Update on the Canada Disability Benefit – Summer 2025

The Canada Disability Benefit (CDB) is finally here. The Benefit has been open for applications since late June, with funds being distributed starting in late July.

Some applicants have reported problems with their receipt of funds over the summer. In some cases, Service Canada was not calculating the amount of the CDB properly, which resulted in some applicants receiving a lower amount than they were entitled to. Service Canada has corrected this error automatically and will send letters to everyone affected. In other cases, recipients who bank with specific banking institutions were experiencing a delay in receiving funds. Service Canada is also addressing this problem. Recipients can call the Service Canada CDB hotline if they are concerned that these issues have impacted them.

Summer CDB Spotlight Series

Over the summer, we highlighted several great resources that help with understanding and applying for the Disability Tax Credit (DTC) and the CDB. To get CDB, someone must first have a valid DTC Certificate. Many different organizations have put together helpful materials to support individuals and their families, friends, or supporters to apply for the DTC and/or the CDB. We have compiled the list of website posts on each resource below and encourage anyone interested in applying for the DTC and/or the CDB to check them out.

Note: These resources have been designed by the federal government or non-profit organizations and are for information purposes only. ISAC does not endorse any organization that asks you to pay for services to support your DTC or CDB application.

Positive policy changes are coming

Before the April 2025 federal election, the federal government put forward a proposal to exempt CDB from being treated as income for tax purposes. This was a positive and welcome proposal, because if the CDB continues to be considered “income” in this way, someone who is receiving the CDB could see their other income-based benefits reduced. When the election happened, all legislative work in progress ended, and this proposal disappeared. Federal government staff has reassured ISAC that this legislative change will be made soon so that the CDB will no longer be considered income for tax purposes. This means that the CDB received in 2025 will not affect other federal income-based benefits in 2026.

ISAC has also advocated at the provincial level for the CDB to be removed from the definition of income in the regulations under the Housing Services Act so that receiving CDB doesn’t bump up the rents of people who live in rent-geared-to-income (RGI) housing units. Based on this advocacy, we have received reassurance from the office of the Minister of Municipal Affairs and Housing that the appropriate change will be made to the regulations before the end of 2025 so that those who live in RGI housing and who receive CDB will not face a large rent increase due to receiving the CDB. We will continue to monitor the regulations to ensure the provincial government follows through with this change.

Ongoing Issues with the CDB

Despite these important wins for CDB recipients, there are ongoing problems with the CDB that continue to impact its efficacy and fairness.

There is still no information about the $243 million set aside in Budget 2024 to help pay doctors for completing DTC applications. The Canadian Medical Association and others have championed this issue. Based on ISAC’s meetings with policymakers, it seems as though the government is actively working on this internally, but there is little information about if and when the funding will roll out.

Using the DTC as the gateway to access the CDB is a major barrier for many people. The government’s own Disability Advisory Committee has repeatedly highlighted problems with the DTC even before the CDB became available, noting that a quarter of eligible individuals who start the application process later abandon it. ISAC continues to advocate for additional pathways to accessing the CDB, such as via Canada Pension Plan Disability eligibility or through a new inclusive disability test.

Another ongoing issue with the CDB is the issue of the “marriage penalty”, which refers to how considering a couple’s income to calculate the benefit amount can result in a lower benefit amount than the person would have received if they were single. This policy approach assumes that a couple that is cohabitating can find cost savings. The unfortunate truth is that when people live on very low incomes, there are virtually no cost savings to be had by living together, as any amount saved by sharing rent is often redeployed elsewhere in the family budget, for medical supports or therapies, dietary needs, specialized transportation, or any other costs associated with disabilities. People with disabilities often face up to a 30% higher cost of living because of their disability-related needs. Reducing income supports for low-income couples, especially where both individuals are disabled, is unfair and perpetuates ongoing poverty. This is a significant issue that impacts not only CDB recipients but also social assistance recipients more broadly.

The biggest lingering issue is of course that the maximum CDB payment is still too low to meaningfully address disability poverty across Canada. New national data from Maytree indicates that at its current maximum amount, the CDB will not lift households out of poverty in any jurisdiction across the country. Though the CDB does reduce the depth of poverty by bringing incomes closer to the deep poverty line in some areas, this is not enough movement to end disability poverty. We support organizations such as Inclusion Canada and Disability Without Poverty in their advocacy efforts to increase the benefit amount.

We will continue to post updates about the CDB and related supports and events on our website, and through our Twitter/X account here. If you want to read our past posts on the CDB, click here.