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When the system was first set up in the 1960s, there were no other broad-based government programs that paid income to all recipients of social assistance. This began to change in the 1980s. Today, most persons receiving Ontario Works or the Ontario Disability Support Program have other income from both the federal and provincial governments, particularly in the form of refundable tax credits.

Table 4 shows ten types of households receiving Ontario Works or Ontario Disability Support Program benefits and the amounts of income from various sources. Tax credits now account for one third or more of income for single parents on social assistance. Most are child-related tax credits, such as the Canada Child Tax Benefit and the new Ontario Child Benefit. A smaller contribution is made up of various property and consumption tax credits at both the federal and provincial levels.

Table 4 : Tax credits as a percent of total annual income for households on social assistance Ontario 2010
Household Social assistance Federal tax credits Ontario tax credits Total tax credits Total income Tax credits % of total income
Ontario Works
Single adult $7,020 $248 $595 $858 $7,878 11%
Two adult couple $12,120 $496 $1,053 $1,549 $13,669 11%
Lone parent - one child $10,956 $5,242 $2,153 $7,395 $18,351 40%
Lone parent - two children $11,532 $8,549 $3,303 $11,852 $23,384 51%
Two adult - one child $12,696 $5,242 $2,203 $7,445 $20,141 37%
Ontario Disability Support Program
Single adult $12,504 $248 $595 $858 $13,362 6%
Two adult couple $19,008 $496 $1,053 $1,549 $20,557 8%
Lone parent - one child $17,400 $5,242 $2,153 $7,395 $24,795 30%
Lone parent - two children $18,144 $8,549 $3,303 $11,852 $29,996 40%
Two adult - one child $19,752 $5,242 $2,203 $7,445 $27,197 27%
Source and assumptions: Calculations by the Social Assistance Review Advisory Council; two adult couple on the Ontario Disability Support Program assumes one with disability; for two children one is under age 6 and one is age 6 or older; no earned or other income.

Income from tax credits is paid as a result of filing an income tax return, something which almost everyone is expected to do. There are fewer rules to navigate beyond the ordinary challenges facing every resident filing a tax return, although barriers remain for some low-income groups in filing their taxes. Tax credits have proven popular and sufficiently attractive to governments that they have chosen to increase these programs and protect them from inflation. All tax credit programs, except the federal Universal Child Care Benefit and the Ontario Child Benefit, are indexed so their real value does not erode due to inflation. The real after-inflation value of tax credit programs has risen over time with various ad hoc improvements. In contrast to social assistance, tax credits have proven non-stigmatizing and sustainable.

“From my perspective, and I have just recently received it (Ontario Works) for the first time, the challenge is that people get used to the struggle of being on it, and do not see how they can get off of it. It is difficult to transition from being on social assistance, and then get a job directly after with enough additional pay to make it worthwhile ending assistance. You must make many adjustments, and there are many additional costs and lifestyle and routine changes that must occur when you go from living and struggling to survive ON social assistance, to working full time OFF assistance. So I think the challenge is making sure that those who get off of it have an easier time adjusting, making that transition, so that they can comfortably and confidently be off of it, and onto being self-supportive and sufficient.” - Ontario Works recipient, Toronto

The history of modern welfare in Canada reveals the futility of attempting to achieve the goal of ‘income security’ solely through increasing social assistance rates. In the last few decades broad-based income tested programs outside of social assistance have emerged that provide more reliable and publicly acceptable sources of income. Tax credit programs also have an added advantage: they are not cut off when a family finds work. For this reason, the tax credit strategy also reduces barriers to employment.