Shutterstock

By Asif Khan

May 19, 2025

The much-anticipated Canada Disability Benefit (CDB) is set to roll out with first payments in July 2025. For Canadians with disabilities and their advocates, the path to CDB has been a long and hard-fought one. Yet with the rollout nearing, victory still feels far away.

While the CDB has been promoted by the federal government as a major move forward in supporting people with disabilities who live in poverty, the interactions among federal and provincial benefits, social assistance policy, tax law, and income treatment require complicated navigation that most people do not have the time or ability to steer through.

The CDB has been capped at a monthly $200 maximum per individual, which has sparked justified outrage. Originally touted as a means to bridge “the gap between the poverty line and what people receive in their respective provinces,” the CDB falls catastrophically short. The regulations show it will lift only 20,000 recipients—just 2% of the 917,000 working-age Canadians with disabilities in poverty—above the poverty line in the first year, and only 25,000 by year ten. This is not the meaningful support that people with disabilities have fought for.

The benefit amount is not the only problematic aspect of the CDB. Access is another major hurdle. Under the current regulations, the Canada Disability Benefit (CDB) relies entirely on the Disability Tax Credit (DTC) as its sole eligibility gateway, locking out many of those who need it most. The DTC’s restrictive definition of disability does not align with the broader, more inclusive criteria set out in the Canada Disability Benefit Act. Since the DTC is a non-refundable tax credit, low-income people with disabilities see no point in applying because they owe little to no income tax. Compounding this design flaw, the Canada Revenue Agency’s complex eligibility and dispute process renders the DTC an inaccessible and overly restrictive gatekeeper for CDB access.

The CDB’s punitive income treatment has been another major source of concern. Currently, the CDB is classified as social assistance under the Income Tax Act and included in net income for tax purposes. While not taxable specifically, this inclusion means the CDB will increase an individual or family’s total income for tax filing purposes, resulting in a decrease in other income-tested benefits, such as the Canada Child Benefit, Canada Workers Benefit, GST Credit, and numerous other provincially administered benefits.

Moreover, the CDB regulations count provincial or territorial social assistance, such as the Ontario Disability Support Program (ODSP), as income when determining eligibility for the CDB. Applying the CDB’s income thresholds ($23,000 for singles, $32,500 for couples) to those receiving last-resort assistance creates unnecessary barriers for the most vulnerable CDB applicants.

Worse still, for Ontarians with disabilities living in poverty, the provincial government has remained non-committal on whether social assistance recipients will get to count the CDB as a top-up to their other income support.

The Curious Case of Ontario

While most provinces, including larger ones such as British Columbia and Quebec, have pledged not to claw back the CDB from provincial social assistance income, Ontario has stayed troublingly silent.

Since they have not made a clear statement or commitment that the CDB is going to be exempt from being counted as income, the provincial government has created major worry and concern for people with disabilities living on social assistance in Ontario, who already live on incomes between 40%-60% below the poverty line.

Ontario’s social assistance schemes claw back some types of benefit income from other government sources by decreasing a person’s social assistance benefits dollar for dollar. If the provincial government decides to count the CDB as part of a recipient’s income, it will reduce their social assistance benefit amount. This is a cynical, one-step forward, two-steps back move, which would allow the province to use the CDB as a cost-mitigation opportunity. Balancing the budget on the backs of the most vulnerable in the province is unacceptable and will do nothing to reduce disability poverty in Ontario.

This policy direction is not inevitable. There is an administratively feasible and cost-neutral way of exempting the CDB from the income calculation in Ontario’s social assistance legislation. Following the treatment of the Canada Child Benefit, the provincial government could add the CDB as an exemption in the statute’s regulations, at no cost to the government, to prevent clawbacks.

The CDB is Flawed, but Fixes Exist

In addition to addressing Ontario’s policy inaction on the CDB, there are other practical, feasible solutions that the federal government could undertake.

To address its exclusionary eligibility criteria, the federal government could expand CDB access by incorporating the Canada Pension Plan disability benefits (CPP-D) as an alternative pathway. Like the DTC, CPP-D uses a tiered definition of severe and prolonged disability and a similar determination process, and its inclusion would broaden eligibility without compromising integrity.

The federal government can also amend the Income Tax Act, as it proposed in the 2024 Fall Economic Statement, to exempt the CDB from being treated as income. The government could then take this amendment one step further and exempt provincial/territorial social assistance from the CDB’s income threshold. With a new federal government and Parliament’s recall approaching, now is the time to act.

Disability communities have repeatedly and clearly presented their recommendations for improving the CDB at every opportunity but have been largely ignored. Formal consultation engagement has been immense: The government itself reported receiving nearly 3000 comments from nearly 1000 individuals and organizations on the proposed CDB regulations that would address many of these previously identified flaws. Yet, despite this outpouring of input, the final regulations made no meaningful changes to core concerns such as benefit amounts and eligibility, which has left communities largely frustrated.

However, the final CDB regulations did include the important addition of an accessible reconsideration and appeal process. Ontario community legal clinics who support individuals with disabilities living in poverty advocated for this change. The amended regulations now allow individuals to appeal overpayment decisions to the Social Security Tribunal. This expansion promotes fairness, accountability, and better outcomes for people with disabilities. In a process where progress has been scarce, this is a meaningful step worth recognizing. It provides hope that more positive regulatory change may occur in the future.

Improving the CDB isn’t just a good poverty reduction policy – it’s honouring a commitment made to nearly a million Canadians with disabilities who have waited too long for essential income support. It should not be this difficult to obtain.

Solutions are not lacking. What’s missing is a recognition that delivery on promises is about more than just implementation.

Asif Khan is the Research and Policy Analyst for the Income Security Advocacy Centre (ISAC).