TFSA AND SOMEONE ON ODSP

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
sydney2
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TFSA AND SOMEONE ON ODSP

Post by sydney2 » 03 Feb 2010 21:36

We are in the middle of a discussion on this subject and cannot seem to find an answer on the government site relating to this, does anyone have any comment.

There is a Henson Trust that can be set up for someone who is collecting ODSP, so that they would not be cut off their disability income when they receive their inheritance. The rules of the Henson Trust are quite clear.

Is there anything obstacle under the TFSA rules that would eliminate a family giving the person who is receiving ODSP $5000.00 per year to put into a TFSA.

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Re: TFSA AND SOMEONE ON ODSP

Post by Nowhereman » 03 Feb 2010 22:25

sydney2, with all due respect, if the person inherits monies, why should they continue on drawing from the tax payer, why should they continue to ask that others support them??

People get up and go to work each day, get monies taken from them, why should they be asked to support someone who has the finances to support themselves??

It doesn't answer your question, but it touched a nerve.

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Re: TFSA AND SOMEONE ON ODSP

Post by sydney2 » 04 Feb 2010 08:34

In cases where someone is disabled, and say perhaps 18 to 25 years old, they will never be able to work again. The inheritance probably would not last their lifetime. The most they would receive from ODSP, I think is $900.00 dollars or more a month and that does not pay for much. With the trust they are allowed so much per month to cover additional expenses and so a parent or guardian when they die, can feel that their loved one has been taken care of.

The trust pays the taxes on income so the government is still collecting taxes, but the disabled person is then guaranteed a better standard of living after the parents become deceased.

I agree with you if the inheritance is substantial, but in this case, it will be quite modest, but woud help the individual, so that is why I was inquiring about the TFSA as opposed to the Henson Trust.

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Re: TFSA AND SOMEONE ON ODSP

Post by stardancer » 04 Feb 2010 09:05

A number of years ago, I spoke to a social assistance worker regarding the rules around ODSP. At the time, he said that parents (or other) could give a recipient up to $2400/yearly without it affecting the ODSP. Not sure of any current limits. But since ODSP is based on a financial need, as well as a disability need, any meaningful support given by parents or other to a recipient would affect the cheque amount. It doesn't matter if the $$ are put into a TFSA, a savings account or general spending.

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Re: TFSA AND SOMEONE ON ODSP

Post by Pickles » 04 Feb 2010 09:25

sydney2 wrote:
Is there anything obstacle under the TFSA rules that would eliminate a family giving the person who is receiving ODSP $5000.00 per year to put into a TFSA.
I'm not aware of any obstacle under the TFSA rules. The problem, istm, would be with ODSP. Are you considering the TFSA as an alternative to a Henson Trust? I wouldn't. First, I think the Ont Gov would not permit a gift of $5,000 per year. Second, there is a limit on assets ODSP recipients are permitted to have (that's why the Henson trust system was eventually set up -- the assets are held in trust for the recipient, not by the recipient himself/herself). Third, as discussed elsewhere in this forum, there is no guarantee that TFSAs will be around at the time the recipient will need to have the income.

If you are asking (it's not clear) if you can make deposits into a TFSA within a Henson Trust, I suggest you check with the Henson Trust Rules as well as the institution you've selected as the potential TFSA provider.
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Re: TFSA AND SOMEONE ON ODSP

Post by biker » 04 Feb 2010 09:39

stardancer wrote:A number of years ago, I spoke to a social assistance worker regarding the rules around ODSP. At the time, he said that parents (or other) could give a recipient up to $2400/yearly without it affecting the ODSP. Not sure of any current limits. But since ODSP is based on a financial need, as well as a disability need, any meaningful support given by parents or other to a recipient would affect the cheque amount. It doesn't matter if the $$ are put into a TFSA, a savings account or general spending.
From Gov web site:
If you are receiving Ontario Disability Support Program Income Support, you and your family can receive gifts or voluntary payments for any reason without affecting your Income Support.

