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7. Exempt Government Income

(a) Payments from Ontario

The following is a list of payments from Ontario that are exempt income [Reg s.52]:

1. Welfare (Ontario Works) assistance.
   
   This includes basic financial assistance (shelter, basic needs and benefits). It can also include any direct employment assistance funding, such as Learning, Earning and Parenting Incentives (LEAP). LEAP can provide a $500 payment which can be used only for education or an investment towards education (eg. RESP).
   
   Practically this exemption is only applicable when a recipient receives retroactive welfare assistance.
   
   
2. Ontario Disability Support Program payments for children with severe disabilities.
   
   This is a special program under ODSP [see the Isthatlegal.ca ODSP Legal Guide: Ch.5]. Payments for children with severe disabilities are exempt, but regular ODSP income support and other benefits are considered chargeable income.
   
   During a transition from welfare to ODSP eligibility a recipient may receive both welfare and ODSP for the same period of time (or more commonly, retroactive ODSP after a successful appeal). In such a case ODSP will deduct the welfare received during the period of ODSP eligibility (and any outstanding overpayment) and re-pay it to welfare directly. The (new) ODSP recipient will usually then get the balance in the form of a retroactive income support cheque.
   
   
3. A payment made by a children’s aid society on behalf of a child in care under the Child, Youth and Family Services Act, 2017 (foster children) [Reg 52(1)3,3.2].
   
   
4. A payment made by a children's aid society for services where there are reasonable and probable grounds to believe that the child is in need of protection, made under s.32(1)(b) of Reg 156/18 of the Child, Youth and Family Services Act, and the child has not been placed in the society's care [Reg 52(1)3.1].
   
   
5. A payment received under the 'Services and Supports to Promote the Social Inclusion of Persons with Developmental Disabilities Act, 2008', if the payment is used or will be used within a reasonable time period to purchase the services and supports for which the payment was intended.
   
   
6. Any payment received under the Ministry of Community and Social Services Act.
   
   The Ministry runs a variety of programs. Of these, families on welfare may avail themselves of the Ontario Child Care Supplement for Working Families (OCCSWF). Such payments are exempt as income, and as well (since 27 March 2009) no longer count as child care 'reimbursement' to reduce child care expenses otherwise claimable under earnings exemptions treatment [see s.3(d) above].
   
   
7. Ontario Tax Credits payments or refunds.
   
   These may be received by a recipient directly as part of an Income Tax refund, or indirectly as a credit within the income tax calculation. In either event they are exempt as income.
   
   
8. Taxation Act Payments
   
   Payments or refunds under the following provisions of Ontario's Taxation Act, 2007 are exempt as income:
   
   
   • s.99 (non-senior property and sales tax credit)
     
     
   • s.100 (seniors property and sales tax credit)
     
     
   • s.101.1 (non-senior property tax credit)
     
     
   • s.101.2 (senior property tax credit)
     
     
   • s.104.11 (Sales Tax Credit)
     
     
   • s.104.12 (Ontario Sales Tax Transition Benefit)
   
   
9. Ontario Seniors Homeowners' Property Tax Grants [this exemption is in effect 01 January 2009].
   
   
10. Permanent partial disability supplements under the (old) Workers' Compensation Act.
    
    
11. WCB or WSIB awards for non-economic loss ("NEL" awards).
    
    Note that these awards, along with civil and Family Law Act pain and suffering damage and expense awards are subject to a aggregate $50,000 "cap" for income exemption purposes. (see "Other Exemptions: Pain and Suffering Awards", below)
    
    CAUTION:
    It is sometimes possible to convert or "cash-in" regular monthly WSIB/WCB "FEL" ("future economic loss") payments (for loss of income) into a lump sum (called "commutation"). However - without prior arrangements with the administrator to treat such a 'cash-out' as exempt income and/or assets, such an action may be treated by the administrator either as a breach of the "duty to realize available resources" or of the "duty not to improvidentally dispose of assets" [see Ch.7, s.7 and 8]. If so, they will result in a disentitling income charge when received and large ongoing (and also disentitling) asset charge thereafter. While it is tempting to commute such income streams to avoid their on-going deduction from assistance, it almost always results in long-term disentitlement. Contact your worker beforehand in all such situations.
    
