of what is actually received. The percentages differ by the type of arrangement, as follows.

(b) Lodging

"Lodging" includes simple accomodation (usually a just a room with shared kitchen and bathroom) without meals provided. Chargeability of lodger income is 60% of the actual lodger rent received, but no less than $100 for each lodger.

For example, if the rent charged is $300, only $180 ($300 x 60%) counts as chargeable income. However if the rent charged is $150, then the $100 minimum applies because 60% of $150 is only $90 [Reg s.50(1)3].

(c) Boarding (with meals)

"Boarding" includes simple accomodation (usually just a room with shared kitchen and bathroom) with meals. Boarder income is assessed at 40% of the actual amount received, but no less than $100 per boarder.

For example, if the boarder is charged $300, only $120 ($300 x 40%) counts as chargeable income. However if the charge is $200, then the $100 minimum applies because 40% of $200 is only $80 [Reg s.50(1)2].

(d) Renters

The term "renters", for present purposes, covers situations where the recipient owns the premises rented, or where the recipient is themselves a renter (and is then 'sub-letting' to 'sub-tenants'). "Renters" get no meals but have exclusive possession of self-contained accomodation (ie. their own private kitchen and bathroom). As noted above, "renting" can also involve renting land, a garage or other non-residential property - though this is less usual.

Renter income is assessed at 60% of the actual amount received, with no minimum assessment.

For example, if the rent charged is $500, $300 ($500 x 60%) is chargeable income [Reg s.50(1)1].

(e) Adequacy of Rent Amount

Where recipients have rent-paying tenants of their own as set out in sub-section (b) to (d) above, either in residential property that they own (and live in) or by subletting within their own tenancy, welfare is concerned to ensure that the amount of rent paid is fair in term of market value. Remember that all recipients have a "duty to realize available resources" (see Ch.7 "Asset Rules") and the more rent the recipient receives, the less assistance the administrator has to pay.

Thus, where the rent charged to such a "tenant" is markedly different from what the market would expect, welfare will be suspicious that low rent is being claimed to minimize chargeability while actual rent money might be paid to the recipient 'under the table'.

In such case welfare may reduce or cancel assistance for breach of the "duty to realize all available resources" (see Ch.7 "Asset Rules"). Remember as well that "income" includes "amounts of income deemed to be available to members of the benefit unit" [Reg s.48(2)], which would allow welfare to "deem" income at a rate higher than that claimed by the recipient - effectively reducing the assistance paid.

(f) Income Exemption For Children and Grandchildren on Social Assistance on their Own

If a recipient provides accomodation (either as lodging, boarding or renting) to their or their spouse's child or grandchild - and if such child or grandchild is themselves on social assistance (ie. welfare or ODSP) - then any rent paid is totally exempt income to the 'landlord' recipient [Reg s.50(2)]. There are also corresponding "living with parents" rules of which provide that recipients living with their parents do not receive a shelter component to their assistance, although that rule is so fraught with exceptions as to be largely meaningless (the primary being where the payment of rent is a condition of the child or grandchild living there) (see Ch.3, s.12: "Basic Assistance: Living with Parents").

When this rule operates, it saves welfare the trouble of paying the landlord/recipient rent through the child's benefit unit, and then deducting it from them as chargeable income.

5. Immigration Sponsorship Income

(a) Overview

Where a recipient is a sponsored immigrant, it is usual for the sponsor to provide an undertaking to the federal government to support the immigrant. This is essentially a contract with the federal government to support the immigrant financially.

Concern has existed for a long time over situations where the sponsored recipient lives in accomodation owned or controlled by a defaulting sponsor who charges them rent. In such cases welfare is put in the position of paying rent to the defaulting sponsor (through providing a shelter component to the recipient) while at the same time the sponsor ignores their duties to help support the recipient.

Before a Regulation change on 15 December 2004, when a recipient neither resided with their immigration sponsor nor lived in accomodation owned or controlled by the sponsor, welfare would impose an income charge (deduction) to the greater of (a) the amount paid to the recipient by the sponsor, or (b) $100. The result would be that where the sponsor abandoned the recipient, they would still be deducted $100 regardless. There were exceptions where the sponsor was on social assistance (OW, ODSP, OAS or GIS) and where the relationship between the sponsor and the recipient had broken down due to family violence.

