4.6 Settlement agreements and other awards

April 2026

Legislative authority

Section 7(3) of the Act.
Sections 14(1), 17(2), 39(1), (3) and (4), 53, 54 and 62(3) of Regulation 134/98.

Audit requirements

All awards and settlement payments are noted as assets, and exceptions to these assets and transfer of such assets are documented and on file.

Asset levels for such awards and settlement payments are adhered to and transfer of asset rules are applied consistently and fairly in accordance with provincial standards.

Random file reviews are completed to ensure that the above information is documented and filed accordingly.

Application of policy

Amounts received as compensation for pain and suffering and expenses actually and reasonably incurred or to be incurred as a result of an injury to or death of a member of the benefit unit, including any prejudgment interest, are exempt as income and assets up to a maximum amount of $50,000 per award for each member of the benefit unit.

Amounts received under settlement agreements and other awards, other than amounts paid for things like loss of income or punitive damages, may be partially or fully exempt as income and assets as outlined in regulation.

An award received by an applicant or recipient must be verified by the caseworker in order to make a determination of eligibility for an exemption.

Other than the pre-judgment interest referenced above, all interest including post judgment interest (with the exception of $30 per year of interest or dividends which may be considered as exempt from income), dividends, capital gains or investment income earned from compensation awards are considered income.

Awards for pain and suffering

Awards for pain and suffering are exempt as income and assets up to a maximum of $50,000 per award, for each member of the benefit unit.

In some cases, more than one member of a family may be granted an award or receive a settlement payment. The maximum $50,000 exemption applies to each member of a benefit unit separately.

Some examples of these awards include:

• tort awards made by a court for pain and suffering
• compensatory payments to victims of abuse in provincial institutions not otherwise explicitly exempted in regulation (e.g., the Nova Scotia Compensation for Institutional Abuse Agreement; see Settlement Agreements and other awards below for exempted agreements)
• payments made under the Japanese Canadian Redress Agreement
• compensatory payments to persons infected with HIV or Hepatitis C not otherwise explicitly exempted in regulation (e.g., the Canadian Red Cross Society (CRCS) Hepatitis C Settlement Agreement; see Settlement Agreements and other awards below for exempted agreements)
• payments made under clause 61 (2) (e) of the Family Law Act to compensate a member of the benefit unit for loss of care, guidance and companionship when certain members of their family are injured or pass away
• payments for non-economic loss received under section 46 of the Workplace Safety and Insurance Act, 1997 or section 42 of the former Workers’ Compensation Act

Awards in excess of $50,000 will be considered income and assets in making a determination about eligibility.

When determining whether an income charge applies, the Administrator should look at the net amount payable to the beneficiary after legal fees and disbursements have been deducted from the total settlement/court ordered payment.

Non-exempt forms of compensation

Awards, portions of awards or settlements to compensate a person for things like lost income are not exempt and are considered income and assets. The following forms of compensation are treated as income and assets:

• income replacement benefits
• non-earner benefits
• past or future loss of income
• punitive damages awards
• Workplace Safety and Insurance Act, 1997, or the former Workers’ Compensation Act awards for past or future economic loss

Structured settlements

Recipients of a structured settlement do not receive the full award at once. Payments are provided over a period of time. Cases where structured settlements are planned or in place require careful review.

Awards may be broken down and paid out for different reasons under several headings known as "heads of damage".

Some heads of damage are exempt (e.g., cost of future care), while other heads of damage are not exempt and are treated as income and assets (e.g., loss of income payments). Structured settlements may include various heads of damage paid at varying time periods, or may not define heads of damage at all (see Verification procedure below).

Settlement Agreements and other awards

The following payments and awards listed in the Ontario Works general regulation (134/98), are fully exempt as income and assets:

Indian Residential Schools Settlement Agreement

Any payments, other than payments for loss of income, received in the settlement of a claim of abuse sustained at an Indian residential school are exempt as income and assets.

The exemption also includes compensation payments made under the Alternative Dispute Resolution process established by the federal government prior to the formal Settlement Agreement.

Personal credits within the meaning of section 5.07 of the Indian Residential Schools Settlement Agreement are also exempt.

Compensation under the Indian Residential Schools Settlement Agreement may include one or more of the following:

• Common Experience Payment (CEP) of $10,000 for the first school year plus $3,000 for each school year after that (exempt).
• Personal Credits, not cash, will be provided if there is sufficient funding remaining in the federal CEP fund after all claims are paid and can be used for personal, family or education services (exempt).
• Payments resulting from the Independent Assessment Process (IAP), which replaced the federal government’s Alternative Dispute Resolution process. The IAP provides payments of $5,000 to $275,000 for those who suffered serious abuses (exempt).
• Income loss payments of up to $250,000 in addition to the above payments may be paid to individuals who can prove actual loss of income (not exempt).

