Section 16 - Earned Income

16.1.1 EARNED INCOME

"Earned income" is defined as the return on work done or services rendered deriving from labour as opposed to capital or entitlement.

16.1.2 EMPLOYMENT EARNINGS

"Employment earnings" are defined as earned income derived from salaried employment or wages rather than from self-employment.

16.1.3 SELF-EMPLOYMENT EARNINGS

For the purposes of the Act and Regulation, self-employed persons are:

1. Persons of independent livelihood, such as farmers, fishers, trappers and small business operators.
2. Independent contractors whom The Employment Standards Act of Manitoba defines as persons who undertake to do certain work but who are not employees of another person or agency. Such persons are not entitled to the minimum wage or other general provisions of the labour laws. Their work situation is characterized by its independent nature whereby the person has undertaken to produce a given result without the direction or control of an employer. Babysitters, Avon distributors, real estate agents, and commissioned sales people are examples of independent contractors. For EIA purposes, such earners are to be considered self-employed.

Deductions at source of pay are not factors to be considered in determining whether a work situation falls within the self-employment category.

16.1.4 EARNING EXEMPTIONS - LEGISLATION

Sections 8(4) to (10) of the Regulation provide for certain exemptions of earned income from calculations of financial resources available to the applicant or participant. Such exemptions are granted as an incentive to work.

Subject to the conditions cited in the Regulation, each earning participant in an income assistance household is entitled to earned exemptions.

16.1.5 DECLARATION OF EMPLOYMENT INCOME

Participants with earnings are responsible for making a full declaration of employment income and expenses at each month end, prior to any calculations of EIA eligibility for the upcoming month, or payment of any assistance. The Income Declaration Statement is to be used for this purpose.

16.1.6 EMPLOYMENT SITUATIONS UNDER THE AUSPICES OF THE VOCATIONAL REHABILITATION AND SUPPORTED LIVING PROGRAMS

Earnings exemptions and allowable employment expenses should be applied to income received from employment in one of the following situations operated under the auspices of Vocational Rehabilitation or Supported Living Programs:

• sheltered workshop
• sheltered employment in industry
• training on the job
• occupational activity centre

The Supported Living or Vocational Rehabilitation Programs may provide transportation costs. To avoid duplication, it is important to verify with the programs if the participant is in receipt of any of these funds prior to including the transportation as an employment expense on the income assistance budget.

See section 16.2.7 for more information on allowable expenses for persons with disabilities.

16.1.7 INCOME FROM OTHER SOURCES (E.G., MEMBERSHIP ON A BOARD OR COMMITTEE)

Remuneration from other sources to an EIA participant such as an honorarium or stipend received from membership on a board or committee, participation in an education pre-employment, job readiness or skill training program is considered as earned income and must have the appropriate work incentive benefits applied (please refer to Section 16.2 and Section 16.3 for further information on the calculation of work incentive benefits).

16.1.8 EARNINGS EXEMPTION FOR DEPENDENT CHILDREN ATTENDING SCHOOL FULL-TIME

Section 8(1)(b)(x) of the Regulation provides for the exemption of all employment and self-employment earnings of children receiving, or applying for, EIA who attend school full-time.

All children under 18 are potentially eligible for the earnings exemption regardless of the basis of their eligibility for EIA. Children enrolled in their own right under clause 5(1)(f) of the Act are eligible, as are children of all other EIA participants.

The following considerations apply:

1. School Attendance

Only children who attend school full-time are entitled to have all their earnings exempted. Full-time attendance is defined by the local school division. Where a child's attendance does not seem consistent with the full-time requirement, confirmation from the local school division should be obtained.

Children in grade 12 who are taking less than a full course load, but who are taking all of the courses necessary to complete their grade 12 and who wish to claim the earnings exemption, should be referred to a Program Specialist for consideration.

Those who are not attending school full-time and who work may receive the work incentive appropriate for their household.

2. Summer Earnings

To qualify for a full exemption of earnings during the summer months, children must have attended school full-time during the preceding academic year and must intend to return to school full-time in the fall. (A verbal statement of this intention is sufficient).

If children, whose summer earnings have been exempted, do not return to school, they will cease to qualify for the complete exemption once the school year has begun. However, the exemption of their summer earnings will not be reduced retroactively.

3. Employment vs. Self-Employment

All children's earnings qualify for exemption regardless of source (i.e., employment or self-employment)

4. Liquid Asset Limit

A family with children whose earnings have been exempted will still be required to comply with the liquid asset limits of the program by the date of their annual review.

Determining Eligibility

The requirement for the exemption is full-time school attendance. Counsellors must determine whether a child attends school full-time before granting the exemption. Normally, a verbal declaration by the participant will be sufficient proof. However, where circumstances warrant, written confirmation of attendance by the school may be required. This should be requested from the school by the child or the participant and consist of a statement on school letterhead that the child is enrolled in a full-time course of study and attends school regularly. To preserve participant confidentiality, the counsellor should not contact the school unless the participant requests it.

