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Housing and Homelessness

Directive # 2006 - 04

Date: January 5, 2006

The policies, procedures and service manager requirements in this Directive are to be implemented by all housing providers in the Region of Durham included under the provisions of the Social Housing Reform Act and its associated Regulations.

Please note: If your housing corporation is not covered by the Social Housing Reform Act, this Directive is for information purposes only.

Subject

Treatment of Lump Sum Income

Background

Section 50(3) of Ontario regulation 298/01 excludes specified types of income from rent-geared-to-income (RGI) calculations.  Under this provision, the following types of lump sum payments are not included in RGI calculations:

  • A war reparation payment
  • A lump sum insurance payment
  • A severance pay arising from a dismissal from employment
  • A lump sum payment received under a decision of a court
  • A lump sum payment received under a decision of a statutory tribunal
  • A lump sum payment received under the 1986-1990 Hepatitis C Settlement Agreement made as of June 15, 1999 among the Attorney General of Canada, Her Majesty the Queen in right of Ontario and others.

All other lump sum payments received by RGI households are included in RGI calculations. 
In accordance with section 50 (2.1) of Ontario Regulation 298/01 (amended in November 2005), if the income is intended for a previous time period, RGI must be retroactively recalculated for this period and an overpayment of RGI assistance/subsidy determined.

Action Required

Rent-geared-to-income (RGI) households must declare all income received including lump sum payments.  Lump sum payments may be received for income such as:

  • Employment Insurance benefits
  • Canada Pension Plan benefit
  • Old Age Security / Guaranteed Income Supplement payments
  • Child or spousal support payments
  • Private insurance payments
  • Workplace Safety Insurance Board (WSIB) payments
  • other public or private benefits.

When a lump sum payment is received, the housing provider must verify the income and determine the period of time for which the lump sum is intended. The RGI is then retroactively readjusted to include the lump sum income in the months for which it was intended – i.e. when it should have been received.  Any resulting increase in RGI takes effect on the later of the:

  • first day of the second month following the effective date of the new income
  • the move-in date. 

If an overpayment of RGI assistance is incurred as a result of this retroactive adjustment, it is not to exceed the total amount of RGI assistance issued for the period that was adjusted.

If it is known in advance that a tenant has applied for income that may be paid in a lump sum, the housing provider should advise the tenant that the income may be used to recalculate RGI for previous months and that the tenant may be responsible to repay an overpayment of RGI assistance.

Exemptions

Lump sums that are excluded from RGI calculations per section 50(3) of Ontario regulation 298/01 are not to be used in retroactive adjustments.  These lump sums are:

  • a war reparation payment
  • a lump sum insurance payment
  • a severance pay arising from a dismissal from employment
  • a lump sum payment received under a decision of a court
  • a lump sum payment received under a decision of a statutory tribunal
  • a lump sum payment received under the 1986-1990 Hepatitis C Settlement Agreement made as of June 15, 1999 among the Attorney General of Canada, Her Majesty the Queen in right of Ontario and others.

In addition, retroactive lump sum payments of Ontario Disability Support Plan (ODSP) benefits are not to be used for retroactive adjustments because ODSP shelter allowances are not adjusted retroactively when these benefits are paid in a lump sum.   ODSP lump sums are often paid when an Ontario Works recipient is granted ODSP benefits.  ODSP reimburses Ontario Works and pays the remaining amount to the recipient.  In these circumstances, housing providers will increase the RGI to ODSP rates beginning with the first day of the month following termination of the Ontario Works benefits.

Sometimes retroactive lump sums are used to repay another social program such as Ontario Works, ODSP or Employment Insurance.  If this occurs, RGI should not be retroactively calculated on the repayable amounts, and housing providers will increase the RGI effective the first day of the month following the date of the payment of the lump sum.

Court Ordered Support Garnishees

Sometimes lump sum payments are subject to a garnishee for court ordered child or spousal support.  Housing providers must ensure that the support paid by the tenant is deducted from the gross lump sum amount that is included in the retroactive RGI calculation.  Providers will calculate retroactive RGI based on the gross monthly amount minus the support garnishee for that month.