    
12. Ontario Child Benefit Payments received under s.8.6.2 of the Income Tax Act (Ontario) [see s.6(d) above].
    
    
13. Payments made under the Ontario Child Benefit Equivalent Act, 2009. This is an Ontario program to match the federal Children's Special Allowances Act (Canada), with money equivalent to Ontario's Ontario Child Benefit (OCB), for children in the care of certain agencies [Reg 52(1)14].
    
    
14. Payments made under the "Quest for Gold - Ontario Athletes Assistance Program" [Reg s.54(1)22].
    
    
15. Payments made by a service manager designated under the Housing Services Act, 2011 to be used as a rent supplement or a housing allowance, where approved by the Director.
    
    and:
    
    A rent supplement funded by the Ministry of Health and Long-Term Care that is used to pay for permanent supportive rental housing for persons who are homeless or at risk of becoming homeless [Reg 54(1)15.2].
    
    However the exemption amount for the above two forms of income shall not exceed the amount by which actual allowable shelter costs exceed the welfare shelter allowance. The amount of the shelter allowance varies with the size of the benefit unit, and with periodic changes in the shelter allowance (typically there are small annual increases). Basically this rule means that any 'extra' received through such a payment is not exempt income ('extra' being determined by what welfare will count as a shelter expense). For specific amounts and details to make this calculation see Ch.3, s.2(c) ["Income Rules: Renters and Home Owners: Shelter"][Reg s.52(1)15,(2)].
    
    
16. Payments made under the Ministry of Housing’s Ontario Renovates program [Reg 52(1)15.1].
    
    
17. Payments under the Ontario Trillium Benefit program received under section 103.3 of the Taxation Act, 2007 [Reg 52(1)18].
    
    
18. Payments made under the Community Homelessness Prevention Initiative up to the monthly personal needs allowance granted to residents of long-term care homes [see Ch.3, s.9(b)] ($140 at 2015) [Reg 54(1)24, 43(1)] if:
    
    
    • the payment is made by a service manager designated under the Housing Services Act, 2011;
      
      
    • the payment is made to residents of a place that provides permanent housing with limited supports to vulnerable adults who require some supervision and support with the activities of daily living, and
      
      
    • the payment is made for the personal needs of the resident.
    
    
19. Payments made under the Community Homelessness Prevention Initiative by a service manager designated under the Housing Services Act, 2011 and applied to [Reg 54(1)25]:
    
    
    • rent deposits, including first and last month’s rent;
      
      
    • establishing a new principal residence,
      
      
    • maintaining the health or welfare of a member of a benefit unit in his or her current residence,
      
      
    • arrears on any shelter expense [as defined in Ch.3, s,2(c), or Reg 42(1)], or
      
      
    • other services, items, payments or costs related to housing and homelessness, as approved by the Director.
    
    
20. Youth Jobs Strategy payments, made by either or both of the Ministry of Economic Development and Growth and the Ministry of Advanced Education and Skills Development, if, in the opinion of the administrator, the payment will be used within a reasonable period and for the purpose for which it was paid [Reg 54(1)27].
    
    
21. Grants received under the Northern Health Travel Grant Program, administered by the Ministry of Health and Long-Term Care, to the extent that the grant amount exceeds the amount otherwise provided by welfare for medical transportation for the same trip [see Ch.4, s.2(b) "Medical Transportation")] [Reg 54(1)28].
    
    
22. a payment received under the Canada-Ontario Housing Benefit program [Reg 52(1)15.3].
    
    
23. a payment of financial assistance under the Soldiers’ Aid Commission Act, 2020. [Reg 52(1)5].

