If you receive social assistance payments, you must report them as income. The Canada Revenue Agency does not tax them, but it takes them into account when determining your eligibility for benefits such as the Canada Child Benefit, the Old Age Security supplement, and several others. However, there are a few exceptions to this rule.
Social Assistance Reporting Exemptions
You may receive social assistance payments to help you pay for food, clothing, and shelter. Otherwise, you may receive them on behalf of another person to help him pay for these basic necessities.
If you receive social assistance on behalf of a foster child or disabled adult who lives with you, you do not have to report these payments on your income tax return. In this circumstance, they are exempt from the reporting requirement.
Social Assistance for Disabled Spouses, Common-Law Partners, and Relatives
To qualify for the reporting exemption, qualified social assistance payments must be received on behalf of an adult who is not related to you. If you receive social assistance payments on behalf of a disabled spouse or common-law partner, you have to report them as income.
Additionally, if you receive them on behalf of a disabled adult who is related to you or your common-law partner, you also must report these payments as income.
For example;
If you receive social assistance payments for a disabled family friend who lives with you, you are not required to report the payments as income.
However, if you receive social assistance payments on behalf of your disabled cousin, you have to report the payments as income.
Completing Your Tax Return
Near the beginning of each year, you will receive a T5007, Statement of Benefits slip. This slip details the social assistance benefits you received in the previous tax year.
If you meet the conditions for an exemption, you do not have to report these amounts on your income tax return. However, you are required in all other cases.
If you are married or in a common-law partnership, the partner with the highest net income must report the eligible payments, regardless of who received them. Do not use your pay stubs to compare your income levels. Instead, start your income tax return and then compare the amounts you both have on line 23600 of your Income Tax and Benefit Return.
If you have the same number on that line, the person whose name appears on the T5007 slip should report the benefits.
To report these benefits, take the number from Box 11 of the T5007 slip, deduct any amounts received for a foster person who meets the above requirements, then transfer the result to line 14500 of your income tax return. Also, you can claim a deduction for the same amount on line 25000.
By claiming the Social Assistance and deducting it in different sections of your income tax return, you allow the CRA to factor in these payments when determining your benefits. This amount is considered income when calculating your eligibility for federal and provincial benefits such as GST/HST credit, Canada Child Benefit, etc.
However, this income is not taxable. So, you must subtract these payments on line 25000 before you calculate your taxable income to help ensure that you are not taxed on them.
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