5.8 Interest and dividends
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Section 7(3) of the Act.
Section 48 of Regulation 134/98.
Random file reviews are completed to ensure that:
- all sources of income have been reported by the applicant or recipient
- documentation of earned interest and/or dividends has been visually verified
- 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
Interest and dividends earned on all assets such as bank account balances, Canada Savings Bonds, Guaranteed Investment Certificates, Registered Retirement Savings Plans (with the exception of locked-in plans), stocks, bonds, and life insurance policies are treated as income.
Applicants and recipients must be informed that all sources of income, including interest and dividends from assets, must be reported when earned.
A maximum of $30 per year (beginning in the month of application) of accrued interest or dividend income is considered a casual payment of small value and is therefore exempt as income.
If interest and/or dividends earned exceed $30 per year, the entire amount is considered as income. To determine in what period interest or dividend income over the threshold amount is included as income, the actual date in which the interest or dividend is earned rather than received is used.
The twelve month period starts in the month of application. At the time of annual review, interest and dividends accrued are verified and recorded. Once the threshold amount is reached, the ensuing interest and dividends in the remaining twelve month period are reported monthly. In cases where interest and dividends are earned at an interval other than monthly, the applicant or recipient is consulted to determine an appropriate reporting amount.
Interest and/or dividends do not have to be received by a recipient in order to be treated as income. A recipient may choose to have any interest or dividends reinvested into the fund instead of receiving it as a cash payment. In this case, the amount of any reinvested interest or dividend is considered as income, unless specifically exempted. The amount of an interest or dividend used to pay fund premiums is also considered as income.
Applicants and recipients should be informed that they must retain any financial documents that detail interest and/or dividends received for the purpose of verifying income during file reviews.
A recipient has a $1000 Guaranteed Investment Certificate (GIC) that earns 5% interest per year. When the GIC matures at the end of the year, the recipient will have earned $50 in interest for the year. The amount of interest earned ($50) is considered as income regardless if it withdrawn or reinvested back into the GIC.
The interest earned on a locked-in Registered Retirement Savings Plan (RRSP) is exempt as income if it is reinvested as part of the locked-in plan.
The interest earned by a Registered Education Savings Plan (RESP) or by a Canada Education Savings Grant (CESG) that is reinvested into an RESP is considered exempt as income (see Directive 4.6: Pensions, RRSPs, and RESPs for more information).
The interest earned from a Registered Disability Savings Plan (RDSP) that is reinvested into an RDSP is considered exempt as income (see Directive 4.6: Pensions, RRSPs, RESPs and RDSPs for more information).
Interest or dividends earned from non-accessible life insurance policies that are reinvested into the policy are considered exempt as income. If allowable by the life insurance provider, the recipient should be advised to change the terms of the policy to permit access to any earned interest and/or dividends (see Directive 4.7: Life insurance for more information).