In the Province of Ontario regulations, the Ontario Disability Support Payment (ODSP) is a monthly payment, paid out to people who are found to be a “person with a disability” as defined under the Ontario Disability Support Program Act. A person with a disability is someone who has a substantial physical or mental impairment that is continuous or recurrent and is expected to last a year or more. The physical or mental impairment must directly result in a substantial restriction in the person’s ability to work, take care of his or her self, or take part in community life. Additionally, the Province of Ontario regulations state that the impairment(s), its’ duration, and the restriction(s) must also be verified by an approved health care professional. Are you concerned about protecting this payment?
To qualify for Income support, the individual must be 18 years or older, live in Ontario and be in financial need. The province will review the family’s income; assets, housing costs and the size of the family unit to determine financial eligibility.
Families in this situation are often also concerned about the final expenses for an individual receiving the ODSP. Fortunately in Ontario, setting up a prepaid funeral for a person receiving the ODSP, does not challenge their assets or reduce the amount of their monthly ODSP payment.
How does this work?
When a prepaid funeral plan is set up by an authorized person for an individual receiving the ODSP, these funds are place into an Eligible Funeral Arrangement or EFA. Additionally, an EFA can only be set up by a licensed Funeral Home with a licensed Funeral Director.
Since May 1993, the Canada Revenue Agency (CRA) permits up to $15,000 to be set into an EFA for the sole purpose of pre-funding eventual funeral arrangements. Contributions in the EFA earn interest. The interest earned is income tax deferred and is most likely tax exempt. Additionally, this accumulated income is not counted as a relevant contribution in the EFA. However, if the pre-funded funeral plan is greater than $15,000.00, then the interest earned on the amount over $15,000.00 is taxable as income.
If you would like to learn more about how to set up your EFA and protect the ODSP payment, I welcome you to contact me. You can reach me by phone or email, leave a comment or question right here on the site or click the contact tab at the bottom of the screen if you are reading this post on the website.
Until next time,