You and each family member are allowed to receive a total of up to $6,000 in a 12-month period, including money from:

gifts
voluntary payments
payments from trusts (including interest earned)
payments from life insurance policies (including interest and dividends earned)
inheritances
honorariums
windfalls, such as lottery winnings.
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sydney2
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Re: TFSA AND SOMEONE ON ODSP

Post by sydney2 » 04 Feb 2010 13:28

Nowhereman wrote:sydney2, with all due respect, if the person inherits monies, why should they continue on drawing from the tax payer, why should they continue to ask that others support them??

People get up and go to work each day, get monies taken from them, why should they be asked to support someone who has the finances to support themselves??

It doesn't answer your question, but it touched a nerve.
Why do we, who are probably comfortable enough, still question why someone with less and with disability be able to totally support themselves. We don't always know the circumstances involved and yet we seem to think they are taking something they are not entitled to. There are probably cases where this happens, but under our Society, those less fortunate get very little. If they have family support that is a plus, but sometimes family can't always help out.

If someone has lost their job and have little assets, they are days or months away from being homeless in our society. We send millions of dollars to help out other nations, but don't seem to want to help at home.

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Re: TFSA AND SOMEONE ON ODSP

Post by AltaRed » 04 Feb 2010 15:05

Sydney, I think the issue arises because many of us see a lot of 'shady' dealings designed to skirt the rules, and/or know people that skirt the rules, or abuse the rules, without conscience. Sometimes it is worth being a whistleblower, sometimes we just stay silent and burn. We, as taxpayers, don't like being 'taken' for a ride and we become sensitive to what we read, with, or without sufficient information.... and sometimes come to inappropriate conclusions. Sometimes it is the program's fault having rules/guidelines that are too severe. Much (if not most) of the time, it is the 'receiver' abusing the system. So we can overreact.

As for your point about taking care of our own people rather than sending millions/billions out-of-the-country, I am with you on that point for the most part.... but I'd rather support a genuine Haitian refugee than a Canadian resident allegedly skimming the system. Too bad we cannot wave a wand and solve those problems.
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Re: TFSA AND SOMEONE ON ODSP

Post by sydney2 » 04 Feb 2010 16:09

Thanks AltaRed for your comments and Biker for posting the information from the gov. site.

Recently I have encountered a situation where there is no abuse of the system and the need is genuine and I was thinking of someway around it to help with info on which way to go.

The inheritance will be modest and the parent really cannot help at this point, but might be able to leave something to this person via a trust or tfsa or some other way, this probably needs a tax lawyer or accountant.

However, to encounter more people than not who believe there is more abuse out there than need, begs to have society change for the better in compassion. We as Canadians have so much be to grateful for and it justs grates me to hear about the abusers of social programs, which leaves less for the real needs of people. Although it seems we are biased towards abuse.

We were out for dinner one evening and one of the people in the group volunteers at a food bank and the conversation turned to the attitude of the people coming there to get food, the comment was made that they were rude and abusive, to the volunteer staff at the food bank. I wonder if it is our attitude and not the attitude of the needy who are put in the positionwhere the have to use a food bank ..surely they are not happy campers when they come to a food bank. Enough said, I will leave this be at this point, thanks everyone for your comments.

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Re: TFSA AND SOMEONE ON ODSP

Post by Frosinone » 08 Feb 2010 21:53

No one had mentioned the new RDSP provisions where a person on ODSP and low income can put $1500.00 into the RDSP plan and the government will top it off to $6000. The $1500.00 can be donated by anybody.

This is a god send.