Note that where a former student of an Indian residential school is deceased, any payments under the Indian Residential Schools Settlement Agreement are made to the deceased former student’s estate. Any payments from the estate to its beneficiaries are not exempt as a compensation award but will be treated as an inheritance.

Sixties Scoop Settlement Agreement

Any payment received by a class member under the Sixties Scoop Settlement Agreement is exempt as income and assets.

Compensation amounts are expected to vary between $21,430 and $50,000, with the exact payment to each person dependent on the number of claimants.

Federal Indian Day Schools Settlement Agreement

Any payment received by a class member under the Federal Indian Day Schools Settlement Agreement is exempt as income and assets.

Each class member will receive a payment of $10,000. Many will also receive an amount between $50,000 and $200,000, in relation to specific abuse, with the exact payment to each person based on the severity of harm suffered.

First Nations Drinking Water Settlement Agreement

Any payment received by a class member under the First Nations Drinking Water Settlement Agreement is exempt as income and assets.

First Nations Child and Family Services, Jordan’s Principle, Trout and Kith Class Settlement Agreement

Any payment received by a class member under the First Nations Child and Family Services, Jordan’s Principle, Trout and Kith Class Settlement Agreement is exempt as income and assets.

Indian Boarding Homes Settlement Agreement

Any payment received by a class member under the Indian Boarding Homes Settlement Agreement is exempt as income and assets.

Mercury Disability Fund

Payments received from the Mercury Disability Fund established under the English and Wabigoon River Systems Mercury Contamination Settlement Agreement Act, 1986 are exempt as income and assets (refer to section 36(1) of the Act).

Aboriginal Land Claim Settlement Agreements

Payments made by Ontario or Canada pursuant to an Aboriginal Land Claim Settlement are exempt as income and assets. This exemption only applies to the capital amount of such a settlement payment (with the exception of $30 per year of interest or dividends which may be considered as exempt from income).

Helpline Reconciliation Model Agreement

The Helpline Reconciliation Model Agreement provides payments to victims of abuse in provincial institutions. Under this agreement, beneficiaries are eligible to receive:

• a lump sum government payment up to $25,000
• an additional payment from the Christian Brothers of Ottawa for every dollar paid by the government
• a $3,000 contribution to an "Opportunity Fund" for each validated claimant
• free counselling services in Ontario
• payment of legal fees.

Some beneficiaries of this award are also eligible to receive a sum for unpaid wages that were earned while they attended the provincial institution.

All payments received under the Helpline Reconciliation Model Agreement are exempt as income and assets.

Grandview Agreement

The Grandview Agreement provides payments to victims of abuse in provincial institutions. Under the Grandview Agreement, beneficiaries are eligible to receive:

• financial support
• counselling
• removal of self-inflicted tattoos through laser therapy
• educational and vocational opportunities
• a contingency fund to cover expenses incurred in accessing benefits (e.g., transportation, child care, etc.)

All payments received under the Grandview Agreement are exempt as income and assets.

Extraordinary Assistance Plan and Multi-Provincial/Territorial Assistance Program

The Extraordinary Assistance Plan (EAP) was established in May 1990 to provide financial assistance to individuals infected by HIV through blood or blood products received in Canada. This assistance plan is funded by the federal government and consists of one lump sum payment of $120,000, tax free. EAP payments are exempt as income and assets.

Once approved for financial assistance under the EAP, individuals become eligible for additional assistance from the Multi-Provincial/Territorial Assistance Program (MPTAP).

The main components of the MPTAP package are:

• $30,000 per year for life to people directly infected
• a one-time $22,000 lump sum payment to people directly infected or their surviving spouses when the package is accepted
• $20,000 per year for five years to surviving spouses
• $4,000 per year for five years to surviving dependent children.

Payments received under the MPTAP Agreement are also exempt as income and assets.

Ontario Hepatitis C Assistance Plan

A person who contracted the Hepatitis C virus through the blood system in Ontario before January 1, 1986 or from July 1, 1990 to September 28, 1998 is eligible for a total payment of $25,000 (an initial payment of $10,000 plus additional compensation of $15,000) from the Ontario government. All payments under the Ontario Hepatitis C Assistance Plan are exempt as income and assets.

