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EARNINGS EXEMPTIONS
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The figures in the tables in this report do not take into account the fact that welfare incomes may be higher if recipients have earnings. Each province and territory allows welfare recipients to retain a certain amount (a flat-rate sum, a percentage of earnings or a combination of both) without any reduction in their welfare cheques. The National Council of Welfare did not include these extra amounts in the tables because it is not certain that recipients could actually increase their incomes by these levels. They may be unable to work or unable to find jobs.

Table 7 shows the allowable earnings exemptions for January 1999 in each province and territory. The exemptions vary by family size and sometimes by employability. All provinces and territories recognize work-related expenses, including childcare expenses in most cases. Welfare recipients are allowed to deduct all or some of these costs when declaring their earnings for welfare purposes. In effect, that means that the actual earnings exemptions in some provinces and territories are more generous than they appear at first glance. They also provide a greater incentive for people to take paying jobs.

Earnings exemptions are important because they provide a means for welfare recipients to improve the quality of their lives, at least marginally. These exemptions also encourage individuals to get experience in the labour market and to gain sufficient confidence to leave the welfare system.

No one would disagree that sensible earnings exemption policies offer genuine incentives for people on welfare to improve their financial situation by taking a job. But earnings exemptions, no matter how generous, are no substitute for adequate welfare rates. It is disheartening to note that Canada's two largest provinces have opted for higher earnings exemptions instead of increases in welfare benefit levels.

As part of its welfare reforms of 1989, Quebec introduced the concept of "threshold of recognized needs" based on a Statistics Canada study of the cost of living of the lowest ten percent of working households in Canada. Quebec welfare rates are set as different proportions of this threshold based on the recipient household's classification. The amount of monthly earnings that may be exempted is equal to the difference between the threshold of recognized needs and the benefit level payable to the household. In April 1997, Quebec increased its earnings exemptions while reducing payments under the Property Tax Refund program. Employable people, including single parents with children of school age, have to find work to get the same total income. Finding a decent job is hard enough today with the high unemployment in Quebec. But for people on welfare, there is the added barrier of insufficient training and, despite the efforts of the Quebec government, a shortage of quality affordable child care continues to pose an obstacle for parents.

As of April 1996, Yukon granted an additional earnings exemption to people who had been on assistance for three months. Recipients are now permitted 25 percent of net earnings exceeding the flat-rate exemptions.

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The National Council of Welfare feels that it is fair to require some effort on the recipient's part towards self-sufficiency wherever possible. Job search and training requirements have always been a condition of eligibility for employable welfare applicants. But we also feel that welfare rates should be based on the cost of a reasonable basket of goods and that recipient households should receive the full amount. Paying decent welfare rates and improving incentives to work by increasing earnings exemptions is sound social policy. Cutting benefits is not.

 

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TABLE 7, MONTHLY EARNINGS EXEMPTIONS AS OF JANUARY 1999

 

UNEMPLOYABLE

EMPLOYABLE

NEWFOUNDLAND1

Adults on social assistance for reasons other than unemployment (excluding disability): $30 + 50% of allowable income over $30 and up to $80 a month (maximum monthly exemption of $55)

Disabled adults : up to $95 a month

Families of two ormore (no disabled members): $150

Families with disabled member(s): up to $190 a month

Unemployed adults: 50% of allowable income up to $80 a month (maximum monthly exemption of $40)

Families of two or more (no disabled members): $150

PRINCE EDWARD ISLAND2

$50 for a single person or $100 for a family plus 10% of the balance of net wages for both households

NOVA SCOTIA3

Single persons : $100 + 25% of gross earnings or vocational training allowances

Families : $200 + 25% of gross earnings or vocational training allowances

Single people with disabilities who are in an approved education program: $275 + 25% of monthly training allowances

Single person: $50 (net wages)

Families: $100 (net wages)4

 

 

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TABLE 7, MONTHLY EARNINGS EXEMPTIONS AS OF JANUARY 1999

 

UNEMPLOYABLE

EMPLOYABLE

NEW BRUNSWICK

Single person: $150
Families: $200

Single person: $150
Families: $200
If welfare officials decide a recipient has high employment potential, exemptions are increased. For a single person: an additional monthly amount of $250 for two months For a family: an additional $200 a month for two months and $100 for the third month. Two-parent employable families are eligible for the $200 exemption for six months with allowable extensions.

Welfare recipients are eligible for the Extended Wage Exemption when their earnings are high enough that the application of the extended wage exemption is to their benefit, and where the employment seems likely to lead to self-sufficiency (that is, is not temporary or seasonal). The Extended Wage Exemption lasts for twelve months only. Recipients' exemptions then revert to the established exemption minimum. Single people and couples without children: 30% of net earned income for the first six months, 25% of net earned income for the next six months, then flat exemption of $150 or $200 a month Families with children: 35% of net earned income for the first six months, 30% of net earned income for the next six months, then flat exemption of $200 a month.

