1. Social Assistance Rate Restructuring and the Ontario Child Benefit
Prepared by: Cindy Wilkey, JoAnne Frenschkowski,
Jennefer Laidley (May 2008)
Income Security Advocacy Centre
Hello, etc.

2. Workshop Overview Structural change overview
How the Ontario Child Benefit works
How social assistance rates will be affected by the Ontario Child Benefit
A new benefit: Transition Child Benefit
Some family income examples
Here’s what we’re going to cover today:
First, we’ll talk about the structural change that is occurring in social assistance, the history and theory behind this change, the new direction that this change represents, and the XYZXYZ.
Then, we’ll explain how rate restructuring is being integrated with the Ontario Child Benefit and the National Child Benefit Supplement.
We’ll look at another new benefit, the Transition Child Benefit, and what situations it is intended to address.
And we’ll go over the Ontario Child Benefit in some detail, providing both history and an overview of how it is intended to work.
Then we want to take you through some examples of situations in which your clients may find themselves, and ask you to highlight any problems that you may identify in implementation of the new system.
And finally, we’ll have a look at the broader context for social assistance rates as well as some next steps that are being pursued by many, including the provincial government.

3. Structural Change: History
1988 – “Transitions” report
Federal / provincial / territorial agreement on NCB and NCBS
Ontario Child Benefit (OCB) recommended in many social assistance redesign initiatives:
Ontario Municipal Social Services Association
Caledon Institute / John Stapleton
“Transitions Revisited”
Toronto Daily Bread Food Bank
Toronto Social Services Action Plan
MISWAA (Modernizing Income Security for Working-Age Adults)

4. Structural Change: Theory
Social assistance can be a barrier to economic independence
Social assistance is stigmatizing - Tax delivered benefits move income supports beyond stigma; think of Old Age Security
Same approach should be used for child benefits:
Income tax delivered, based on family income
Portable: available regardless of source of income
Non-stigmatizing
Reliable: not affected by parental eligibility for social assistance
BUT: less responsive to changes than social assistance
So first.
What we’re looking at with rate restructuring and the introduction of the Ontario Child Benefit is a fundamental structural change in the way that income supports are being delivered TO FAMILIES in this province. Must stress that this only applies to people with children and not to singles.
What this represents is the removal of benefits for children from the social assistance system, and a transfer of those childrens’ benefits to a tax-delivered system based on family income.
You may remember that, back in 1988, the Transitions report

5. Structural Change: Results
Means a gradual move of benefits for children out of social assistance and into Ontario Child Benefit
From social assistance  tax-delivered, income-based benefit
Requires SA rate restructuring & integration
Other forces at play:
Move to simplify SA rules
Matthews Report / OMSSA
Move to look more comprehensively at poverty
MISWAA/Ontario Poverty Reduction Strategy

6. The Ontario Child Benefit: What is it and who will benefit?
Announced in the 2007 provincial budget
Directed at low-income families with children under age 18
One-time “down payment” on the OCB made in July 2007
Monthly OCB payments will start as of July 2008
OCB eligibility piggy-backs on NCBS eligibility
Like the CCTB and NCBS, the OCB amount will be based on the previous year’s income
OCB payment will come as part of the CCTB/NCBS cheque paid on the 20th of the month
As previously mentioned, rate re-structuring and the creation of the OCB go hand-in-hand.
The OCB is the government of Ontario’s vehicle to move some child benefits out of social assistance and into the taxation system.
Low income families will be eligible for the OCB, regardless of source of income. Both low-income working families and families on social assistance can receive the benefit if they meet the eligibility criteria.
In July 2007, eligible families received a non-taxable, one-time payment of up to a maximum of $250 for each child under 18 years of age. This was a “down payment” on the OCB.

7. Maximum OCB amounts: July 2008-July 2011
By July 2011, families on social assistance should see a net benefit of at least $50 per child per month as a result of the OCB.

8. The Ontario Child Benefit: Eligibility Criteria
In order to be eligible for the OCB:
Must be the primary caregiver (single parent, spouse, common-law partner) of one or more children under age 18, in a low-income family; and,
Must file a tax return; and,
Must be eligible and register for the Canada Child Tax Benefit; and,
Must be a resident of Ontario; and
Must have status in Canada.
In order to be eligible for the OCB, no separate application needs to be filed. If an Income Tax Return has been filed, CRA will use this information in order to determine eligibility and calculate the amount of benefit.
In order to qualify for the CCTB (and hence the OCB) a parent (or spouse or common-law partner) must be a Canadian citizen, a permanent resident, a protected person, or a temporary resident who has lived in Canada for the previous 18 months.

9. The Ontario Child Benefit: Who gets the Maximum?
OCB benefits ↓ as net family income ↑
In July 2008, eligible families will receive the maximum OCB if their net family income ≤ $20,000.
The OCB will be reduced by 8¢ for every dollar of net family income over $20,000.
The Ontario Ministry of Finance on-line calculator can help you estimate your benefit

10. OCB and net family income
For all family sizes, the OCB begins to phase out at $20,000 net family income annually.
In July 2008, a family with one child whose net family income was $26,000 in 2007 will receive zero OCB.
A family with two children, whose net family income was $34,500 in 2007, will receive zero OCB in July 2008.
A family with three children whose net family income was $40,000 in 2007, will receive zero OCB in July 2008.

