Canadian Forces Income Support Benefit - Income Assessment: General

Issuing Authority: Director General, Policy and Research
Effective Date: April 1, 2019
Document ID: 1246

Care has been taken to ensure these policies accurately reflect the acts and regulations. Should any inconsistencies be found, the acts and regulations will prevail.

Purpose

This policy describes those income sources that are assessable, as well as those deductions which are permitted, when calculating the amount of the Canadian Forces Income Support (CFIS) benefit to be paid.

Policy

  1. The CFIS benefit is a form of income support available to qualified Canadian Force Veterans, survivors or orphans who are no longer eligible for an Earnings Loss (EL) benefit. (See policy, CFIS – Eligibility).
  2. The CFIS Program uses, in part, the definition of income contained in the Old Age Security (OAS) Act.  This definition relies on Part I, Division B (Computation of Income), of the Income Tax Act to determine what monies constitute income or allowable deductions.
  3. Any deduction provided by the Income Tax Act that is outside the scope of Part 1, Division B, for example the Capital Gains deduction, is not applicable for CFIS program purposes.

Assessable Incomes

  1. Assessable income is grouped into two categories:
    1. Reported Incomes
      Those sources of monies which are always reportable for income tax purposes. Clients must report the ongoing monthly amounts, and these are termed “Reported Incomes.” Paragraph 7 identifies those income sources that are considered “Reported Incomes”.
    2. Current Monthly Benefits
      These sources of monies are unique. They are treated differently, because they may be non-taxable, but the CFIS program requires their assessment, or their assessment is necessary to avoid the issuance of duplicate payments from the same source. Clients will report this income on the basis of the ongoing monthly amounts, and these are termed “current monthly benefits.” Paragraph 8 identifies those income sources that are considered current monthly benefits.
  2. The following income sources are treated as “Reported Incomes”:
    1. Canada/Quebec Pension Plan (CPP/QPP) benefits (excluding lump-sum death benefits and children’s benefits).
    2. Other Pension Income - includes retirement pensions, superannuation benefits, payments received as a result of former employment or contributions to a retirement plan, survivor’s benefits received from any of these sources, annuity payments, Worker’s Compensation and foreign pensions (excluding war-related disability pensions).
    3. Employment Insurance Benefits.
    4. Net Interest Dividends and Capital Gains (the profit resulting from the sale of any possession that is, after sale, worth more than $1,000 either as an individual item or as a set. Personal use property, such as household goods, automobiles and other personal effects, is not usually subject to capital gain or loss. A principal residence is exempt from capital gain or loss, but there can be only one principal residence.) - 100% of the actual dividends received and 50% of Capital Gains are assessable for CFIS purposes. A Capital Loss is permitted as a deduction against a Capital Gain only for the year in which the loss occurs.
    5. Rents from Property.
    6. Employment Income.
    7. Self-employment Income.
    8. Income from Other Sources - includes any income that falls within the income sources described as “income” for Income Tax Actpurposes, such as:
      1. Alimony; Registered Retirement Savings Plan (RRSP) / Registered Retirement Income Fund (RRIF) Income;
      2. Scholarships and/or Bursaries;
      3. Retiring Allowances;
      4. Sickness, Accident, Disability or Income Insurances (excluding EL Benefits, the income replacement benefit, Service Income Security Insurance Plan (SISIP) and/or disability pension income paid in accordance with the Pension Act);
      5. Adult Training Allowances;
      6. Income Averaging Annuity Contracts;
      7. Supplementary Unemployment Benefit Plan;
      8. Income from an estate or trust;
    9. Income from a deferred or profit-sharing plan; and
    10. Research Grants.
  3. Section 37 of the Veterans Well-being Regulations identifies the following income sources as “current monthly benefits”:
    1. Income Replacement Benefits (and/or SISIP payments). There could be instances where a Veteran, survivor, or orphan has, in the same month, an overlap of income from these sources and the CFIS benefit.
    2. Disability pensions payable under the Pension Act;
    3. The OAS Act benefits. (Note: There is no authority to “deem” receipt of such benefits for CFIS benefit purposes.);
    4. Disability pension benefits payable under the Royal Canadian Mounted Police Pension Continuation Act or the Royal Canadian Mounted Police Superannuation Act; and
    5. Compassionate Awards authorized under the Veteran Review and Appeal Board Act (if the award was refused under the Pension Act).

Not Assessable Incomes

  1. The following benefits, awards, allowances, etc. are not assessable income:
    1. The Pain and Suffering Compensation, the Additional Pain and Suffering Compensation, the Disability Award prior to April 1, 2019, Critical Injury Benefit, Death Benefits, Detention Benefits and Clothing Allowances provided under the Veterans Well-being Act;
    2. Special Awards under the Pension Act as non-taxable benefits (i.e. Attendance Allowance, Exceptional Incapacity Allowance, and Clothing Allowance);
    3. Gallantry Awards, certain ex-gratia payments (e.g., VAC’s Agent Orange Ex Gratia Payment), social assistance payments from municipal, provincial or federal governments; support or gifts from relatives or registered charities; lottery winnings, municipal tax rebates, the Goods and Services Tax/Harmonized Sales Tax (GST/HST) rebates or Child Tax Benefits; and,
    4. Income received by a dependent child.

Income Tax Act - Deviations and Deductions

  1. The CFIS program definition of “income” deviates from the income tax process in the following instances:
    1. An Employment Expense Deduction as stipulated in the definition of income under section 2 the OAS Act.
    2. Dividend income is assessed at 100% of the face value.
    3. Capital and Business losses are assessed for the calendar year in which they occurred.
  2. A CFIS employment earnings exemption is allowed (See policy, CFIS – Employment Earnings Exemption).
  3. An interest income exemption is allowed (See policy, CFIS – Interest Income Exemption).

Deductions

  1. In computing a recipient’s income, specific deductions are provided under Division B of the Income Tax Act, which are allowed in computing assessable income. These deductions include:
    1. registered retirement savings plan contributions;
    2. child care expenses;
    3. child support payments payable under a court order made prior to April 30, 1997;
    4. attendant care expenses;
    5. tuition fees;
    6. allowable business investment and/or capital losses;
    7. employment and/or student moving expenses;
    8. exploration and development expenses;
    9. spousal support or a separation allowance paid under a separation agreement or a court order;
    10. an amount paid to refund an overpayment of Employment Insurance or Canada/Quebec Pension Plan benefits, except when the amount of the overpayment was recovered by deductions from current benefits; and
    11. first $500 of scholarships and/or bursaries.

References

Veterans Well-being Act, Sections 37 and 41

Pension Act

Veteran Review and Appeal Board Act

Old Age Security Act

Income Tax Act

Royal Canadian Mounted Police Superannuation Act

Royal Canadian Mounted Police Pension Continuation Act

Veterans Well-being Regulations, Sections 36 and 37

CFIS – Eligibility

CFIS – Employment Earnings Exemption

CFIS – Interest Income Exemption

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