1986-1990 Hepatitis C Settlement Agreement

Payments under the federal, provincial and territorial 1986-1990 Hepatitis C Settlement Agreement made with respect to individuals infected with the Hepatitis C virus through the blood system between January 1, 1986 and July 1, 1990, other than payments for loss of income or loss of support, are exempt as income and assets.

Payments under the Agreement may include:

• Payments for pain and suffering to individuals infected with the Hepatitis C virus, based on the severity of their illness. The settlement calls for an initial payment of $10,000, followed by additional payments as the disease progresses. A total of $225,000 may be received for pain and suffering (exempt).
• Lump-sum awards up to $50,000 for loss of care, companionship and guidance to family members and dependents where an individual dies as a result of the Hepatitis C virus (exempt).
• Payments for loss of income or loss of support. Loss of income payments are available to individuals with the Hepatitis C virus who progress to the later stages of the disease. Loss of support payments are paid to family members and dependents where an individual has died from the Hepatitis C virus (not exempt).

Extended health benefits are available for social assistance recipients who are ineligible for financial assistance due to payments received for loss of income or loss of support (see Directive 7.3: Extended health benefits for more information).

Pre-1986/Post-1990 Hepatitis C Settlement Agreement

Payments under the Pre-1986/Post-1990 Hepatitis C Settlement Agreement, other than payments for loss of income, loss of services, or compensation to dependents, are exempt as income and assets.

The Agreement provides compensation to persons infected with the Hepatitis C virus through the blood system before January 1, 1986 and after July 1, 1990. These persons were not covered under the 1986-1990 Hepatitis C Settlement Agreement noted above.

Eligibility criteria are the same as for the 1986-1990 Agreement. The Agreement consists of one-time lump sum compensation payments to eligible individuals ranging from approximately $10,000 to over $300,000.

Lump sum compensations payments may include the following elements:

• compensation to approved Hepatitis C Infected Class Members (exempt)
• compensation for loss of income (not exempt)
• compensation for loss of services in the home (not exempt)
• compensation for family members and dependents (not exempt)

Walkerton Compensation Plan

The Walkerton Compensation Plan is the settlement of court proceedings for the Walkerton class action approved by the Ontario Superior Court of Justice on March 19, 2001. Walkerton residents, as well as non-residents who became ill or died as a result of drinking the water, or who were exposed to someone who was ill as a result of the drinking water, may be eligible for:

• a minimum payment of $2,000 per person
• additional payments above the $2,000 minimum where individuals are able to prove that their losses are compensable under the Plan and exceed $2,000.

Payments may be provided for pain and suffering, loss of past and future income, health care costs not covered by OHIP, out-of-pocket expenses and other monetary losses.

All payments received under the Walkerton Compensation Plan, except for payments for future loss of income, are exempt as income and assets.

Huronia, Rideau and Southwestern Regional Centres Settlement Agreements

The Huronia, Rideau and Southwestern Regional Centres Settlement Agreements are the settlements of court proceedings for the class action litigations by former residents of these institutions. The Huronia Regional Centre Agreement was approved by the Ontario Superior Court of Justice on December 3, 2013, while the Rideau Regional Centre and Southwestern Regional Centre agreements were approved on February 24, 2014.

Payments may be provided to class members who were victims of abuse. Individual class members may be eligible for a maximum payment of $35,000, with a potential top-up of 20% per claim if there are any funds remaining after all the claims have been paid out.

All payments received from the Huronia, Rideau and Southwestern Regional Centres Settlement Funds are exempt as income and assets.

Clegg Settlement Agreement

Payments received by a class member under the Settlement Agreement in the class action Clegg v. Her Majesty the Queen in Right of the Province of Ontario (also called Schedule 1 Facilities Class Action) that was approved by the Superior Court of Justice on April 25, 2016, are exempt as income and assets.

Nova Scotia Home for Colored Children Class Action Settlement Agreement

The Nova Scotia Home for Colored Children (NSHCC) Class Action Settlement Agreement is a settlement of court proceedings for the class action litigations by former residents of the NSHCC. The NSHCC Agreement was approved by the Nova Scotia Supreme Court on July 7, 2014.

Under the terms of the settlement, former residents of NSHCC may be eligible for compensation packages ranging from $1,000 to $200,000, depending on the period of residence and the severity of harm suffered.

All payments received under the NSHCC Settlement Agreement are exempt as income and assets.

Thalidomide Survivors Contribution Program

On March 6, 2015, the federal government announced a support package for Thalidomide survivors. Payments made under the Government of Canada’s Thalidomide Survivors Contribution Program are exempt as income and assets.