11. OCB Benefits: Calculating “Net Family Income”
Families determine their net family income by calculating their total income, which includes:
Social assistance income (reported in T5 form)
Earnings from employment
Other income (CPP, EI, WBC, UCCB benefits)
Then, they make any deductions to obtain net income.
Spouses must add their respective net incomes to obtain net family income.
Total income includes all the items listed in lines of the T1 General Income Tax Return:
Employment income
CPP benefits
Employment Insurance Benefits
Disability benefits
Workers’ Compensation Benefits
Universal Child Care Benefits
Social assistance benefits (line 145 of the 2006 T1 General Income Tax Return). Families in receipt of OW and/or ODSP are issued a T5007 form, and must report all of the benefits recorded in this form as income.
But, does not include the Canada Child Tax Benefit (Basic Benefit or NCBS). These are non-taxable.
Total income is then adjusted by deducting such things as annual dues (union or professional), child care expenses, disability supports deductions, social benefits repayments (line 235), in order to obtain net income.
Spouses/common-law partners must add their respective net incomes in order to obtain net family income.

12. OCB Income Eligibility: Reportable Social Assistance Income
Income included in OW/ODSP T5 includes:
Basic Needs & Shelter allowances
Fuel
Back-to-School & Winter Clothing allowances
Special Diet allowance
Northern allowance
ODSP work-related benefits
Personal Needs allowance (OW)
Transition Child Benefit (new OW/ODSP benefit)
But does not include:
Assistance for Children with Severe Disabilities (ACSD)
Temporary care allowance
ODB, dental or vision care benefits, hearing aids, wheelchairs & repairs, ADP approved items
Excess repayments/reimbursements

13. Joint Custody and the OCB
Eligibility for the OCB is tied to the CCTB/NCBS rules
Parents with joint custody get the CCTB/NCBS in alternating 6 month periods, if the Canada Revenue Agency is aware of the joint custody arrangement.
OCB payments are expected to follow the same payment schedule

14. Rate Restructuring When? July/August 2008 What?
Only rates for families with dependent children under 18
no change for singles/couples without children, children over 18
Basic Needs only
Shelter allowance unchanged
Back-to-School and Winter Clothing Allowances discontinued as a lump sum:
delivered monthly as part of the OCB.

15. Rate Restructuring Three moves: Rates “integrated” with NCBS and OCB
Rates also “rationalized”
Increase “internal consistency”
Reduction and eventual elimination of “older child differential”

16. Rate Integration with OCB / NCBS
To understand this, have to look at before and after, and both SA delivered benefits as well as those delivered through taxation.

17. Rate Rationalization / Reduction of Older Child Differential
Consistent formula for Basic Needs:
Reduction of Older Child differential

18. Rate Integration with the NCBS/OCB: What is the effect on Family Income?
Government committed that:
Rate restructuring will not leave any family on OW or ODSP worse off than they were before, taking into account the 2007 OCB down payment.
Do the new rates meet this commitment?
For most families, yes.
But after restructuring some families fall short:
In 2008/9, single parents on OW with older children will end up behind the $21 benchmark increase set by the 2007 down payment.
But, by 2011, they should reach the same $50 net new income target as other families.

20. Income Trends for Families on Social Assistance – Adapted from National Council of Welfare, Welfare Incomes 2005

21. Transition Child Benefit
New Benefit for both OW and ODSP
s.58.3 OW Reg 134/98; s.45.3 ODSP Reg 222/98
Necessary complement to rate restructuring:
Basic Needs reduction is based on receipt of maximum NCBS and maximum OCB
For a variety of reasons, there are many families who do not receive the maximum NCBS/OCB – they would be worse off after restructuring without TCB.

22. Transition Child Benefit
Maximum amount of TCB
OW $172
ODSP $148
The formula for calculating actual benefit is in the regulations.
Intended to cover the difference between the existing SA rate structure and the restructured rates.

23. Transition Child Benefit
Who can expect to be eligible:
Recipient (or spouse) who is not getting any OCB or NCBS where s/he:
Did not file an income tax return for the previous taxation year;
Is a newcomer to Canada (i.e. refugee claimant);
Has recently moved to Ontario;
Has a newborn child;
Experienced a catastrophic income change;
Is facing administrative delays.
Recipient/spouse who gets less than the maximum amount of the OCB for at least one dependent child.
Usually because income is above the cutoff

24. Transition Child Benefit
Those not eligible:
A child receiving Temporary Care Assistance under Ontario Works;
A dependent of a dependent under Ontario Works;
Persons not on social assistance in their own right and getting only ACSD on behalf of a child;
Residents of interval and transition homes, once they are no longer eligible for the equivalent to basic needs and shelter; and
Residents of emergency hostels.

