September 2017

5.3 Deductions from Employment and Training Income

Summary of Policy

Earnings include income from employment, amounts paid under a training program and the net monthly income, as determined by the Director, from an interest in, or operation of, a business.

A $200 flat rate and a 50% partial income exemption are applied to each member’s earnings to reduce chargeable earnings. Chargeable earnings is the portion of earnings that is deducted from monthly income support payments.

Chargeable earnings may be further reduced by the amount paid for child care and disability-related employment expenses that are necessary to allow a person to be employed.

Legislative Authority

Section 38 of the ODSP Regulation

Summary of Directive

Describes the earnings exemptions and deductions for members whose earnings are not fully exempt and how the exemptions and deductions are applied to calculate chargeable earnings.

Intent of Policy

By deducting only a portion of earnings received in a month from income support, recipients and their families have more monthly income than if they did not work and received only income support. In this way, the exemptions and deductions encourage recipients and their families to move towards financial independence.

Application of Policy

Chargeable earnings are determined by applying the following exemptions to each member’s gross income from employment, amounts paid under training programs and the net monthly income, as determined by the Director, from an interest in, or operation of, a business, in the following order:

  • The deductions required by law or by the terms of employment in respect of income tax, Canada Pension Plan, employment insurance, union dues or pension contributions;
  • A full exemption of the first $200 of net earnings after mandatory deductions;
  • partial exemption of 50% of the amount greater than $200.

The amount of a benefit unit’s chargeable earnings may be further reduced by the following deductible amounts:

  • child care expenses; and
  • disability-related employment expenses necessary to enable a person to be employed.

If the chargeable earnings is a negative amount, there is no reduction in income support.

The earnings exemptions and deductions under this Directive do not apply to adult members of a benefit unit who attend secondary or post-secondary school full time and whose earnings are fully exempt.

Child Care Expenses

Child care expenses are allowable deductions from earnings if child care is necessary to permit a recipient, spouse, or a dependent adult to be employed or to participate in an employment assistance activity.

If child care is provided by a person licensed under the Child Care and Early Years Act, 2014, or by a board under the Education Act for an extended day program, the actual cost of child care is deducted from earnings.

If child care is provided by an unlicensed person, the actual cost of child care is deducted up to $600 per child. (See ODSP Directive 5.5 Child Care Deductions).

Disability-Related Employment Expenses

A maximum of $1,000 per month can be deducted from earnings if the expense is work-related and attributable to the person's disability. Examples of eligible expenses include specialized transit services, attendant care services, specialized equipment and sign-language interpreting.

To qualify, the items or services purchased must be necessary for employment and not otherwise reimbursable. Verification of cost is required.

Examples

The following examples show the calculation of chargeable income.

Example 1
Recipient with gross earnings of $1,100
Disability-related employment expenses of $400

Gross Earnings   $1,100

Income Tax

----

 

Canada Pension Plan

37

 

Employment Insurance

24

 

Mandatory Pension Contributions

33

 

Union dues

26

 

Less total of mandatory deductions

- 120 980
Less $200 flat rate exemption - 200 780
Less 50% Partial Rate Exemption ($780 x 50%) - 390 390
Less disability-related employment expenses - 400 (10)
Chargeable Earnings

 

$0

Example 2
Recipient with gross earnings of $1,100
Spouse with gross earnings of $1,250
Child Care Costs of $400
Disability-related employment expenses of $300

Gross Earnings ($1,100 + 1,250)   $2,350

Income Tax

----

 

Canada Pension Plan

37/45

 

Employment Insurance

24/27

 

Mandatory Pension Contributions

33/37

 

Union dues

26/31

 

Less total mandatory deductions

- 260
(120+140)
2,090
Less $200 flat rate exemption per earner - 400
(200 x 2)
1,690
Less 50% Partial Rate Exemption ($1,690 x 50%) - 845 845
Less child care costs - 150 695
Less disability-related employment expenses - 650 45
Chargeable Earnings

 

$45

Other Employment Benefits

Employment and Training Start-up Benefit (ESUB)