(b) Payments from Canada

The following is a list of federal and extra-provincial payments that are exempt income [Reg s.53, 54(1)19]:

1. GST rebates [s.122.5 of the Income Tax Act (Canada)].
   
   
2. By policy (see Policy Directive 5.1), income tax refunds are considered exempt income.
   
   Except for Ontario tax credits (which are exempt as such, above), refunds are usually a refunding of monies 'overpaid' by the taxpayer/recipient. As such they have normally already been assessed for welfare income impact, or were originally received before the time when the recipient was on welfare.
   
   
3. A death benefit payment under the Canada Pension Plan, or the Quebec Pension Plan.
   
   
4. A payment received from the Department of Indian Affairs and Northern Development (Canada) or from a band for board and lodging of a student attending a secondary school not on the reserve. These payments are made under the federal "Boarding Home Policy" to the adult who runs a boarding home in another community where the native child must live to attend school.
   
   
5. A payment received pursuant to the Indian Act (Canada) under a treaty between Her Majesty and a band, other than funds for post-secondary education.
   
   
6. A payment made by a band as an incentive bonus for school attendance to any dependant who is attending school.
   
   
7. A payment from a municipality or a Tribal Council, on behalf of the Department of Indian Affairs and Northern Development (Canada), received between October 2005 and September 2006 by an evacuee from that part of the Fort Albany No. 67 Reserve on which members of the Kashechewan First Nation reside.
   
   
8. By policy, payments made under the Skills Development Employment Benefit under the Employment Insurance Act are exempt income.
   
   
9. By policy, payments made under the Oppourtunities Fund for Persons with Disabilities (Employment and Social Development Canada) are exempt income.
   
   
10. Payments made on surrender or partial surrender (designation) of title rights in a reserve to the federal government under s.40 of the Indian Act (Canada) are exempt.
    
    
11. A payment received under the Extraordinary Assistance Plan (Canada).
    
    This is a federal program to financially assist HIV-infected individuals. See the Health Canada website for details.
    
    
12. A benefit received under the Universal Child Care Benefit Act (Canada).
    
    This program commenced July 2006 and provides $100 to families for each child under the age of 6. It will automatically be sent to families already receiving the CCTB (see s.6 above). While labelled a "child care" benefit there are no restrictions as to how the money may be used, an issue that was politically contentious as the funding was largely taken from that previously designated for organized child care facilities.
    
    
13. A payment by Canada into a Registered Disability Savings Plan (RDSP).
    
    This program started in 2008, and acts as a tax-deferral mechanism similar to RRSPs [Reg s.53(17)].
    
    As is explained is s.8(l) below, third parties gifts towards RDSPs and rolled-over RDSP interest are also exempt income. As well, any cash-out of an RDSP by a recipient is exempt income.
    
    This is a useful Canada Revenue Agency fact sheet on the topic:
    
    Registered Disability Savings Plans
    
14. A payment made as a tax credit under the Working Income Tax Benefit under s.122.7 and 122.71 of the Income Tax Act (Canada).
    
    
15. Payments made under the Athlete Assistance Program, administered by the Department of Canadian Heritage [Reg 54(1)30].
    
    
16. An orphan’s benefit payment under the Canada Pension Plan.
    
    
17. Payments made under the Government of Canada’s Thalidomide Survivors Contribution Program [Reg 53(18)].
    
    
18. An orphan’s pension payment under the Act Respecting the Québec Pension Plan (Quebec) or a payment under a similar program in another jurisdiction [Reg 54(1)32].
    
    
19. A disabled contributor’s child’s benefit payment under the Canada Pension Plan [Reg 53(4.2)].
    
    
20. A disabled contributor’s child’s pension payment under the Act Respecting the Quebec Pension Plan (Quebec) or a payment under a similar program in another jurisdiction [Reg 54(1)33].

Note 1: Any federal exempt loans are listed in s.9(b) "Non-chargeable Loan Income", below.

Note 2: Any federal student-related "income" is discussed in s.10 "Student and Education-Related Income", below.

Note 3: Treatment of the Canada Child Tax Benefit (CCTB) is dealt with separately above in section 6.