Verification procedure

A reward is verified in order to make a determination on eligibility for an exemption. Damages or compensation for pain and suffering or expenses may be awarded by a court, but are frequently settled out of court. If a case proceeds to trial, the judge may break down the damage award under various headings (i.e., heads of damage).

Out of court settlements are less likely to use heads of damage. Generally, in this case, a total figure is calculated in the settlement and the various heads of damage may not be broken down to their monetary components. If an award is made without specific reference to the heads of damage, it is necessary for the applicant/recipient, spouse and/or dependent to provide written verification from the lawyer or insurance company of the amounts for each head of damage.

The proportion of the original claim that was made for pain and suffering can then be applied to the total amount of the award actually made. Where no other heads of damage were sought for loss of earnings, other income or employment, the whole amount of the award can be attributed to pain and suffering and expenses.

The following particulars relating to the award(s) or settlement(s) are determined:

• the purpose(s) of the award(s) or settlement(s)
• the amount(s)
• the named recipient(s)
• the date of the award or settlement or when it will be paid.

In some cases an amount may represent several types of compensation awards. The amount and purpose of each award must be specified together with the name of the recipient.

The applicant or recipient must provide verification of the award by way of:

• a copy of the order(s) for the award(s) made by the court or Tribunal and/or;
• a statement or statements from the payor(s) such as an insurance company

Upon receipt of verification, staff can make a determination on eligibility.

Determination of eligibility

The following examples demonstrate the application of this Directive to various types of awards (other than payments received under the agreements or plans outlined above).

Example 1:

A head of a family with a spouse and 2 children has no income other than financial assistance under Ontario Works and no assets. The family is involved in a car accident. The head of the family is killed and the spouse and 2 children are injured.

An auto insurance claim is settled as follows:

• $10,000 to the estate of the deceased individual for medical expenses (EXP)
• $20,000 to the spouse for pain and suffering (P&S) and $7,000 for EXP
• $10,000 to the first child for P&S and $10,000 for EXP
• $11,000 to the second child for P&S and $15,000 for EXP

The awards received are within the allowable compensation award or settlement limits, being a maximum of $50,000 per each member of the benefit unit that receives an award or settlement for pain and suffering and/or expenses incurred due to injury.

*The amount awarded to the estate of the deceased individual may not impact eligibility of the benefit unit depending on finalization of the estate and whether a member of the benefit unit becomes a beneficiary of these funds. At that point, the rules regarding an inheritance may apply. See Ontario Works Directive 5.7 (Gifts and Voluntary Payments for more information.

Example 2:

A single recipient lives with her mother who is in receipt of Old Age Security. The recipient has no income, other than Ontario Works financial assistance and has assets of $1,500. Both the recipient and her mother are injured in an automobile accident.

The awards are as follows:

• $20,000 to the recipient for P&S and $6,000 for EXP
• an additional $4,000 to the recipient for expenses relating to her mother’s care
• $25,000 to the mother for P&S and $25,000 for EXP.

The total award for the recipient is fully exempt as income and assets under Ontario Works as it is within the exemption limit (a maximum of $50,000 for each member of the benefit unit as pain and suffering and/or medical expenses in total) and the recipient continues to be eligible for Ontario Works.

Payments to or in respect of the mother are not considered, as the mother is not a member of the benefit unit.

Example 3:

A recipient and spouse are involved in an accident that occurred prior to eligibility for Ontario Works financial assistance.

An auto insurance claim was settled as follows:

• $5,000 to recipient for EXP
• $7,000 to spouse for EXP and $20,000 for loss of earnings

The total non-exempt funds ($20,000) are in excess of the allowable asset limit for a couple, therefore, the benefit unit is ineligible unless and until these funds are spent down or converted to an exempt asset such as a primary vehicle.

Example 4:

A mother’s three children, (who now live with her as part of her benefit unit) previously suffered emotional abuse and discrimination while temporarily residing in a private facility. The facility is later the subject of a human rights complaint before the Ontario Human Rights Tribunal. The challenge is successful, and the children are each granted $30,000 for pain and suffering as a human rights award for the violation.

Since the human rights award compensates for pain and suffering (emotional abuse and discrimination) and the amount is below the $50,000 exemption limit under Ontario Works, the award is fully exempt from income and assets (the allowable exemption is a maximum of $50,000 for each member of the benefit unit), as set out below.