QUEBEC

Single person or family : $100

Single Person : $200
Single parent : $200
Two-parent family : $300$

 

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TABLE, MONTHLY EARNINGS EXEMPTIONS AS OF JANUARY 1999

 

UNEMPLOYABLE

EMPLOYABLE

ONTARIO5

Single person: First $143 + 25% of remainder of earnings
Single parent, one child: First $275 + 25% of remainder of earnings and child care
Couple, two children: First $346 + 25% of remainder of earnings and child care

MANITOBA

The greater of $50 a month of net earnings, 70 cents for each hour worked or 30% of gross monthly earnings.
Newly-enrolled applicants and self-employed persons, $50 a month up to $600 a year

Single persons, childless couple and two-parent families with children: $100 for each earner + 25% of net earnings
Single parent: $115 + 25% of net earnings

SASKATCHEWAN6

Single disabled person: First $100 of monthly earned income + 20% of excess (maximum exemption $175)
Two-adult family, no children: First $125 of monthly earned income + 20% of excess (maximum exemption $250)
Family with children in which the adult is disabled: $250 monthly. Earnings over $250 monthly are eligible for the Saskatchewan Employment Supplement.

Single person: First $25 of monthly earned income + 20% of excess (maximum exemption $100).
Two-adult family, no children: First $50 of monthly earned income + 20% of excess (maximum exemption of $175).
Family with children: $125 monthly. Earnings over $125 monthly are eligible for the Saskatchewan Employment Supplement.

ALBERTA

Adults in family: $115 plus 25% of net income by all adults. First $350 of earnings of each child in the family plus 25% of income over $350 earned by the children.

 

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TABLE 7, MONTHLY EARNINGS EXEMPTIONS AS OF JANUARY 1999

 

UNEMPLOYABLE

EMPLOYABLE

BRITISH COLUMBIA

Disability Benefits Level 1 (temporarily unemployable): no earnings exemption.
Disability Benefits Level 2 (permanently unemployable): $200 plus 25% of remaining amount. No time limit for earnings exemptions.

25% of any income earned after recipient has been on welfare for three months. The exemption is available only twelve months during a 36-month period. The twelve months need not be consecutive.

NORTHWEST TERRITORIES8

$150 (no dependants)
$300 (dependants)

NUNAVUT

$150 (no dependants)
$300 (dependants)

YUKON

For first three months on welfare, $50 for single person, $100 for a family. In fourth month, an additional exemption of 25% of further income.
No exemption on net income from full-time employment (more than 20 hours a week).
Earnings exemption on part-time employment is the greater of 50% of net earnings but not exceeding 25% of the total of items of basic requirements necessary to maintain an applicant and dependants or $5 a month for a single person, $10 a month for a family of two and $15 a month for a family of three or more. In lieu of an earnings exemption, full-time workers get additional payments of $50 a month: $25 for clothing and $25 for transportation.
People considered to be permanently excluded: $25 for a single person; $50 for a married couple from sale of handicrafts or hobby materials.
After three months on welfare, Yukon grants an additional exemption of 25% of net earnings exceeding the flat rate exemptions.

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1  As of October 1998, Newfoundland allows the deduction from earnings of babysitting or day care costs up to a maximum of $325 a month for one child and a further $125 a child for other children if necessary for employment. The same exemptions apply to applicants for welfare. Newfoundland revised its earnings exemptions for families in June 1998. Revisions to the exemptions for single adults began in June 1999 and will be reflected in later versions of this report.

2  The earnings exemptions for welfare recipients also apply to applicants for welfare. A maximum of $25 a week may be deducted from net income where applicants or beneficiaries must travel to and from work.

3  There is a total exemption of earned income for the first month of full-time employment for unemployable recipients on provincial welfare (the disabled person and the single parent). Training allowances for full-time participants are also exempt during the first month. The Director may include as a budgetary requirement up to $200 a month for child care, transportation and special clothing if needed for participation in an approved employment, education or rehabilitation program.

4 These are the earnings exemptions for the Halifax Regional Municipality (called the City of Halifax until April 1996). In April 1998, the provincial government took over the administration of all welfare in Nova Scotia.

5  Ontario changed its earnings exemption policies in 1995. Further changes effective October 1999 will be reflected in future versions of this report.

6  Earnings exemption levels vary by family size. The earnings exemptions apply to fully employable individuals only after they have been in receipt of assistance for at least the preceding three consecutive months. Recipients in the 'disabled' or 'not fully employable' categories are entitled to the earnings exemption from the time they receive income from employment. The Saskatchewan Employment Supplement is a monthly payment for parents on welfare who have paid work or maintenance. The Supplement is paid at a rate of 25 to 45 percent of income depending on the size of the family to a maximum of $315 extra a month for a family with five or more children.

7  Persons who qualify for the Assured Income for the Severely Handicapped program have higher earnings exemptions. Single persons get an exemption of $200 a month plus 25 percent of additional earnings and the exemption for families is $775 monthly.

8  Northwest Territories changed its earnings exemptions in 1997.

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