8. Other Exemptions from Income

(a) Rent Received From a Child or Grandchild in Receipt of Social Assistance

Where a recipient provides accomodation to a child or grandchild of the recipient (or their spouse) in the benefit unit, and where the child or grandchild is on social assistance on their own (ie. within a separate benefit unit), then money received for rent or boarding is not chargeable income to the parent or grandparent [Reg s.50(2)] (see s.4(f): "Rent Paid to a Claimant: Income Exemption For Children and Grandchildren on Social Assistance on their Own", above).

Note however that there is a rule (easily excepted) that children in such cases are not able to collect any amount for shelter component in their assistance (see Ch.3 "Assistance: Living with Parents").

(b) Hardship Payouts under Pension Benefits Act

Under some circumstances (financial hardship) persons may access pension funds otherwise "locked-in" under the Pension Benefits Act (Ontario). While there is no legal duty to access these funds under the general social assistance "duty to realize available assets", their income and asset chargeability treatment when the funds are in fact accessed is less clear.

See Ch.7, s.7: "Asset Rules: Duty to Realize Available Financial Resources" for a fuller discussion of these issues, and the income and asset treatment of such monies.

(c) Pain and Suffering Awards

To a maximum of $50,000 total of any or all of the following [Reg s.54(2)]:

• damages or compensation for pain and suffering from injury or death to a member of the benefit unit (also known as "general damages"),
  
  
• actual and future expenses related to such injury or death [Reg s.54(1)4] (also known as "special damages" and "disbursements");
  
  
• "dependent" damage awards under the Family Law Act to compensate for loss of guidance, care and companionship as a result of death or injury [Reg s.54(1)4.1]; and
  
  
• amounts received as compensation for non-economic loss under section 46 of the Workplace Safety and Insurance Act, 1997 or section 42 of the Workers' Compensation Act ("NEL" awards) [Reg s.52(8.1)].

The most common use of this exemption is when a motor vehicle claim is settled or won at trial [see s.11(a) "Motor Vehicle Accident Settlements and Awards", below].

Following on the case of Director, ODSP v Passaro (Div Ct, 2010), these provisions were amended to clarify that "non-earner benefits" (NEBs), granted under the motor vehicle accident provisions of the Insurance Act (specifically under the Statutory Accidents Benefits Schedule, or SABS), did not fall within the meaning of "pain and suffering", and as such did not fit within this $25,000 income exemption [Reg 54(4)]. The net result is that any funds from NEB awards are fully chargeable for income purposes. This rule applies to past NEB (or NEB-like) awards made under their various manifestations through the following sequential SABS provisions:

• s.13(1-3,7,8) of Reg 672/90 (accidents before 01 Jan 1994);
  
  
• s.19 of Reg 776/93 (accidents after 31 Dec 1993 but before 01 Nov 1996);
  
  
• s.12 of Reg 403/96 (accidents on or after 01 Nov 1996);
  
  
• s.12 of Reg 34/10 (effective 01 Sept 2010).

The issue of when interest on such lump sum awards is chargeable is discussed in s.11(d), below.

(d) Special Agreements

Payments from the following agreements are exempt from treatment as income [Reg.53(15),54(1)paras.5,10,12,13,17,18]:

• The Helpline Reconciliation Model Agreement
  
  
• The Multi-Provincial/Territorial Assistance Program Agreement
  
  
• The Grandview Agreement
  
  
• Ontario Hepatitis C Assistance Plan (applies where recipient contracted the disease before 01 January 1996 and after 30 June 1990)
  
  
• lump sum payments received under the 1986-1990 Hepatitis C Settlement Agreement of 15 June 1999, except payments for loss of income or loss of support (applies where recipient contracted the disease between 1986 and 1990)
  
  
• A payment received under the Pre-1986/Post-1990 Hepatitis C Settlement Agreement (December 14, 2006), except those: for loss of income under section 2.05 of the Agreement, loss of services under section 2.06 of the Agreement and compensation to dependants under section 4.04 of the Agreement
  
  
• Walkerton Compensation Plan, except payments for future loss of income.
  
