Canadians won’t be taxed on disability benefit under proposed rule change

OTTAWA — The Liberals are planning to introduce legislation to exempt the Canada Disability Benefit from being treated as income under the Income Tax Act.

The fall economic statement, which was released on Monday, is also calling on the provinces and territories to ensure the program’s recipients do not have their other benefits reduced as a result of it.

“The government will be monitoring the decisions of provinces and territories and is prepared to take action to ensure the federal benefit is not clawed back,” the fall economic statement says.

The disability benefit, which is set to take effect in July, would see eligible people receive up to $200 per month.

While advocates critiqued the amount for being too low, some have also raised concerns that if the benefit were considered taxable income, it could lead to a reduction in provincial and territorial government benefits.

Amanda MacKenzie, the national director of external affairs for March of Dimes Canada, said the government’s plan to exempt it from taxation is welcome news.

“This is a thing that makes it easier for provinces, frankly, to make the right decision,” she said.

She also said it’s a signal from the government to the community that it’s going to work with people with disabilities to realize the “full value” of this benefit.

But, she said, the amount of money people can receive through the benefit is not enough.

“It’s a start — I’m not going to say it’s a good start,” MacKenzie said. “People with disabilities continue to push for an increase in that amount.”

This report by The Canadian Press was first published Dec. 17, 2024.

Alessia Passafiume, The Canadian Press