In addition to the above confirmation of full-time attendance, counsellors are required to obtain written confirmation from the school of registration for a full course load at the beginning of the school year OR at the beginning of each term if registration occurs then. This confirmation should be provided by the child or the participant and include a list of the courses for which the child is registered. If the school does not provide its students with this information, the child should request written confirmation of registration in a full-time course of study from the school. To preserve participant confidentiality, the counsellor should not contact the school unless the participant requests it.

NOTE The progress of the child in his or her course of study is irrelevant for the purposes of this exemption. It is only necessary that the child be registered for a full course load and attends regularly.

Record-Keeping

Once it has been determined that a child qualifies for the earnings exemption, there is no requirement to keep track of his or her earnings. Counsellors should emphasize to participants that they are required to report all changes in circumstances (e.g., the child ceasing to attend school full-time). If the change renders the child ineligible for the exemption, all income must then be reported and it will be treated in accordance with the exemption provisions set out in section 8(1)(b)(ix) of the Regulation.

16.1.9 EARNINGS EXEMPTION FOR CHILDREN NOT ATTENDING SCHOOL FULL-TIME

The employment income of a dependent child who does not attend school full-time must be declared. This income is subject to exemption under the Work Incentive if the parent's eligibility conforms to the 30 day minimum enrolment section, and is within the categories named in section 8(1)(iv)(A) of the Regulation.

Where a child's earnings, after exemption, exceed his or her own basic living allowance, he or she should be given the option of being deleted from the family's budget since it is not intended that children should support income assistance households.

16.1.10 TRANSITION TO EMPLOYMENT - EXTENDED HEALTH SERVICES

Participants with disabilities and single parent participants who have found employment may be eligible for up to twelve months of extended health services to ease the transition to employment.

See also section 22.1.11 for information on "Extended HS Assistance".

16.2.1 WORK INCENTIVE FOR PARTICIPANTS WITH DISABILITIES AND AGED PARTICIPANTS - LEGISLATIVE AUTHORITY

Section 8(4)(a) of the Regulation details the earned income exemptions for those applicants with disabilities and aged applicants, participants and their dependants enrolled or applying under clause 5(1)(a) of the Act.

16.2.2 EARNINGS EXEMPTIONS

The following exemptions are allowed on earned income for applicants and participants under the persons with disabilities and aged categories:

For participants enrolled in the disability or aged categories, who are not also a single parent and are enrolled at least one month

Up to $200 of net monthly earnings plus 30% of net monthly earnings in excess of $200, excluding earnings from an employment program.

Where the participant has been continually enrolled under section 5(1)(a) of the Act since August 31, 2001, had earnings in August 2001, and has not received an exemption under the option above since August 31, 2001, the exemption provided will be the greatest of the option above, or:

• 30% of gross monthly earnings, for each employed person who is not self-employed and whose household has been enrolled for one month or longer; or
• up to $50 per month or, at the discretion of the director, up to $600 per fiscal year for each employed person or self-employed person.

For participants enrolled in the disability or aged categories who are also a single parent and enrolled at least one month

Up to $200 of net monthly earnings, plus 30% of net monthly earnings in excess of $200, excluding earnings from an employment program.

Where the participant has been continually enrolled under section 5(1)(a) of the Act since August 31, 2001, had earnings in August 2001, and has not received an exemption under the option above since August 31, 2001, the exemption provided will be the greatest of the option above, or:

• 30% of gross monthly earnings, for each employed person who is not self-employed and whose household has been enrolled for at least one month or longer; or
• up to $50 per month or, at the discretion of the director, up to $600 per fiscal year for each employed person or self-employed person.

Applicants and participants who have been enrolled less than one month

Employment income received during the first month is based on actual monies received as opposed to a prorated amount.

16.2.3 (deleted)

16.2.4 CHILDREN'S SUMMER EMPLOYMENT INCOME

A dependent child in a persons with disabilities category household who is not a full time student does not qualify for the complete earnings exemption under section 8(1)(b)(x) of the Regulation. Where that child has summer earnings only and does not intend to exercise earnings exemptions during the remainder of the year, it is permissible to exempt up to $600.00 as the annual earning exemption for this individual. This policy is authorized by section 8(4)(a)(ii) of the Regulation and should be exercised when it is to the child's financial advantage.

16.2.5 BABYSITTING

Aged participants and participants with a disability earning an income from babysitting shall be considered self-employed and eligible for an earning exemption in accordance with section 8(4) of the Regulation. This also applies to children who have income from babysitting but who are not in school full-time. Children who are in school full-time have their earned income totally exempted as per subsection 8(1)(b)(x) of the Regulation.

16.2.6 ALLOWABLE DEDUCTIONS

Only compulsory payroll deductions are to be allowed in the calculation of net employment income.

Payroll deductions for meals or other basic maintenance supplied by the employer may be considered only if the arrangement is compulsory, and if the basic assistance is reduced accordingly for these items.