  
• Huronia Regional Centre class action settlement payments [Reg 54(1)13.1];
  
  
• Rideau Regional Centre class action settlement payments [Reg 54(1)13.2];
  
  
• Southwestern Regional Centre class action settlement payments [Reg 54(1)13.3];
  
  
• 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 that was approved by the Superior Court of Justice on April 25, 2016 (Court File No.: CV-14-50642300CP) [Reg 54(1)13.4];
  
  
• Payment received by a class member under the Sixties Scoop Settlement Agreement [Reg 54(1)13.5];
  
  
• Payment received by a class member under the Settlement Agreement in the Federal Indian Day Schools class action [Reg 54(1)13.6];
  
  
• amounts received as compensation (except compensation for loss of income) related to a claim of abuse sustained at an Indian residential school, including compensation received under the Indian Residential Schools Settlement Agreement.
  
  
• "personal credit" within the meaning of section 5.07 of the Indian Residential Schools Settlement Agreement.

(e) Administrator-Approved Expenditures from Asset-Sale Funds

Income received from the sale or disposition of an asset that has been put towards, or - if the administrator approves - will be put towards [Reg s.54(1) para.6]:

• purchase of a principal residence by a member of, and for the use of, the benefit unit;
  
  
• assets which are, in the opinion of welfare, necessary for the health or welfare of a member of the benefit unit;
  
  
• the purchase of an asset that is an "exempt asset" for the purposes of determining asset maximums (See Ch.7: "Asset Rules" and Reg s.39); or
  
  
• the purchase of an asset that does not put the recipient over the asset cap (see Ch.7 "Asset Rules").

(f) Charitable Donations

Donations received from a religious, charitable or benevolent organization are exempt from treatment as income [Policy Directive 5.1] [Reg s.54(1)7].

(g) $10,000 Gift or Voluntary Payments Exemption

Welfare recipients benefit from an exemption of $10,000 per year (that's a 'running year', not a calendar year) for "(g)ifts or other voluntary payments" [Reg 54(1)8].

The most common use of this exemption is to regulate trust payments made to recipients.

(g.1) Specific Gifts or Voluntary Payments

Specific gifts or voluntary payments made for these purposes, if applied as soon as practicable for the purpose, are exempt income [Reg 54(8.1)]:

• The purchase of a principal residence for the benefit unit.
  
  
• The purchase of a asset-exempt motor vehicle [see Ch.7, s.4(d) for asset-exempt vehicles].
  
  
• To pay the first and last month’s rent necessary to secure accommodation for the benefit unit.

(h) Long-Term Care Home Special Services

Payments by a friend or relative for special services provided by a long-term care home to a resident/recipient [Reg s.54(1)9] are exempt income.

(i) Home and Vehicle Modification Grants

The Ministry of Community and Social Services runs a program entitled the "Home and Vehicle Modification Program". Grants received under this program are exempt as income.

(j) Disaster Relief Committee Payments

The Ministry of Municipal Affairs and Housing runs a program entitled the "Ontario Disaster Relief Assistance Program". Payments from local committees under this program are exempt income, other than payments for loss of income.

(k) Insurance Pay-outs

Pay-outs by insurance companies for "loss of or damage to real or personal property" - if the money is applied to - or with administrator approval will be applied to any of the following:

• purchase or repair of s.39 exempt assets (see Ch.7 "Asset Rules");
  
  
• purchase or repair of any asset necessary for the health or welfare of a member of the benefit unit, as approved by the administrator;
  
  
• the purchase or repair of an asset whose ownership by members of the benefit unit does not put the benefit unit over the asset cap (see Ch.7 "Asset Rules");
  
  
• additional living expenses, including temporary shelter costs, if insurance-covered damage renders the recipient's primary residence unfit for habitation; or
  
  
• debt obligations of a member of the benefit unit.