However these provisions generally had the negative effect of penalizing sponsor-abandoned recipients who had no on-going relationship with their sponsors. After litigation, this law has been acknowledged by the government as being discriminatory.

The 2004 amendments have tried to address this situation, however they are complex.
Case Note:
Where a sponsored immigrant makes use of social assistance, the assistance provider has a statutory entitlement, which is contractual in nature, to recover the amount of assistance provided as a debt: Mavi v Canada (SCC, 2011). This right may be enforced by filing a ministerial certificate in federal court, or any provincial court of competent jurisdiction. The decision to pursue debt recovery is subject to a duty of procedural fairness, as follows:
[5] In the exercise of this discretion, which Parliament has made clear is narrow in scope, the Crown is bound by a duty of procedural fairness. The content of this duty is fairly minimal. The Crown is obliged prior to filing a certificate of debt with the Federal Court (i) to notify a sponsor at his or her last known address of its claim; (ii) to afford the sponsor an opportunity within limited time to explain in writing his or her relevant personal and financial circumstances that are said to militate against immediate collection; (iii) to consider any relevant circumstances brought to its attention keeping in mind that the undertakings were the essential conditions precedent to allowing the sponsored immigrant to enter Canada in the first place; and (iv) to notify the sponsor of the government’s decision. This is a purely administrative process. It is a matter of debt collection. There is no obligation on the government decision maker to give reasons. .....
(b) Current Treatment

Firstly, where the sponsored recipient does not reside in premises owned or controlled by the sponsor then normal dollar-for-dollar income deductions apply to any amount provided by a sponsor to a recipient.

However, where the sponsored recipient does reside in premises controlled or owned by a defaulting (or partially-defaulting) sponsor then the new rules provide that there shall be a "deemed income" applied to reduce the shelter component of the recipient's assistance - though in a manner different from the previous system. Like the old system, the "deemed income" application can be excepted in a number of situations where it would be unfair to apply it. As the rules governing the "deemed income" are really just a convoluted way to reduce the budgetary requirements of recipients to whom they apply, they are explained in detail in Ch.3 "Basic Assistance: Sponsored Immigrants".

6. Canada Child Tax Benefit (CCTB) and Ontario Child Benefit (OCB)

(a) Overview
The following tries to explain the complexities of welfare's treatment of the CCTB and the OCB. This complexity is a function of political federal-Ontario wrangling over these programs. The basic problem with any federal attempt to provide additional monies to poor Ontarians is that if Ontario makes the funding 'chargeable' (ie. deductible) for social assistance purposes, then the net effect of the federal program is to transfer the funds directly to the province, with no benefit to the intended targets (this is called "clawback"). Such federal efforts invariably get linked to federal-provincial funding grievances in other government sectors. The result in the present case is a complicated political 'settlement' of this issue, which has in turn resulted in some convoluted legal gymastics as to when and how such program funding is chargeable. Welcome to one of the gross inefficiencies of the federal form of government.
The Canada Child Tax Benefit (CCTB) is a monthly payment made by the federal government to families based on such things as family size, ages of the children, net family income, region of the country lived in, and child care expenses.

The CCTB is composed of two elements: the Child Tax Benefit (CTB) and the National Child Benefit Supplement (NCBS). From July 2008 forwards, with the introduction of the Ontario Child Benefit (OCB) [see (d) below], the chargeability of the CCTB (both the CTB and the NCBS parts) was greatly simplified such that it became fully non-chargeable (ie. you get to keep it all) [Reg s.53(3.4)].

However, prior to that time the situation was more complicated, as I explain here. From July 1998 to June 2004, the CTB part of the CCTB was not chargeable, but the NCBS part was fully chargeable. The specific amounts of each type of benefit received are set out in the recipient's CCTB statement.