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Re: TFSA AND SOMEONE ON ODSP

Post by Nowhereman » 10 Feb 2010 09:07

Alta Red, you put it better than I could.

i

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Re: TFSA AND SOMEONE ON ODSP

Post by Pickles » 10 Feb 2010 11:48

sydney2 wrote: The inheritance will be modest and the parent really cannot help at this point, but might be able to leave something to this person via a trust or tfsa or some other way, this probably needs a tax lawyer or accountant.
Again, let me remind you that while family members may "gift" an ODSP recipient, the recipient cannot stockpile these gifts. There are rules on the size of assets a person can hold and still be eligible for ODSP. That is why a TFSA is not a viable way to go. I'm not sure why you keep coming back to it; a Henson Trust, recognized and authorized by the ODSP mandarins is the better approach.
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Re: TFSA AND SOMEONE ON ODSP

Post by Ottawa Advisor » 14 Mar 2010 22:52

A TFSA will be included as part of their assets when assessing their eligibility for the ODSP. I great plan that the governement has recently introduced is a Registered Disability Savings Plan (RDSP). As long as the beneficiary is age 59 or yougner a contribution can be made and tax sheldered as well as not be included as part of the beneficiaries assets for ODSP requirements. If the beneficiary is under age 49 there are additional benefits as the government will provided grants based on the contribution which is income tested.

Hope this helps in regards to passing on assets and assisting in wealth accumulation for someone with a disability.

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Re: TFSA AND SOMEONE ON ODSP

Post by Maltese » 15 Mar 2010 00:15

To be eligible for the RDSP, the individual must have the Disability Tax Credit approved by CRA. Once this has been completed it is well worth opening a RDSP for the many benefits it provides. Detailed information can be found at http://www.rdsp.com. A summary of the RDSP is as follows:

Highlights of the Registered Disability Savings PlanLike Registered Education Savings Plans, the plan will allow funds to be invested tax-free until withdrawal
▪ Any individual that is eligible for the Disability Tax Credit may establish an RDSP
▪ In the case of a minor child, a parent or guardian can establish and direct the RDSP
▪ $200,000 lifetime contribution limit, but there is no annual limits on contributions
▪ Contributions permitted by the individual, family member and/or friends
▪ No restrictions on when the funds can be used or for what purpose
▪ Upon withdrawal, the growth, the Grant, and the Bond are taxed in the hands of the beneficiary, and are likely to be taxed at a much lower rate.
Highlights of the Canada Disability Savings Grant
▪ The Canada Disability Savings Grant will provide a federal contribution to assist families in saving for the future.
▪ Grants are greater for families in the lower and middle-income categories.
▪ When annual net income is less than $77,664 the grant will contribute:
 $3 for every $1 contributed on the first $500
 $2 for every $1 contributed on the next $1,000.
▪ When annual net income is over $$77,664, the grant will contribute:
 $1 for every $1 contributed up to $1,000.
▪ The Grant can be received up to a maximum of $70,000 or up until the end of the year the person turns 49.
Highlights of the Canada Disability Savings Bond
▪ When annual net income is $21,816 or less, the Canada Disability Savings Bond will provide $1,000 per year without any contribution.
▪ The RDSP thus becomes accessible to persons with disabilities whose family does not have the resources to make contributions.
▪ The Bond can be received for up to $20,000 or up until the end of the year the person turns 49.
Payments from the RDSP
▪ The beneficiary of a plan can receive Disability Assistance Payments as soon as the RDSP is established. There are no restrictions on when the funds can be withdrawn of for what purpose, but any Grant or Bond received within 10 years must be repaid.
▪ Each dollar withdrawn is considered to be comprised of contribution, Grant or Bond, and growth. The proportion that is Grant, Bond and growth is taxable.
Federal/Provincial Implications
British Columbia, Newfoundland and Labrador, Saskatchewan, Manitoba, Yukon, Alberta, Nova Scotia, Northwest Territories and Ontario have all exempted the RDSP as an asset and income when determining a person’s eligibility for provincial disability benefits. Quebec and New Brunswick have exempted the RDSP as an asset and partially exempted any payments from the plan. Prince Edward Island has fully exempted the RDSP for calculating eligibility for income-tested social programs, except where someone’s income exceeds the low-income level defined by the National Council on Welfare. Nunavut has not yet made a decision on the RDSP. For up-to-date information on provincial announcements and treatments of the RDSP visit http://www.rdsp.com .