(l) Registered Disability Savings Plan (RDSPs) Income

In 2008, the Income Tax Act created RDSPs, which operate as a tax deferral mechanism similar to RRSPs.

Payments to a total maximum of $200,000, made to a recipient by third parties which are intended for RDSPs, and which are applied to RDSPs within a reasonable time, are exempt from chargeability as income [Reg s.54(1)11.4, 54(3); Income Tax Act s.146.4(4)(g)(iii)]. This is also the case with interest in an RDSP which is rolled-over back into it [Reg s.54(1)(11.5)].

Most significantly, withdrawals by a recipient from an RDSP are also exempt income (though they are taxable) [Reg s.54(1)11.6].

This is a useful Canada Revenue Agency fact sheet on the topic:

Registered Disability Savings Plans
(m) Court-Ordered Payments Applied to Approved Uses

Administrator-approved payments, not otherwise subject to reimbursement, made pursuant to a court order for the following specific purposes - and which are applied to such purposes - are exempt as income [Reg 54(1)20]:

• expenses for disability-related items or services for a member of the benefit unit;
  
  
• education or training expenses incurred with respect to a member of the benefit unit because of their disability.

(n) Energy Efficiency Grant, Items or Services

The value of grants, payments, credits, services or items provided by or in accordance with a program funded by gas distribution utilities, local distribution companies, municipalities, an Independent Electricity System Operator, the Ontario Energy Board, Ontario or Canada for the purposes of energy efficiency, conservation or affordability, is exempt as income [Reg 54(1)21].

(o) Transplant Patient Expense Reimbursement Program Payments

Payments made to any member of the benefit unit under the Transplant Patient Expense Reimbursement Program (under the Ministry of Health and Long-term Care) are exempt as chargeable income, if they are or will be applied as intended under that program within a reasonable time [Reg 54(1)23].

(p) Nova Scotia Home for Colored Children Settlement Agreement

Payments received by a class member from the Nova Scotia Home for Colored Children Settlement Agreement [Reg 54(1)29].

(q) Child Support Payment

A child support payment made by a person who has an obligation to support a member of the benefit unit under the Family Law Act, the Divorce Act (Canada) or similar legislation in another jurisdiction [Reg 54(1)(31)].

(r) Juror's Fees and Allowances

A fee or allowance paid for attendance as a juror [Reg 54(1)34].


9. "Loans" as Income

(a) The Legal Status of Loans as "Income"

(i) "Income" Defined

The issue of whether loans received by a recipient are "income" is a vexed one. No where does it plainly state in the present law that loans are "income". Instead, s.48(1) of the OW General Regulation states:

48(1)
... income [is] .... the total amount of all payments of any nature paid to or on behalf of or for the benefit of every member of the benefit unit ...

48(2)
For the purposes of subsection (1), income shall include the monetary value of items and services provided to the members of the benefit unit as well as amounts of income deemed to be available to members of the benefit unit.

Thus income is "payments", plus the monetary value of non-cash items and services provided. The status of loans is not expressly (though it certainly is implicitly, see below) addressed within the current regulation definition of "income".

In my view the slightly stronger legal argument is that "loans" are income, though it is arguable.

(ii) Rubino v Metro Toronto

In a 1992 court case, Rubino and Metro Toronto 11 OR (3d) 289 (Div Ct, 1992), the court considered this issue in the context of a private loan to a recipient under the old General Welfare Assistance Act (GWA) - the predecessor to the Ontario Works Act. In that case a two-judge majority (a further judge disagreeing) held that the term "payments" does not, in normal usage, include loans - and therefore the court did not count loans received as chargeable income against the recipient.

The statutory wording that the court examined in Rubino was similar to the present wording, quoted above. I repeat it here:

GWA s.13(1)
.... the income of an applicant or recipient shall include all payments of any nature or kind whatsoever ...

It also included a further passage:

GWA s.13(2)
For the purposes of subsection (1) and without restricting the generality of subsection (1), income shall include,

...