Where the monthly amount of the garnishee is unclear, the provider may average the total amount of the garnishee that is deducted from the lump sum over the period for which the lump sum is intended.   

Household Notification

If an overpayment of RGI assistance is established as a result of a retroactive adjustment to the RGI, the household must be notified of the:

  • the amount of the RGI overpayment;
  • the period for which the overpayment was incurred; and
  • the household’s right to request a Regional Review of the overpayment within 10 business days.

If the RGI is increased by 10% to collect the overpayment, the household must also be notified of this increase.  In these circumstances, the 10% increase takes effect on the first day of the second month following the date of notice.

If you have any questions please contact your Housing Co-ordinator.

Shirley Van Steen
Director of Housing Services

Mary Simpson
Director of Financial Planning

 

APPENDIX A
LUMP SUM CALCULATIONS - EXAMPLES

Directive 2006-04
July 5, 2006

Example 1

A tenant applies for Employment Insurance (EI) benefits on April 12.  The tenant has no other income and pays minimum rent of $85 per month.  On June 2, the tenant receives a gross lump sum EI payment of $1750.  This represents gross weekly EI of $250 effective April 26.

Current RGI - $85 per month
New RGI - $302 per month
Weekly EI: $250
Monthly EI: $250 times 4.333 = $1083.25
RGI: $1083.25 minus $75 times 30% = $302

Effective Date of Change - June 1
EI effective April 26
First day of the second month following April 26 = June 1

RGI Overpayment - $217
$302 minus $85 for June only

Example 2

A tenant is on Ontario Works and pays RGI at $85 per month.  The tenant applies for ODSP on February 14.  On October 12, the tenant receives a lump sum ODSP payment of $1752.  They will receive ongoing ODSP income of $523 per month effective October 31 and their Ontario Works will also end on October 31.

Current RGI - $85 per month
New RGI - $109 per month
Per Table 5 of Ontario Regulation 298/01
Effective Date of Change - November 1
Ontario Works terminated October 31
First day of the month following October 31
RGI Overpayment - zero
No retroactive calculation completed

Example 3

A tenant applies for Canada Pension Plan (CPP) benefits on March 10.  The tenant’s spouse currently receives CPP income of $810 per month and private pension income of $980 per month.  Current RGI is $537 per month and the market rent for the unit is $700 per month.
On September 12, the tenant is approved for CPP at $650 per month effective March 1 and receives a gross lump sum payment of $4550.

Current RGI - $537 per month
New RGI - $700 per month
Total monthly income: $810 plus $980 plus $650 = $2440
RGI: $2440 times 30% = $732
Adjusted to market amount = $700

Effective Date of Change - May 1
CPP effective March 1
First day of the second month following March 1 = May 1
RGI Overpayment - $815
$700 minus $537 =  $163 per month
Times 5 months (May to September inclusive)

Example 4

A tenant is on Ontario Works and applies for Workplace Safety and Insurance Board (WSIB) benefits on May 12.  On August 6, the tenant begins to receive WSIB payments of $750 per month, and also receives a lump sum WSIB payment of $1900 for the months of May, June and July.  Current RGI is $175 per month.

Current RGI - $175 per month
New RGI - $180 per month
$750 minus $150 times 30% = $180
Effective Date of Change - September 1
First day of the month following August 6 (the date the lump sum was received) = September 1
RGI Overpayment - zero
No retroactive calculation completed

Example 5

A tenant applies for Employment Insurance (EI) benefits on June 11. On September 15, he receives confirmation that his EI will be paid at $310 gross per week effective June 25.  The EI benefit is also being garnisheed at $150 per week for the payment of court ordered child support.  Current RGI payable is $110.

Current RGI - $110 per month
New RGI - $163 per month

Gross weekly EI: $310
Weekly EI for RGI calculation
$310 minus $150 (support garnishee) = $160
Monthly EI: $160 times 4.333 = $693.28
RGI: $693.28 minus $150 times 30% = $163

Effective Date of Change - August 1
EI effective June 25
First day of the second month following June 25 = August 1
RGI Overpayment - $53
$163 minus $110 =  $53 per month
Times 2 months (August and September)