Starting in July 2004 chargeability of the NCBS was reduced by a small fixed amount per child (reflecting the annual federal increase of the NCBS), followed in July 2005, 2006 and 2007 by larger reductions [as explained in (b) below].

Remember, in July 2008, as part of the introduction of the Ontario Child Benefit [see (d) below] the chargeability of the NCBS was ended completely, rendering all parts of the CCTB non-chargeable from that time forward.

(b) Calculation of Past CCTB Chargeability (July 1998 to July 2008)

As noted above, the basic treatment of CCTB income during this period was to exempt the CTB from chargeability (ie. recipients can keep it) but to charge the NCBS (aka "item C" form the Income Tax formula). This treatment was modified slightly in June 2004 (inclusive) by the staged introduction of additional 'exemptions' from chargeability of the NCBS (which results in the recipient being able to keep more of it). These staged changes are explained here.

From July 2004 to June 2005 an additional chargeability 'exemption' applied as follows:
  • $4.00 for the first dependent child;

  • $3.41 for the second dependent child;

  • $3.25 for each additional dependent child.
From July 2005 to June 2006 an additional chargeability 'exemption' applied as follows:
  • $21.58 for the first dependent child;

  • $20.66 for the second dependent child.

  • $20.33 for each additional dependent child.
From July 2006 to June 2007 the additional chargeability exemption was replaced by higher amounts, as follows:
  • $40.17 for the first dependent child.

  • $38.82 for the second dependent child.

  • $38.41 for each additional dependent child.
From July 2007 to June 2008 the additional chargeability exemption was replaced by higher amounts, as follows:
  • $43.75 for the first dependent child.

  • $41.99 for the second dependent child.

  • $41.41 for each additional dependent child.
The effect of these changes is to increase the amount of CCTB that recipients are allowed to keep.

As noted in (a) above, the NCBS (and thus all of the CCTB) became non-chargeable in July of 2008.

This link may help determining the amount of CCTB you are entitled to: Online CCTB Calculator.

(c) Other CCTB Treatment

While CCTB income was normally received monthly, when - prior to July 2008 - it was received as a lump sum (such as a back-payment) it was an exception to the normal income 'spreading' rule (see s.1(b): "Income Allocation, above), which re-allocates lump sums to the months to which the money applies. Thus where a lump sum CTB income was received prior to July 2008 it was treated in its entirety as income in that month alone [Reg s.48(5)].

Note that where (prior to July 2008) a CCTB lump sum payment might exceed the amount of the monthly budgetary requirements (thereby cancelling eligibility for that month) this may have been to the recipient's advantage as it likely reduced the total 'chargeability' - because when CTB income is spread over months it is chargeable dollar-for-dollar.

However with the OCB changes brought about in July 2008 [see (d) following], the normal 'spreading' rule was reinstated for all CCTB lump sum income (both CTB and NCBS).

(d) Ontario Child Benefit (OCB) (July 2008)

As part of a resolution of a federal-Ontario clawback dispute over the CCTB (discussed above), in July 2008 Ontario started the monthly-paid "Ontario Child Benefit" (OCB). The OCB is administered and paid through the same federal system that administers and pays the CCTB.

The OCB has the following features:
  • while it is technically not chargeable income against budgetary requirements (BRs) [BRs are explained in Ch.3: "Basic Assistance"], BRs have been reduced to assume that OCB will be in-pay);
  • it will increase in amount from a maximum of $50 monthly per child at its start in July 2008 to a maximum of $92 monthly per child in 2011;
  • it coincides with the ending of the NCBS clawback [see (a) above];
  • it coincides with the termination of the old Winter Clothing Allowance and the Back-to-School Allowance.
This link may help determining the amount of OCB you are entitled to: Online OCB Calculator.

(e) Transition Child Benefit (TCB) (under the OCB Program)

. Overview

While the OCB program started in July 2008, many welfare recipients were slow to fully avail themselves of the program, typically due to non-filing of income tax (which is where the OCB is claimed), or for the fact that they were in some type of transition such as having a new child or moving into Ontario.