A recipient, spouse, dependent adult who is not attending secondary school full time, or dependent child who has received his/her secondary school diploma (or equivalent), and who begins or changes employment or begins an approved employment assistance activity may be eligible to receive an Employment and Training Start-up Benefit of up to $500 in any 12 month period. The benefit is intended to assist with the initial costs of beginning the new employment or employment activity. (See Directive 9.1 Employment and Training Start-Up Benefit (ESUB) and Up Front Child Care Costs)

Up Front Child Care Costs

If child care costs are required to begin or change employment or begin an approved employment activity, and those child care costs must be paid in advance, eligible members of the benefit unit may qualify for up front child care payments. (See Directive 9.1 Employment and Training Start-Up Benefit (ESUB) and Up Front Child Care Costs)

Work-Related Benefit

A $100 work-related benefit is provided to all eligible members of the benefit unit, each month that they have earnings from employment or training, or net positive income from a business. This benefit is not part of the chargeable earnings calculation; rather it is included in the monthly income support provided to the recipient/benefit unit.

Eligible members of the benefit unit include recipients, spouses, and dependent adults, who are not attending secondary or post-secondary school full time. (See ODSP Policy Directive 9.18 Work-Related Benefit for exceptions to this policy).

The $100 may be used for any purpose and no receipts are required to verify expenses.

Employment Transition Benefit

The Employment Transition Benefit is intended to encourage recipients to move toward financial independence, and to ease the transition from ODSP to employment or self-employment. Recipients who exit ODSP due to earnings from employment or training, or income from the operation of a business, are entitled to a one-time payment of $500.

A benefit unit must, in the opinion of the Director, be ineligible for income support for at least two months to be eligible to receive the Employment Transition Benefit. This benefit may be paid to eligible recipients only once in any 12 month period. (See Directive 9.17 Employment Transition Benefit)

Extended Health Benefit

If a recipient's total income from all sources, after all deductions and exemptions are applied, results in the recipient being ineligible for income support, the recipient may be eligible for the Extended Health Benefit.

The Extended Health Benefit may be provided if the cost of drugs and other health related expenses on a monthly basis exceed the amount of income in excess of budgetary requirements. (See Directive 9.10 Extended Health Benefit)

Transitional Health Benefit

Recipients who do not qualify for Extended Health Benefits may qualify for the Transitional Health Benefit.

If a benefit unit is ineligible for income support due to income in excess of budgetary requirements and the income includes income from employment, a training program, or a business, members of the benefit unit may be eligible to continue to receive drug, dental, and vision care benefits. (See Directive 9.19 Transitional Health Benefit)

Excess Income/Earnings - Transitional Health Benefit and the first month of ineligibility

There is no limit on the number of times Transitional Health Benefit can be issued for a one-month period for recipients who periodically temporarily exit ODSP due to fluctuations in employment income.

For the first month of ineligibility for income support, the following policies and procedures related to assessing Transitional Health Benefit are not required:

  • Extended Health Benefit does not need to be assessed prior to approving Transitional Health Benefit, unless the recipient requires benefits that are only covered under Extended Health Benefit (e.g., Mandatory Special Necessities);
  • Verification that the employer does not provide comparable coverage does not need to be obtained; and
  • The Transitional Health Benefit Grant Letter does not need to be signed by the recipient.

If the recipient is ineligible for income support for one month only (i.e., the recipient meets eligibility requirements in the second month), then no further assessment of Extended Health Benefit or Transitional Health Benefit is required; however, if the recipient remains, or is expected to remain, ineligible for income support beyond the first month of ineligibility, then the full Extended Health Benefit or Transitional Health Benefit assessment must be conducted, per existing policy.

If the recipient is subsequently determined not eligible for Extended Health Benefit or Transitional Health Benefit, their eligibility for Transitional Health Benefit in the first month remains unaffected.

Related Directives

2.1 Who is Eligible: Dependent Adults
2.7 People Involved in Labour Disputes
3.1 Reviewing Eligibility
5.1 Definition and Treatment of Income
5.4 Treatment of Self-Employment Income
5.14 Treatment of Federal and Provincial Benefits for Families with Children
9.1 Employment and Training Start-Up Benefit and Up Front Child Care Costs
9.10 Extended Health Benefit
9.17 Employment Transition Benefit
9.18 Work-Related Benefit
9.19 Transitional Health Benefit