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Re: TFSA AND SOMEONE ON ODSP

Post by Question_Rushed » 07 Oct 2016 04:56

Hi, I'm not sure how to ask a question. I've spent 10 minutes looking how to do this. The only way I see how to ask is by clicking reply to pickles.
I am 61 years old. My daughter wanted to help me out with investing into TSFA. I have no idea what I'm doing. I spoke to my odsp worker. She told me that investing into tsfa is not exempt what you invest in stocks. I was told my investments in stocks and what I take out can't exceed $ 5000.00. My daughter said that didn't make sense if it is not sold and withdrawn it should not be combined and counted as an asset, only what I withdraw from the profits, that I can leave money in and take out half of the 5000.00 and leave the other half in to continue investing. My worker said you can't exceed 5000.00 total in a tsfa account. Example if I have 2500 invested in stocks and it goes up more then 5000.00 I can be disqualified for continuing being on odsp. I questioned her on so if I take out 2500 of it and leave in the other half am I still considered at the 5000.00 mark. My worker said yes right. You can't go over 5000.00 total with withdraw and what is invested.

My question to you is. Am I understand her right, or can I sell half the shares of the 5000.00 total profit, and still keep in 2500.00 until it reaches 5000.00 again? Also if it reaches 5000.00 again quickly do I have to sell it all once it reaches 5000.00 total profit. I am 2 years older then the age limited to apply for RDSP. My daughter also loaned me 2000.00 and I have to pay it back. I will still come out with a small profit if the limit is 5000.00 combined with withdrawl and what I leave in of 5000.00 total profit. Though my worker that is a gift. Not a loan. I told her I still have to pay it back though. So that means my total in truth is not 5000.00 total profit if I have to pay her back as soon as I withdraw it. Yes it is a gift in helping me out I agree. Though I do have to pay it back out of my profits.

Can I take out today 2500.00 and leave in 2500.00, or do I have to withdraw it all asap having reached the 5000.00 mark in total equity. I have no money sitting in tsfa except for in shares. NO withdrawls.

I'm long winded because I'm even unsure of how to ask the question.

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Re: TFSA AND SOMEONE ON ODSP

Post by Spudd » 07 Oct 2016 11:29

It looks like it doesn't matter if it's in a TFSA or in a regular account, your total assets cannot be more than $5000 or it might affect your ODSP.

It doesn't matter if the $5000 is in cash or stocks, it still counts as assets. So selling part of it and keeping it as cash would not help you, if the total was over $5000. If you sell $2000 worth and use it to pay back your daughter then your total would only be $3000 in assets so you would be fine.

Are you eligible for an RDSP? Those are exempt from affecting your ODSP. You might think about using an RDSP instead of TFSA.

http://www.mcss.gov.on.ca/documents/en/ ... rt/4_1.pdf

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Re: TFSA AND SOMEONE ON ODSP

Post by Pickles » 15 Oct 2016 12:15

Question_Rushed wrote:Hi, I'm not sure how to ask a question. I've spent 10 minutes looking how to do this. The only way I see how to ask is by clicking reply to pickles.
I am 61 years old. My daughter wanted to help me out with investing into TSFA. I have no idea what I'm doing. I spoke to my odsp worker. She told me that investing into tsfa is not exempt ....

I'm even unsure of how to ask the question.
I'm sorry for not seeing and responding to your question earlier. I don't have a definitive answer for you but I can explain a bit about TFSAs, how they work, how ODSP looks at them and offer some advice about your next step. I hope you will share this post with your daughter as well.

What makes TFSA accounts special is that when you withdraw money from them, you don't have to pay any taxes on them. So, when you withdraw profit made by your TFSA investment, you will owe no tax.

You are on a government income program that restricts the amount of savings you have to a certain sum (your worker told you $5,000 max). That sum includes all money in all your savings account, including your TFSA account. Your worker is telling you to reduce your total to $5,000. You will have to cash in enough shares in your TFSA to enable you to withdraw. Don't reinvest it or hide it elsewhere.

I see two areas of concern in your situation.

1. You say your daughter lent you $2,000 but your worker considers this money a gift. So the two of you disagree about how much your savings exceed the $5,000 limit.

