December 2016

5.9 Loans

Legislative Authority

Section 7(3) of the Act.
Sections 13 and 54(1) of Regulation 134/98.

Audit Requirements

Random file reviews are completed to ensure that:

  • financial documents pertaining to loans have been visually verified;
  • the amount of the loan and the purpose have been visually verified; and
  • all visually verified documents have been documented in the Social Assistance Management System (SAMS)  or any other file system used by a First Nations delivery agent.

Application of Policy

In certain circumstances the Administrator may approve a loan or a portion of a loan to be exempt as income.
Loans considered exempt as income include those used for:

  • business;
  • medically necessary health-related expenses;
  • post-secondary education related costs;
  • the purchase of a motor vehicle;
  • first and last month's rent;
  • necessary house repairs; and
  • necessary household items.

Insurance payments received for loan repayments, and lines of credit used to pay credit card debt, are also considered exempt as income.

Business Loans

A loan used for the development and maintenance of a business is considered exempt as income if it is invested for the development and maintenance of the business. Any portion of a business loan that is not invested into the business is considered income (see Directive 5.11: Self-Employment Income for more information).

Loans for Medically Necessary Health-Related Expenses

In exceptional circumstances, and where no other government benefits are available, a loan or a portion of a loan used for medically necessary health-related expenses is considered exempt as income.

Medically necessary health-related expenses may include orthodontic care for dependent children, or any required medication that is not covered under the Ontario Drug Benefit (ODB) Program.

A loan provided on an ongoing basis to offset the cost of medically necessary health-related expenses, while a recipient is pending payment from the Trillium Drug Program or the Ministry of Health and Long-Term Care's Special Drugs Program, is exempt as income.

Loans for Direct Post-Secondary Education Related Costs

A loan approved by the Administrator to be used for post-secondary education costs is considered exempt as income if it is used for education or training costs, including loans received from the Ontario Student Assistance Program (OSAP). All available income sources, including OSAP should be pursued when considering post-secondary education. Education or training costs include tuition, compulsory fees, books, instructional supplies, and costs for transportation.

If the amount of the loan for post-secondary education exceeds the amount of the approved education or training costs, the excess amount of the loan must be included as income and assets.

Attendance at the post-secondary institution should be monitored as part of the recipient's participation requirements. If the recipient transfers between post-secondary institutions or training programs, the loan continues to be exempt if the new post-secondary institution or training program is approved by the Administrator.

If the recipient stops attending the institution or training program, the remaining amount of the loan, as well as any refund received from the educational institution, is to be considered as income (see to Directive 3.8: Post-Secondary Students for more information).

Casual gifts and payments may also be exempt as income where they are provided for direct post secondary education costs such as tuition, books, transportation and compulsory fees (see Directive 5.7: Casual Gifts and Payments for more information).

Loans for the Purchase of a Motor Vehicle

The Administrator may exempt as income a loan used to purchase a motor vehicle if it is required by a participant to maintain employment or participate in employment assistance activities (see Directive 4.5: Motor Vehicles for more information).

Loans for First and Last Month's Rent

The Administrator may exempt as income a loan or a portion of a loan used for the payment of first and last month's rent that is required to secure accommodation for the benefit unit. Loans for first and last month's rent may also be used for utility start-up costs.

Loans or Grants from the Residential Rehabilitation Assistance Program

The federal Residential Rehabilitation Assistance Program (RRAP) offers aid to help low income homeowners make necessary repairs to their homes. These loans are considered exempt as income when used to make necessary repairs to homes.

Loans or Grants from Ontario Renovates under the Investment In Affordable Housing for Ontario program

Ontario Renovates provides funding assistance for home repairs, renovations and/or modifications for low and modest income households. These loans are considered exempt as income when used to make necessary repairs to homes or the creation of a new affordable rental unit within an existing single family home.

Loans for the Purchase of Necessary Items

The Administrator may exempt as income loans used for the purchase of household items necessary for the well-being of members of the benefit unit (e.g., furniture, basic appliances, food and clothing).

The types of loans that may be used to pay for these approved household items include cash advances, credit cards, a line of credit, lay-away arrangements, delayed payment agreements, and personal loans.

Insurance Payments for a Loan

Payments from a disability insurance policy obtained to ensure that loan repayments are made are considered exempt as income.

Line of Credit

A line of credit that is used to pay a debt to a credit card company is considered exempt as income.