5.3 — Deductions from employment and training income
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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.
For persons with a disability in the benefit unit, a $1,000 flat rate and a 25% partial income exemption will be applied to each member’s earnings to reduce chargeable earnings. Chargeable earnings are the portion of earnings that is deducted from monthly income support payments.
For non-disabled adult members of the benefit unit, a $200 flat rate and a 50% partial income exemption are applied to each member’s earnings to reduce chargeable earnings.
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.
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
Earnings includes income from employment, amounts paid under training programs and the net monthly income determined by the Director from an interest in, or operation of, a business.
The following income exemptions and deductions apply to earnings from employment, paid training and monthly net business income in the following order:
- all payroll deductions except (does not apply to business income):
- deductions for child or spousal support owed, and
- deductions for garnishments to pay a debt;
- full exemption of the first $1,000 of net earnings after payroll deductions for persons with a disability in the benefit unit;
- partial exemption of 25% of net earnings greater than $1,000 for persons with a disability in the benefit unit;
- for non-disabled adult members of the benefit unit, there is a full exemption of the first $200 per person per month and 50% partial exemption for earnings above $200;
- monthly child care expenses; and
- monthly disability-related employment expenses necessary to enable a person to be employed.
Any monthly earnings remaining after the above exemptions and deductions have been applied are deducted from monthly income support. If earnings are a negative amount due to work-related expenses, there is no reduction in income support.
See ODSP Policy Directive 5.4 Self-Employment Income for further information on the treatment of business income.
Payroll Deductions and the Determination of Net Earnings
Earners are required to report their gross and net pay amounts that appear on the earnings statement or pay stub they receive from their employer.
A person who is working and has a child/spousal support payment or garnishment payment deducted from their earnings must report these deductions to ODSP when reporting their monthly net and gross earnings. These deductions are not allowable payroll deductions and must be added to the net earnings amount.
It is important to ensure that the net earnings amount reported by the member is net of any child/spousal/garnishment deductions before adding the deductions back into the net earnings amount, otherwise the deductions will be accounted twice.
If a person who owes child or spousal support is employed, the court will generally order the employer to deduct money to pay for child or spousal support owed by way of a Support Deduction Order, which is enforced by the Family Responsibility Office. These deductions should appear on the earnings statement or pay stub.
Deductions for garnishments include payments mandated by statute (e.g., requirement to pay notice from the Canada Revenue Agency for unpaid taxes), or required by court order to satisfy a debt (e.g., judgement for garnishment for unpaid credit cards or loans). These deductions should also appear on the earnings statement or pay stub.
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 up to $600 per child is deducted from earnings. (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.
The following examples show the calculation of chargeable income.
Recipient with gross earnings of $2,100
Payroll Deduction for child support of $75
Disability-related employment expenses of $400
|Less total payroll deductions||- 167|
|Add child support payroll deduction||+ 75|
|Less $1,000 flat rate exemption||- 1,000|
|Less 25% Partial Rate Exemption ($1,008 x 25%)||- 252|
|Less disability-related employment expenses||- 400|
Recipient with gross earnings of $2,500
Spouse with gross earnings of $1,250
Spouse with wage garnishment of $100
Child Care Costs of $150
Disability-related employment expenses of $650
|Recipient Gross Earnings ($2,500)||$2,500|
|Less total payroll deductions||197|
|Less $1,000 flat rate exemption per disabled earner ($1,000 x 1)||-1,000|
|Less 25% Partial Rate Exemption per disabled earner ($1,303 x 25%)||-326|
|Less disability-related employment expenses||-650|
|Spouse Gross Earnings ($1,250)||$1,250|
|Less total payroll deductions||-78|
|Add wage garnishment||+100|
|Less $200 flat rate exemption non-disabled earner ($200 x 1)||-200|
|Less 50% Partial Rate Exemption for non-disabled earner ($1,072 x 50%)||-536|
|Less child care cost||-150|
|Total Chargeable Income (327 + 386)||$713|
Earnings of Secondary Students over the Age of 18
Earnings of members of a benefit unit over the age of 18 who attend secondary school full-time are exempt as income. This includes earnings paid during periods of school-mandated breaks (i.e., summer, holidays, etc.) as long as the student intends to return to school following the break.
This exemption applies until the program is complete or the person withdraws from full-time attendance in the program.
For the purposes of this exemption, full-time attendance means the student must be participating in a program that will result in the completion of a secondary school diploma a minimum of:
- 17.5 hours per week of in-class instruction; and/or
- 3 credits per semester or 6 credits per year.
A program of study for the completion of a secondary school diploma may be offered in-classroom, online, through home instruction, dual credit, co-operative education, and/or independent learning courses taken through a regular day school, adult program, continuing education program and/or summer school.
The benefit unit member must inform their caseworker that they are attending secondary school on a full-time basis or if their attendance status changes (i.e. withdrawal) during their study term.
Earnings of Post-Secondary Students
Earnings of, and amounts paid under a training program to, persons in full-time attendance in an approved program of post-secondary study are exempt as income. This includes earnings and training amounts paid in the pre-study period (i.e., the 16 weeks immediately preceding the start of full-time attendance).
In order to be eligible for the exemption benefit unit members must:
- Be enrolled in an eligible program of study; and
- Be taking at least 60% of a full course load, or 40% of a full course load for persons with disabilities on ODSP who meet the definition of persons with a disability or who are members of a prescribed class.
Since employment and training earnings are fully exempt as income for persons attending post-secondary education, these members are not eligible for the Work-Related Benefit.
For more information, see ODSP Income Support Policy Directive 5.18 - Exemption of earnings of post-secondary students.
Amounts paid under an Employment Training Program to Persons residing in First Nations
Amounts paid under an employment training program to a member of the benefit unit who is a resident of a prescribed First Nations community are exempt as income for a period up to 12 months per training program.
Amounts paid under an employment training program include training allowances and cash reimbursements for child care and transportation costs.
For the purpose of this income exemption, First Nations geographic areas are territories designated under section 2, 2.1, 2.2, 2.3, 2.4, 2.5 or 2.6 of Ontario Regulation 136/98 (Designation of Geographic Areas and Delivery Agents) made under the Ontario Works Act, 1997.
For the purposes of ODSP, a member who is required to temporarily relocate to participate in employment training continues to be considered a resident in their home community (i.e., their ODSP casefile should not be transferred to the local ODSP office where the member has temporarily relocated to participate in training).
Other Employment Benefits
Employment and Training Start-up Benefit (ESUB)
An Employment and Training Start-Up Benefit of up to $500 in any 12-month period may be available when an individual begins or changes employment or begins an approved employment assistance activity. Eligible members in a benefit unit include:
- A recipient, spouse or dependent adult who is not attending secondary school full time, or
- A dependent child who has received their secondary school diploma (or equivalent)
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)
A person or family must be determined financially eligible, based on their budgetary requirements, income and assets in order to receive the Work-Related Benefit. The Work-Related Benefit is not a component of budgetary requirements
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.
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.
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