25. Transition Child Benefit
Additional Eligibility requirements:
Parents potentially eligible for NCBS/OCB must make reasonable efforts to access the benefit -
will be given up to 4 months to establish eligibility for NCBS/OCB
Discretion to extend beyond 4 months, if continuing to make reasonable efforts
TCB will have to be repaid, if retroactive NCBS/OCB benefits received.
Recent regulation ensures that retro payment cannot reduce income below $2.50

26. Transition Child Benefit: Joint Custody
Recent Case: Oliveira v. Ontario, 2008 ONCA 123
In a joint custody situation, parent entitled to:
100% shelter allowance for children each month,
may be entitled to full drug and dental each month,
only entitled to 50% basic needs for the children
Where parent is only getting CCTB/NCBS/OCB for 6 months of the year:
Will the parent be entitled to the Transition Child Benefit for the other 6 months?
How will that eligibility be determined? Data sharing with CRA? Recipient reporting?
There are many answers we don’t have yet. Detailed Policy Directives will be issued by OW and ODSP this spring.

27. Rate restructuring: Easy and Difficult Case Examples
The following examples explore how the benefits we have been discussing interact in different family income scenarios.
Please note that the actual figures used are estimates for discussion purposes only. For example,
Very simplified OW/ODSP incomes have been used for ease of comparison.
To illustrate the net income effect due to the OCB and rate restructuring, we have held the CCTB/NCBS payments at 2007/8 levels in both the before and after restructuring examples.

28. Family #1 OW single parent
Single mother with 2 children over 13
OW only – no outside income
2007 net family income = $12,840
(from line 236 on her Income Tax Return – this is not total income, it is the income figure that is used to calculate the amount of the NCBS and the OCB)
NCBS for July = $312
OCB for July = $100
TCB for August 2008 = $ 0
(Ineligible because receiving max NCBS and OCB)

29. Family #1 OW single parent
June 08
August 08
OW Basic needs + shelter
1,022
984
BTS/WC 38
OCB
100
CCTBBB*
214
NCBS*
312
TCB
Total income
1,586
1,610
Change +/-
+ $24
*approximation for comparison purposes

30. Family #2 OW – refugee claimant
Single mother with 2 children, refugee claimant, not landed
OW only – no outside income
2007 net family income = $14,562
NCBS in July = $0 (not eligible)
OCB in July = $0 (not eligible)
TCB in August 2008= $344

31. Family #2 OW – refugee claimant
Transition Child Benefit calculation:
$172 X # of children $344
less: OCB $ 0
less: NCBS-$43.76-$ $ 0
Monthly TCB benefit = $344

32. Family #2: OW – refugee claimant
June 08
August 08
OW Basic needs + shelter
1,248
984
BTS/WC 38
OCB
CCTBBB
NCBS
TCB
344
Total income
1,286
1,328
Change +/-
+ $42

33. Family #3 ODSP – no outside income
Couple with 2 children
ODSP only - no outside income
2007 net family income= $23,590
NCBS for June = $260 (out of $312)
OCB for June = $76 (out of $100)
TCB in August = $46
ODSP shelter and basic needs benefits:
$1,959 for January – October 2007
$2,000 for November & December 2007

34. Family #3 ODSP – no outside income
Transition Child Benefit calculation:
$148 X # of children $296
less: OCB $ 76
less: NCBS-$43.76-$ $174
Monthly TCB benefit = $ 46

35. Family #3 ODSP – no outside income
June 08
August 08
ODSP Basic needs + shelter
1,826
1,764
BTS/WC 38
OCB 76
CCTBBB
214
NCBS
260
TCB 46
Total income
2,338
2,360
Change
+ $22

36. Family #4 ODSP + max special diet
Couple with 2 children
ODSP + $250 special diet for each parent
Net family income = $29,590
NCBS for July = $145
OCB for July = $ 36
TCB for Aug = $201

37. Family #4 ODSP + max special diet
Transition Child Benefit calculation:
$148 X # of children $ 296
less: OCB $ 36
less: NCBS-$43.76-$ $ 59
Monthly TCB benefit = $201

38. Family #4 ODSP + max special diet
June 08
August 08
ODSP Basic needs + shelter
1,940
1,764
BTS/WC 38
OCB 36
CCTBBB
214
NCBS
145
TCB
201
Total Income
2,337
2,360
Change +/-
+ $23

39. Discussion of other examples
We are looking for scenarios where the effectiveness of the Transition Child Benefit can be tested.
Can you think of others?

40. What Next: Information and advocacy in the short run:
Political pressure building to restore the Back-to-School and Winter Clothing Allowances.
Municipal and School Board are passing resolutions
Some Municipalities are considering a special benefit to be paid this year to ease the transition in the first year.
ISAC will continue to work with the various Ministries and the Premier’s office around identified problems
MCSS Communication Strategy:
ODSP and OW staff have received training
Cheque inserts have gone out to ODSP and OW recipients
Some OW/ODSP offices are providing training to local agencies
Some OW/ODSP offices have started meeting with clients to explain the transition. There may also be public information sessions in some municipalities.
In the longer term, advocacy groups are looking for:
faster implementation of the OCB,
increases to the OCB maximum and
a larger net OCB for families on social assistance