Treatment of exempt assets

Once it is determined that an amount is exempt from income and assets and total assets are not in excess of the asset limit, any changes in the value of an exempt asset (e.g., income earned from investments, items purchased and sold for a profit etc.) are monitored. The applicant, recipient or member of the benefit unit is advised that they are responsible for providing adequate information and verification about money gained and lost in respect of an exempt asset.

A recipient can retain an exempt award indefinitely. However, the exempt amount may be reduced over time depending on the circumstances. For example, if the funds are spent down, the amount of the exempt award will be reduced accordingly. The use (or spending) of exempt funds is not an issue, but the conversion of those funds (assets) to another type of asset that earns investment or interest income or which may generate a loss [e.g., the purchase of a stock or Guaranteed Investment Certificate (GIC)] must be considered in relation to ongoing eligibility for assistance.

In addition, exempt assets cannot be replenished from another source of income once spent down and the amount of the exempt funds will be adjusted accordingly. For example, if a recipient initially has $30,000 in exempt assets (an exempt compensation award) and then purchases a non-exempt second vehicle for $20,000, their exempt funds will be reduced to $10,000, however, the vehicle would be considered an exempt asset since it was purchased with exempt funds and its value does not exceed the $30,000 of exempt capital (the amount of the exempt compensation award). The individual would still qualify for financial assistance.

If however, the recipient had purchased a non-exempt vehicle for $40,000 ($30,000 from the exempt compensation award and $10,000 of other funds), $30,000 of the value of the car would be exempt and $10,000 would count towards the individual’s asset limit. Since an individual may have up to $10,000 in non-exempt assets, they would still remain eligible for financial assistance (provided they have no other non-exempt assets).

Interest and dividends earned

With the exception of $30 of interest or dividends per annum, any interest, dividends or investment income generated from an exempt award is included as income in the month earned and as an asset thereafter. Applicants and recipients with complicated questions regarding investments or seeking financial advice should be informed that they may wish to consult a financial adviser.

In cases where large or multiple awards are received, beneficiaries may take advantage of various and complex investment options. Some investment options, such as stocks and securities, may produce income in the form of additional shares as opposed to cash dividends. Such yields on investments should be considered income in the months intended. Transaction receipts, T4s, T5s or income tax returns may be required for verification.

Conversion by purchasing personal property

Example 1:

A recipient with a dependent adult receives an exempt award of $20,000.

The recipient subsequently uses the funds to buy a second car for $16,000 to help the dependent adult find and maintain employment. The $16,000 used from the exempt compensation award to purchase the car reduces the exempt compensation award funds to $4,000. However, the exemption level remains at $20,000. Although a second motor vehicle for the purpose of employment is exempt as an asset up to a maximum of $15,000, the balance of $1,000 remains exempt since it was purchased with exempt funds.

Three years later, the recipient sells the car for $14,000. The exemption level for the compensation award is adjusted to $18,000 (due to a loss of $2,000 on the sale). For more information on the sale and treatment of assets, please refer to Ontario Works Directives 4.1 (Summary of Assets) and 4.2 (Asset Limits).

Example 2:

*The exemption level can never exceed the original capital amount of the award.

For example, if the recipient in the above case purchased a coin collection for $12,000, the exemption level remains at $20,000.

If the person later sells the coin collection for $23,000, earning a capital gain of $11,000, the $11,000 profit would make the individual ineligible because it exceeds the asset limit of $10,000 for an individual. The $11,000 profit is not exempt because it exceeds the original, exempt capital amount of the award ($20,000). In order to qualify for Ontario Works again, the individual would need to spend down $1,000 or convert it to an exempt asset. In addition, the example assumes that the individual has no other non-exempt assets.

If the person sold the coin collection and only got $9,500 for it, their exempt award would be reduced to $17,500 (the $9,500 they got for the coin collection plus the $8,000 in exempt award funds they did not spend). Their asset level would not be impacted and they would remain eligible for financial assistance.

*With the exception of $30 in interest or dividends per year.

Conversion by purchasing an investment portfolio

Example 3:

A single recipient receives an exempt award of $20,000 and uses the full amount to purchase an investment portfolio. Since the funds to purchase the investments are traceable back to the exempt compensation award, the funds remain exempt at a value of $20,000. If however, the investment portfolio generates investment income, for example, $2,000, the investment income earned is treated as income in the month received and then as an asset in the following month (if not spent or converted to an exempt asset). If not spent or converted to an exempt asset, the $2,000 will contribute to the individual’s asset limit. However, as long as their non-exempt assets do not exceed $10,000 (the limit for an individual), they will remain eligible for financial assistance.