ODSP and Employment Income

by William A. Florence, Barrister and Solicitor, Rural Legal Services

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Through the Ontario Disability Support Program, (ODSP), the provincial government provides income support for individuals who meet financial eligibility criteria, and who are deemed to be “disabled”. Although many individuals who are in receipt of ODSP disability benefits are not capable of functioning in the workplace because of their disability, some are able to earn employment income. This income must be reported to ODSP. A new monthly entitlement amount is calculated, which takes into consideration the employment income.

For those who are unfamiliar with ODSP, a natural question which may arise is how could someone be in receipt of disability benefits, at the same time as being employed. The answer lies in the manner in which disability is defined, as well as policy objectives.

As discussed in a previous ‘Legalese’ column, the Ontario Disability Support Program Act, 1997 defines disability as a substantial physical or mental impairment that is expected to last more than one year. The impairment must result in substantial restrictions in one or more of the following activities of daily living: personal care; functioning in the community; and/or functioning in the workplace. Therefore, the ability to function in a workplace may not preclude eligibility for ODSP income support. In addition, one could be granted income support for a fixed period of time where the disabling medical condition is expected to improve. As some ODSP recipients are not necessarily expected to always need income support, ODSP encourages recipients to move towards financial independence, and may provide assistance during a transition period for those moving off ODSP benefits.

The amount of ODSP income support provided to recipients is based on need, and there are maximum amounts that may be provided to each recipient and their benefit unit. If the recipient has income from a different source, the amount that they receive from ODSP may be lowered to compensate. Accordingly, if a recipient is earning an income from employment, this will be taken into consideration when the monthly entitlement is calculated.

In November 2006, the regulation which outlines the treatment of earnings was revised. The current rules regarding how employment earnings are deducted from ODSP benefits follow.

The first step is to take the total gross monthly earnings. This amount is reduced by:

• All deductions that are required by law or by the terms of employment, (such as income tax, Canada Pension Plan contributions, Employment Insurance, union dues, and mandatory pension contributions);
• 50% of the earnings, (after the mandatory deductions have been deducted);
• Eligible Child Care expenses; and
• Disability-related employment expenses, (such as specialized transit services, sign-language interpreting, etc.).

The remainder amount is taken off the ODSP monthly entitlement.

Here is a simplified example: An ODSP recipient has gross employment earnings of $450 over the course of a month. $50 of the gross earning are mandatory deductions such as CPP and EI. The net income would then be $400. The 50% flat rate exemption would then be applied. The remaining amount of $200 would then be deducted from their ODSP income support.

ODSP may also provide Employment benefits such as:

• A Work-Related Benefit of $100 which is provided to all eligible members of the benefit unit, each month they have earnings from employment;
• The Employment and Training Start-up Benefit, (intended to assist with the initial costs of beginning a new employment or employment activity);
• Up Front Child Care Costs;
• The Employment Transition Benefit, (for those who are leaving ODSP and are able to return to the workforce); and
• The Extended Health Benefit and the Transitional Health Benefit, (for those whose amount of earnings would preclude assistance from ODSP on financial eligibility grounds, yet may still be eligible for extended health benefits).

If you are on ODSP and considering a return to the workforce, Rural Legal Services would be pleased to discuss this with you and how it may change your monthly entitlement.

Legalese is a column of general information and opinion on legal topics by the lawyers of Rural Legal Services, Box 359, Sharbot Lake, ON, K0H2P0, 613-279-3252, or 1-888-777-8916. This column is not intended to provide legal advice. You should contact a lawyer to determine your legal rights and obligations.