16.2.7 ALLOWABLE EXPENSES

Participants enrolled in persons with disabilities or aged categories are eligible for exemptions on the following work expenses:

Work clothing - sections 18.4.3 and 21.2.1
Work transportation - section 21.2.1
Child care - section 21.2.1
Telephone costs - section 21.2.1

16.3.1 LEGISLATIVE AUTHORITY

Earned income exemptions for applicants and participants under a provision of the Act other than clause 5(1)(a) (e.g. single parent and general assistance participants) are outlined in clauses 8(4)(b), (c), and (d) of the Regulations. These exemptions were effective September 1, 2000.

These exemptions do not apply to children who attend school full-time.

See also section 16.1.8 for "Earnings Exemption for Dependent Children Attending School Full Time".

16.3.2 EARNINGS EXEMPTION

The following exemptions are allowed on employment and self-employment earnings for each earner enrolled or applying for EIA under the following categories:

Single parent households under section 5(1)(b) or (c) of the Act

1. for households who have been enrolled for at least one month:
   • up to $200 of net monthly earnings plus 30% of net monthly earnings in excess of $200.
   • this exemption does not apply to earnings from an employment program (see section 16.3.6) or an "Approved Self-Employment" program (see section 17.1.5).
2. for households who have been enrolled for less than one month and new applicants:
   • up to $200 of net monthly earnings
3. for earnings from employment program (regardless of length of enrolment):
   • up to $100 of net earnings

General assistance households under Section 5.1 of the Act

1. for households (single, childless couple, couple with dependents) who have been enrolled for at least one month:
   • up to $200 of the net monthly earnings plus 30% of net monthly earnings in excess of $200 for each employed or self-employed person.
   • this exemption does not apply to earnings from an employment program (see section 16.3.6) or an "Approved Self-Employment" Program (see section 17.1.5).
2. for households (single, childless couple, couple with dependents) enrolled less than one month and new applicants:
   • up to $200 of net monthly earnings.
3. for earnings from an employment program (regardless of length of enrolment):
   • up to $100 of the net monthly earnings.

Households not enrolled under clause 5(1) or Section 5.1 of the Act

• up to $100 of net monthly earnings

16.3.3 NET MONTHLY EARNINGS

Net monthly earnings are defined in section 8(5) of the Regulation as either of the following:

1. monthly employment earnings less compulsory payroll deductions.

   Compulsory payroll deductions include those for Canada Pension Plan, Employment Insurance, income tax, union dues, private pension plan, group insurance, and other deductions over which the participant has no control.

2. monthly self-employment earnings, less allowable self-employment expenses approved by the District Director.

See section 17.1.3 for "Net Business Income".

16.3.4 ALLOWABLE EXPENSES

The exemptions allowed under the work incentive provisions for participants not enrolled under the persons with disabilities or aged categories are intended to cover employment expenses, such as work clothing and transportation.

See also sections 18.4.3 and 21.2.1 about work clothing, and section 21.2.1 concerning transportation.

Single parents and general assistance families, in which both parents are working, are allowed an exemption for child care expenses for employment reasons. Exemptions are allowed on child care expenses in excess of $1.40 per day per child for both subsidized and private child care.

See also section 21.2.1 for more information on "Child Care".

16.3.5 PARTICIPANTS WITH MORE THAN ONE TYPE OF EARNINGS

The earnings exemption for participants with employment and self-employment earnings will be based on the combined net earnings from these two sources and a "double exclusion" will not apply.

The earnings exemptions for participants with employment and/or self-employment earnings as well as earnings from an employment program will be calculated as follows:

• up to $100 of net monthly earnings from the employment program plus
• 25% of the net monthly earnings from employment or self-employment.

16.3.6 EMPLOYMENT PROGRAMS

Section 1(1) of the Regulation defines an employment program as:

"A wage-based program approved by the Minister or any person authorized by the Minister as an employability enhancement measure."

Employment programs, such as the Manitoba Conservation Corps, are wage-based programs which are intended as an employment enhancement measure to assist EIA participants in gaining competitive employment.

Earnings from employment programs are subject to a flat exemption regardless of the length of time enrolled on income assistance. Single people and two-adults without dependents are eligible to receive $100 of the net monthly earnings and single parents and two-adult families, with dependents receive $115. This exemption is intended to cover expenses associated with participation in the employment program.

16.3.7 EXIT POINT

Exit Point

In accordance with section 8(6) of the Regulation, an Exit Point will be reached and cash assistance shall be reduced to $0 when a household's total income from gross earnings and unexempted unearned income represents 135% or more of the household's monthly budget, including allowable child care expenses.

When The Exit Point is Reached

Income which exceeds the household's monthly budget shall be considered an overage. If the overage is greater than the exit point, the file should be closed immediately, as the household will be ineligible for cash assistance in the second month. If the overage is greater than the household's budget but less than the exit point, the overage should be carried over to the following month's calculation of eligibility. Ineligibility for cash payment in two consecutive months shall be cause for immediate closure.

Fluctuations in Income

Where a participant's income and hours of work are known to fluctuate widely from month to month, and the exit point policy would result in frequent closings and re-openings, the file may be kept open for three months and the overage from the second month carried to the calculation of eligibility for the third month. In these situations, ineligibility for cash in three consecutive months shall be cause for immediate closure.

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