While recipients were technically required to have this problem sorted out by July 2008 (by keeping their income tax returns, and thus OCB applications, current) - as at that date OCB benefits come under the 'duty to realize available resources', see Ch.7, s.7], a "transition child benefit" (TCB) has been established in an attempt to ensure that those not fully up-to-speed are not unduly penalized [Reg s.58.3]. These provisions now continued for all situations where OCB and CCTB are, for whatever reason, late in coming into payment.

Recipients are not required to make any application for the TCB, as the welfare administrator has the duty to calculate and pay it without a request being made. The TCB thus differs from the OCB in that it will be paid on the welfare cheque, not through the federal CCTB system.

. Categories of Recipients Not Eligible for TCB

Note that the following categories of recipients are not eligible for the TCB [Reg s.58.3(3)]:
  • emergency hostel (shelter) residents (this does not include residents in interval or transition homes for abused women: see immediately following) [re such residents see Ch.3, s.9(e)];

  • residents of interval or transition homes for abused women if they are no longer under the three-month 'still living at home' budgetary requirements extension. This extension can be longer at the discretion of the administrator, and is meant to preserve a woman's ability to pay home expenses for a reasonable time to preserve the option of returning to that home. This extension is explained further at Ch.3, s.9(c)];

  • 'minor sole-support parents' [see Ch.3, s.10] who receive welfare for their child/ren but who themselves are in their parent's benefit unit.
. Amount of TCB

Where the benefit unit is receiving neither the OCB nor the NCBS for a given child, then the amount of the TCB is $230 for that child per month.

Where the benefit unit is receiving less than the maximum OCB and/or NCBS for a given child, then the amount of the monthly TCB is $230 per child minus the OCB and NCBS actually received respecting each child.

. Shared-Custody Splitting of TCB

However, where two persons, one not in the benefit unit, are shared-custody parents for CCTB purposes, then the amount of TCB for the shared-custody children is reduced by 50% each [Reg 58.3(4)]. Similarly, where two persons share joint physical custody on an approximately equal basis (as determined by the Director) over a child for which TCB is payable, then the TCB is split 50/50 between the two people [Reg s.58.3(6)]. Shared custody and shared CCTB eligibility are discussed in more detail in relation to the definition of a 'dependent minor' at Ch.2, s.4(b).

. Repayment of TCB on Receipt of Retroactive OCB and/or CCTB

Where retroactive OCB and/or CCTB is received, an 'overpayment' of TCB results if (as there usually is) any or all of the retroactive payment applies to months in which TCB has earlier also been received [Reg 47.2(1-3)]. The amount of the overpayment is that portion of the retroactive payment that is applicable to the months that TCB was also received (the 'overlap months'), but shall not be greater than the TCB received over these overlap months.

Where the retroactive payment is received before 01 March 2015 the 'overpayment' is recovered by reducing ongoing monthly budgetary requirements of the recipient, starting the month after the retroactive payment is received and continuing until the overpayment is recovered in full. This results in a full recovery (ie. a claw-back) of the full TCB received in the period of overlap, by way of a reduction in the amount of ongoing assistance for as many months as it takes [the old Reg s.47.2, since repealed and re-enacted, but still applicable to pre-01 March 2015 situations by virtue of the current Reg 47.2(5)].

However, when retroactive OCB and/or CCTB is received on or after 01 March 2015, the reduction in budgetary requirements only continues for three months. Any amount of of overpayment remaining after that period is waived by the administrator (ie. it is forgiven and will not be recovered).

In either case (retro payment received before, or on and after, 01 March 2015), no reduction in budgetary requirements will be applied to reduce them to zero or less (which would eliminate eligibility for the month), but rather budgetary requirements will be deemed to be at least $2.50. This is done to preserve continuity of eligibility for benefits, particularly the drug card - and is functionally equivalent to an 'extended health benefit' such as is discussed in Ch.4, s.3 [Reg s.47.2(4)]. A similar amendment [Reg s.48(5,6)] is made to achieve the same 'extended health benefit' result where the recipient has chargeable income in the month.

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Last modified: 11-01-23
By: admin