2. You have earned a profit and your worker may decide this is income, even though it is within the TFSA. There are rules about how much income you can earn while on ODSP before your monthly cheque is affected.


First, you need to get legal advice to help you organize your finances to deal with your situation and to prevent this issue from occurring again. I recommend that you call the community legal clinic in your area and make an appointment to speak to a lawyer or legal worker. Legal clinics give free advice and help. There will be no charge for the service. Also, legal clinics are experts at dealing with ODSP issues.

Your daughter should go with you to help you explain the situation to the lawyer/legalworker. That person can then talk to your ODSP worker to address any immediate concerns. To find the clinic nearest you, go to:

http://www.legalaid.on.ca/en/contact/co ... sp?type=cl

Second, after this immediate issue is fixed, I think you should consider selling all of the shares within your TFSA while you are ahead.

You say you currently have a small profit. Stock prices sometimes go up but can also go down. They are a risky investment for someone in your position. You don't want to lose the $5,000 you are allowed to hold. So lock in your profit while you can! ODSP doesn't care if you lose your savings; only if you gain enough to put you over the limit allowed. So there is no reason to take risks with your money in the hopes your shares go up because ODSP will not allow you to keep the money earned.

In a few years you will be off ODSP and receiving your old age pension and a supplement. At that time, the benefit of having a TFSA will work for you. You will no longer be limited to a balance of $5,000 in your account. If you earn money from TFSA investments, you won't be taxed on it, should you wish to withdraw some to spend. I think your daughter was right in setting up a TFSA account for you but, with all the ODSP rules, stock investing is not the way to go. I believe, you should focus on simply investing your TFSA into a 5 year, compound interest GIC. That will protect your money and avoid problems with your ODSP worker. In a few years (around the time that GIC would mature) you will be free of ODSP.

I hope this information and suggestions are helpful to you.
Regards,
Pickles

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Re: TFSA AND SOMEONE ON ODSP

Post by OhGreatGuru » 15 Oct 2016 17:53

"...My daughter said that didn't make sense if it is not sold and withdrawn it should not be combined and counted as an asset, only what I withdraw from the profits, ..."

So, according to your daughter, you could have $1M in your TFSA, but as long as you didn't withdraw more than $5K it shouldn't affect your eligibility for a government income subsidy? She needs a lesson in the meaning of "asset".

Listen to your ODSP worker - if you doubt her advice, ask for it in writing to make sure there is no mistake.

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Re: TFSA AND SOMEONE ON ODSP

Post by Pickles » 15 Oct 2016 22:19

OhGreatGuru wrote:...
So, according to your daughter, you could have $1M in your TFSA, but as long as you didn't withdraw more than $5K it shouldn't affect your eligibility for a government income subsidy? She needs a lesson in the meaning of "asset".

Listen to your ODSP worker - if you doubt her advice, ask for it in writing to make sure there is no mistake.
ODSP workers aren't always right thought most are willing to work to ensure the most positive outcome for the recipient while observing the rules. Her best course of action is to get legal advice to help her with her current situation and how to avoid future problems.
Regards,
Pickles

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Re: TFSA AND SOMEONE ON ODSP

Post by Pamela » 12 Oct 2017 15:27

I totally understand the frustration of seeing somebody take advantage of the system!!! But I am here to tell ya most people don’t!!! Generally speaking the people that do are addicts or come from a history of disability living in their family. Seriously who would on purpose want to go onto a system that immediately puts you wayyyy below the poverty level!! And Automatically makes it so you can’t find a decent place to live unless of course you are lucky enough to be beaten by your spouse then you have a chance at living in the toxic environment of housing!!! Oh, and don’t forget that’s only if you’re female depending on what city you live in! So, I went from working hard my whole life in a soccer mom type environment and now I’m on disability and am looked down on and have been treated terribly by pharmacy‘s, doctors, hospitals other people! Although I am very grateful to live in Canada and that we have this opportunity to be on disability but I have always said if you’re gonna do something do it right! This is literally the worst time of my life being sick like this and being cared for so poorly by my own country and treated so badly by some people around me during the sickest time of my life. I’m not sure who said it up there but yes we are lacking a lot of compassion and empathy for our disabled in this country and especially in this province! I challenge anybody to find a healthy decent place to live for $485 a month! By the way I rationalize it in my brain, because I do feel guilty, (recovering Catholic) even though I can’t even control it.,..that I’m using my own tax payer money I paid all my life! I feel very offended hearing people talk like that when they have no idea! I know little ladies who have literally sold their heart medication so they can eat and then sell their pain medication so they can buy their heart medication! Unless you have been in the situation you just don’t understand. I like a lot of things that people said and I’m thinking them very much for their understanding and compassion 💖👍🏻

