Lump sum payments are usually one-time only payments that are not received on a regular basis. Therefore these payments could not be considered Income that would be deducted from the client's cheque Payments may include periods in the past (retroactive) such as Workers Compensation, Canada Pension, Employment Insurance and Wages. Where social assistance benefits are provided for the same period, an overpayment would apply. An Assignment of Benefits or Consent to Deduction filed with the income provider should prevent overpayments as the income provider (e.g. Income Securities or Social Development Canada) would provide reimbursement to SD for assistance provided to the client for overlapping periods. Where a payment has no retroactive portion (lotto winnings, a one time settlement or a gift) the only consideration for past months would be where the client failed to disclose the payment in the month it was received. Otherwise continuing eligibility would be the only consideration.
Lump sum payments could include:
- Arrears on child support payments
- Where arrears are received on a regular basis normally as part of a court order they are considered monthly income.
- Where arrears are not received on a regular basis the payments are considered as lump sums and liquid asset exemptions would apply. - Compensation payments
- Insurance settlements
- Liquidation of investments ex: RSPs, GICs, Stocks, Bonds etc.
- Lottery winnings
- Marital property/divorce settlements
- Retroactive pension payments such as Canada Pension Plan. The regular pension payments would be considered Income, but the retroactive payment would be a lump sum payment The retroactive payment will likely be reduced as a result of the client having completed the Consent to Deduction and Payment – CPP form
- Sale of goods or property
If the applicant/client neglects to inform the Department of an insurance settlement and non Consent to Deduction and Payment - Insurance Settlements form is completee; he/she is still obligated to repay the full amount of the basic assistance benefits. This would also apply to a lump sum for Canada Pension or Worker's Compensation Benefits where the Consent Form was not signed. The overpayment would be retroactive income from the above sources for any month where social assistance benefits were already received.
Specific to Lump Sum payments for Insurance Settlements, in attempting to recover department funds for basic social assistance benefits paid, consider;
- those recoveries can only be made from awards for lost wages, income replacement and/or health services benefits and not from awards for punitive damages (See Insurance Settlements).
- that lawyers fees are an allowable deduction against the amount awarded and to be recovered by SD. Legal fees will average approximately 25%, if the fees are significantly higher, a review of the fees should take place. The review would be completed by the Senior Policy Analyst in the Policy and Federal/Provincial Relations Branch at 453-3259
See also, Section (10) Compensatory Benefit in the Family Income Security Act, Insurance Settlements Policy, Awaiting Income Other Than Employment Insurance and Awaiting Non Federal Income-Applicant.
The liquid assets policy, See Exemptions - Other and Liquid Assets will be applied when determining continuing eligibility upon receipt of a lump sum payment where no retroactive income was received from income sources discussed above, with the following special considerations.
Exemptions
See Assets re: compensation payments for expropriation, to Japanese Canadians, HIV victims, Hepatitis C victims, thalidomide victims, and victims of sexual abuse.
See Blind, Deaf or Disabled regarding Trust Funds for these clients.
Home or Other Expenses
Money received, or a portion of it, may be set aside to purchase a home, as long as the home is purchased within a twelve month period and an agreement is signed by the client regarding the use of this money. The 'Client Statement form'' can be used to obtain this agreement ensuring the statement cites the client "agrees" to conditions written in the statement and the policy. If not, the money must be treated as a lump sum payment or as liquid Assets. Confirmation of the purchase amount etc. must be made.
Beyond that, in exceptional circumstances, monies received as a lump sum may be used by a client for the purchase of basic items (extra food, a used vehicle, fuel such as wood or oil), furniture (a bid or appliance not televisions or stereo equipment), for the payment of a debt related to basic needs (electric or heating bills, mortgages), to purchase an RESP for a dependant or for house repairs. Items such as All Terrain Vehicle's, vacations, debt owed to family would not be considered. Confirmation of such purchases must be made.