3. subject to subsections (4) [revoked] and (7), all payments received under a mortgage, agreement for sale or loan agreement;

This second passage regarding mortgage, loan and similar payments is not repeated in the present Ontario Works legislation. In Rubino the court considered whether the mention of "payments" in that paragraph referred to loan advances (ie. the initial giving of the loan monies to the debtor) or loan payments (ie. repayment to the creditor). In so doing it examined dictionary definitions of the term "pay" and "payment".

In reaching it's conclusion that the term referred only to loan re-payments given by the borrower back to the lender (and thus only chargeable if the recipient was also the lender), the court applied the well-established statutory interpretation principles that statutory language should be given it's "ordinary and natural meaning" and that any ambiguity (uncertainty) in the interpretation of benefits-conferring legislation (as here) should go in favour of the benefits-recipient. This latter principle has been re-affirmed recently by the Supreme Court of Canada in the case of Rizzo v Rizzo Shoes [1998] 1 SCR 27.

This conclusion is further support for the position that even when "loans" are expressly mentioned, their meaning is going to be read-down to that least-impacting the recipient.

(iii) 1993 Post-Rubino Amendments

The story continues. Shortly after Rubino in December 1993 the provincial cabinet amended the (then General Welfare Assistance Act) regulation to expressly include loan amounts as income so that it read:

GWA s.15(2)
For the purposes of subsection (1) and without restricting the generality of subsection (1), income shall include,

....

15.2 proceeds of any loan except, with the approval of the welfare administrator, any portion that is applied or will be applied to the operation of a business;

The case of R v Adeti-Bastine [1998] OJ #5269 (QL)(OCJGD, 1998) considered this new wording. The defendant was charged with criminal fraud for collecting welfare while not declaring his student status and student loans. While the defendant raised Rubino in his defense, the court dismissed this argument for several reasons.

The first was that the law applying to the case was the 1993 post-Rubino amended law, which included loans expressly within the definition of income (the court accepted that "proceeds of [a] loan" meant loan 'advances'). Secondly, a specific income exemption applied for the tuition, fees and books portion of student loans - implying (under an "implied exclusion" argument, see below) that any other component of student loans (such as living expenses) was "chargeable income". Thirdly, the defendant was criminally liable just for failure to declare his student status, itself a fraudulent and disentitling omission.

(iv) Present Law and the Implied Exclusion Argument

However, the 1993 amendment was over thirteen years ago and since then the province re-drafted all of it's social assistance legislation in 1997 (under the composite Social Assistance Review Act, or "SARA"), creating the Ontario Works Act and new regulations under it. The new law removed the express inclusion of loans within the definition of "income". This has greatly confused matters, for Rubino may now once again be good law as it applies to the definition of the key term: "payments", as it occurs in the present s.48(1) of the Regulation.

That said, the new OW general regulation does integrate some of the intent and language of the 1993 amendment quoted above, though it has been re-located to the 'exclusions' portion of the regulation, which reads in the relevant part:

Reg s.54(1)
The following shall not be included in income:

1. That portion of a loan, approved by the administrator, that is,

i. applied or will be applied to the operation of a business,

ii. applied on an exceptional basis for medically necessary health related reasons if no other government program is available for the purpose,

iii. guaranteed under section 8 of the Ministry of Training, Colleges and Universities Act or made under the Canada Student Financial Assistance Act and, in either case, received by or on behalf of a student and relating to tuition, other compulsory fees, books, instructional supplies or transportation for the purpose of the definition of "education costs" in subsection 1 (1) of Regulation 774 of the Revised Regulations of Ontario, 1990 (Ontario Student Loans made before August 1, 2001) made under the Ministry of Advanced Education and Skills Development Act or for the purpose of section 11 of Ontario Regulation 268/01 (Ontario Student Loans made after July 31, 2001) made under that Act,

iv. guaranteed under section 8 of the Ministry of Training, Colleges and Universities Act or made under the Canada Student Financial Assistance Act, if, in either case, the proceeds are received by or on behalf of a student who is,

