The following is content of a letter sent to Liberal MP Chris Brittle by one of our followers. Personal information has been removed.
Subject: Canada Disability Benefit discrepancy
Dear Mr. Brittle,
I have been advocating for those disabled resulting from vehicular accidents and would like to, first, commend the Federal Government for this new program and secondly point out what appears to be discrepancies or omissions that creates an inequity for some participants.
This program captures a very small elite group of individuals based on qualifications:
- The holder of a Disability Tax Certificate – Form T2201
- Meet the basic eligibility requirements of severe and prolonged impairment.
The participants are broken into two (2) basic groups, one (1) that can have some form of employment and two (2) those that will never be employed.
The difference between the two groups creates an inequity as to how benefits get adjusted when there is income generated for purposes of this benefit, relative to the working income exemption:
- Income can be based on employment, self-employment, or taxable Scholarships which the exemption addresses.
- Investment income not sheltered in a TFSA (there are limits on amounts allowed in this vehicle) is not included in the exemption ruling.
Both groups of participants could have negotiated an insurance settlement, as a lump sum intended to replace ongoing insurance benefit payments. if properly invested, the funds are to replace income that would have been earned and are required to take care of future medical and personal assistance that will be needed to maintain a normal life. Some of this money can be established in a TFSA but typically the settlement is large enough so that it must be invested in a manner that generates dividends and interest that is considered income and taxable.
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Here are two scenarios, which are using real examples, to show the discrepancy:
- Joe has a Disability Tax Certificate, collects CPP Disability and works part time.
Income from CPP Disability plan annually $11,520.00 Is part of net income
Income from stock investments $ 9,000.00 Is part of net income
Income from RRSP $ 1,200.00 Is part of net income
Income from Part time employment $ 9,000.00 is part of net income
Income adjustment for program $10,000.00 Deduction
Income for calculating CDB $20,720.00
Joe would qualify for the maximum amount of $200.00 per month.
- Tom has a Disability Tax Certificate, collects CPP Disability, cannot return to work and has invested his insurance settlement to create income to pay for necessities.
Income from CPP Disability plan annually $11,520.00 Is part of net income
Income from stock investments $18,000.00 Is part of net income
Income from RRSP $ 1,200.00 Is part of net income
Income from Part time employment $ 0.00 is part of net income
Income adjustment for program $ 0.00 Deduction
Income for calculating CDB $30,720.00
Tom does not qualify for the employment deduction and is above the net family income allowed for this benefit and will receive $135.66 per month as opposed to Joe who will receive the full $200.00.
We can see that Tom is treated differently because he cannot work and must rely on dividends and interest in place of employment income, which counts as income and does not trigger the deduction for this program.
This leads us into the topic of the maximum earnings allowed to receive the benefit.
Currently the maximum net income is set to $23,000.00 once the working income exemption is taken into consideration. If you are in group one (1) then you can use the $10,000.00 deduction to offset employment income but if you are of group two (2) and do not have a working income but have investment income, you cannot use the deduction to reduce net family income and will not qualify for the maximum benefit as shown above.
In conclusion, I believe the program needs to allow investment income to enjoy the same status as employment income does for deduction purposes. I am also of the conviction that the maximum net family income for a single person should be adjusted to reflect a living wage less, the working income exemption of $10,000.00 which would now make the net individual family income threshold be $33,472.00.
We must consider the dollars referenced for this program as it illustrates the lack of income enjoyed by those that qualify to participate. Should we not make this more reflective of what is happening in our society regarding poverty and use a living wage as the income threshold while taking the working income calculation into consideration. Right now, the living wage in Ontario is $43,472.00 and minimum wage is $35,776.00 annually.
This dissertation does not speak to a married couple and only references a single person.
I look forward to your response.
Have a great day.
Warm Regards,