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Re: TFSA AND SOMEONE ON ODSP

Post by Pickles » 12 Oct 2017 19:17

I understand and empathize with your feelings, Pamela.

The thread you responded to was started seven years ago. The last person with questions posted them more than a year ago. I can only surmise that you discovered this thread through Google or another internet search engine.

Thank you for sharing your feelings, experience and opinions with us. Our society's "safety net" certainly doesn't do the job required. While this is beyond the scope of our forum to address in any meaningful way, we welcome your thoughts on this subject. Oh -- and welcome to the forum!
Regards,
Pickles

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Re: TFSA AND SOMEONE ON ODSP

Post by Pamela » 18 Oct 2017 20:42

Lol yes that’s exactly what happened; it was a link of some sort while I was surfing around to see what changes to ODSP as I had heard some information had changed regarding assets! Which they have!!! Not that I have any but it is a good thing 👍🏻 I was happy to find your forum, very interesting but really I didn’t notice the dates LOL thank you so much 🌺

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Re: TFSA AND SOMEONE ON ODSP

Post by OnlyMyOpinion » 18 Oct 2017 22:39

Some things never change anyway.

Recent experience assisting someone to determine if they qualified for ODSP:
It took nearly 2 years for the paperwork and final determination.
They were eligible from a medical perspective, but since they had begun to take their CPP and a small pension early (to have some income after becoming unemployable) and had pre-tax income of $1800/mo, they were not eligible for any ODSP support. After about $1200/mo of other income ODSP support is fully clawed back. As to prescription drugs, a senior's program exists once you are 65 and older.

Wait lists for assisted living or co-op housing are over 3 years. They found an unsubsidized 1 bedr apt and after their fixed monthly costs are paid (rent, hydro, phone, tv) they have $400 left for food, medication, etc.

In a few years when they are 65 and apparently eligible for full OAS ($585) and GIS ($874), they should see their monthly income increase from $1,800/mo to $3,300/mo - a huge increase.

I'm not suggesting that they should be getting benefits, just pointing out the facts of the situation.

They worked hard while their health allowed but were clearly not the brightest wrench in the toolbox. Learning issues were never diagnosed and labourer jobs allowed them to work somewhat steadily. They managed to reach their 60's with no clue about the need to save or budget, no financial accumen and no guidance. They made financial mistakes, losing a house they should have never bought, running CC balances, etc.
No savings, TSFA or RRSP.

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Re: TFSA AND SOMEONE ON ODSP

Post by Shurville » 20 Oct 2017 08:22

I have read this thread. Still not crystal clear on what happens here.
A person is on ODSP and when last parent dies he inherits the family home in the GTA which sells for $500,000.
What happens now with his income from ODSP?

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Re: TFSA AND SOMEONE ON ODSP

Post by gsp_ » 21 Oct 2017 12:10

OnlyMyOpinion wrote:
18 Oct 2017 22:39
In a few years when they are 65 and apparently eligible for full OAS ($585) and GIS ($874), they should see their monthly income increase from $1,800/mo to $3,300/mo - a huge increase.

I'm not suggesting that they should be getting benefits, just pointing out the facts of the situation.
Full GIS is for those with no income source other than OAS. Unlikely the person you are describing will be eligible for much if any GIS.

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