A. a part time student,

B. a dependent adult who is not a spouse or same-sex partner included in the benefit unit or a sole support student as defined in subsection 1 (1) of Regulation 774 of the Revised Regulations of Ontario, 1990, or

C. a child on whose behalf temporary care assistance is being paid and who is not a sole support student as defined in subsection 1 (1) of Regulation 774 of the Revised Regulations of Ontario, 1990 made under the Ministry of Training, Colleges and Universities Act.

v. applied or will be applied to the purchase of a motor vehicle required for employment assistance activities or to maintain employment, or

vi. applied or will be applied to the payment of first and last month's rent necessary to secure accommodation for the benefit unit.

This extensive 'exempting' of some loan proceeds from chargeability opens up the "implied exclusion" argument to capture some or all loans as chargeable income. The 'implied exclusion' argument is a well-recognized principle of statutory interpretation that says the present regulation, by expressly making some loans exempt within s.54(1) [quoted above], logically and necessarily implies that all other loan proceeds are chargeable.

Unfortunately, the implied exclusion issue was not considered in argument in Rubino, and was not reflected in either the majority or the dissenting judgment. It may not have been available under the wording of the law that was being considered.

The principle was however applied by the court in R v Adeti-Bastine (above), along with other arguments, to capture non-exempt student loans within chargeable income. Whether it will be extended beyond student loans, or defeated by the ambiguity principle from the Supreme Court of Canada in Rizzo v Rizzo Shoes (SCC, 1998) (where any ambiguity in the wording of benefits-conferring legislation is resolved in favour of the rights-claimant), is an open issue.

Note:
While not entirely on point, another case does bear mentioning here. In R v Maldonado [1998] OJ #3209 (QL) OCJ - Prov Div), the criminal court considered a similar fact situation in a charge of criminal fraud against a person who received both welfare and student loans at the same time. The court in Maldonado mentioned the principle in Rubino only in passing as it too was dealing with the 1993 amended regulation. Nonetheless the court dismissed the charge, finding that an element of the fraud offence, that of knowing that the government would be deprived of money, was missing - as the defendant did not know that the student money was chargeable income. The court took great care to distinguish this from a 'ignorance of the law' defence, which is barred under the criminal code. The Maldonado case is essential reading for any criminal lawyer dealing with a welfare fraud case.

(v) Summary

In summation, the legal status of loans as chargeable income remains unclear - although in my view the slightly stronger (though arguable) argument is that loans are now chargeable income, unless expressly exempted (as below).

It is unfortunate that this crucial issue has not been made clear in law, as it was for a time after Rubino. It will be for a future court to resolve the conflict between these competing principles of statutory interpretation. In the meantime recipients should be cautioned not to reach their own conclusions on this issue and act on them unilaterally. By far the safer course is to report all income - from loans advances, repayments or otherwise - and challenge any unfavourable interpretations through the proper appeal mechanisms of the Social Benefits Tribunal (see Ch.10 "Appeals and Other Remedies").

(b) Exempt Loan Income

On the assumption that loans generally are chargeable income (which is plainly the legal position of welfare administration and the Director of Ontario Works), this sub-section reviews when and how some loan income is exempt from chargeability.

Note that any income - loan, grant or otherwise - relating to students or education is covered in s.10 "Student and Education Related Income", below.

Some loan exemptions were listed in the quote from s.54 of the Regulation above. They include that portion of a loan, as approved by the administrator:

• for the present for future operation of a business;
  
  
• on an exceptional basis, for medically necessary health related reasons if no other government program covers the need;
  
  
• that is applied or will be applied to the purchase of a motor vehicle required for employment assistance activities or to maintain employment;
  
  
• that is applied or will be applied to the payment of first and last month's rent necessary to secure accommodation for the benefit unit; and
  
  
• applied to the purchase of household items necessary for the well-being of one or more members of the benefit unit.

As well - a loan, forgiven loan or contribution received from the "Residential Rehabilitation Assistance Program" under the National Housing Act (Canada) is exempt income [Reg s.53(1)].

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