Lump sums to compensate for an injury or loss of physical or mental integrity were excluded in the month in which they were received until December 31, 2021.
As of January 1, 2022, a new liquid asset exclusion applies. The exclusion applies to lump sums paid to compensate for injury or loss of physical or mental integrity and as death benefits. Section 03.03.05 has also been amended to specify eligibility criteria for the new exclusion applying to Income Security Program recipients with or without severely-limited capacity for employment.
The new liquid asset exclusion is separate from the existing exclusion for the $381, 294 aggregate value of property and liquid assets under Section 03.02.06.01 and does not apply to amounts received from life insurance or an estate. In addition, such exclusions are not cumulative. Finally, the excess is calculated as liquid assets for which the basic liquid asset exclusions do not apply.
Increased exclusion amount
The lump sums covered may be excluded up to a total of $ as 381, 294 of January 1, 2025. The exclusion is increase on January 1 of each year.
Family
In the case of a family, each member can benefit individually from the new exclusion, as it applies only to the person receiving the lump sum payment.
Example 1: Death of a person who received compensation
In March 2022, as a result of being the victim of a criminal offence, Ms. X receives $200,000 from IVAC for damages to compensate for a loss of physical integrity. The amount will be excluded since it is less than the exclusion amount.
In September 2022, Ms. X passes away and Mr. Z inherits the $200,000 that Ms. X received from IVAC. Mr. Z cannot benefit from the exclusion since the amount was paid for Ms. X. Upon receiving the amount, if Mr. X does not have a severely-limited capacity for employment, the amount is included in the calculation and added to his liquid assets. However, if Mr. Z does have a severely-limited capacity for employment, the amount can be excluded under Section 05.05.02 since the amount comes from an estate and he has a severely-limited capacity for employment.
Example 2: Purchase of co-owned property
In March 2022, as a result of being the victim of a criminal offence, Ms. X receives $200,000 from IVAC for damages to compensate for a loss of physical integrity. The amount will be excluded since it is less than the exclusion amount.
In June 2022, she buys a house for $200,000 with the amount received from IVAC. The purchase contract specifies that she and her spouse each own 50% of the property, even though she paid for the house in full. Only Ms. X's share ($200,000 x 50% = $100,000) qualifies for the exclusion since the compensation is for the person who received the amount.
When the lump sum is paid to a minor, a guardian, executor or trustee may be appointed to manage the amount. In such cases, the lump sum may be entirely excluded under Section 03.03.06 if all criteria are met.
Duration of the exclusion
The exclusion applies to the person who receives the lump sum, whether or not that person is a client at the time the lump sum payment is received. It begins on the date of payment and applies indefinitely as long as the person owns the lump sum or property purchased with it.
Finally, the exclusion applies only if the money is deposited immediately into a separate account at a financial institution.
Month of application
The exclusion of a lump sum to compensate for an injury or loss of physical or psychological integrity applies from the month of application. For new applications, for the purposes of determining eligibility, the amount is excluded from the calculation.
Types of payments
Lump sums may be paid in a single payment or divided into installments. Regardless of the method of payment chosen, the entire lump sum is taken into account and is subject to the new exclusion. Amounts paid in installments to the beneficiary do not affect the benefit.
In some cases, when a person opts for installments, the organization may pay interest with the installments. Interest is added to the initial benefit amount. The total amount (total lump sum + interest) must be taken into account and is excluded up to a maximum of $381,294. Therefore, the amount paid in installments should not be accounted for as a liquid asset or as income.
Special feature: IVAC compensation
Since the coming into force of the Act to assist persons who are victims of criminal offences and to facilitate their recovery on October 13, 2021, IVAC lump sum awards to compensate for temporary or permanent injury or loss of physical or mental integrity may be paid as:
- A single lump sum;
- A lump sum payment divided into 12 or 24 monthly installments.
In order to receive installments, the individual must apply to IVAC and the choice is final. Interest is paid monthly and is added to the initial amount of the benefit. The total amount (total lump sum + interest) must be taken into account and is excluded up to a maximum of $381,294.
Monthly annuities paid prior to the new IVAC legislation will continue to be paid. The rules for calculating annuities (compensation for personal injury, death and other compensation) apply, i.e. they are excluded in the month in which they are received.
Example: Lump sum below the exclusion amount and installments
On February 2, 2022, Ms. X, with severely limited capacity for employment is awarded $150,000 for loss of physical integrity as a result of a criminal offence. She directs IVAC to pay the amount in 24 installments of $6,250, plus interest. The entire amount is taken into account, i.e. $150,000, and the interest paid monthly is added to the total lump sum. In such a case, follow-up by the agent is required. The amount paid monthly, i.e. $6,250 plus interest in this case, should not be recorded monthly as income or a liquid asset.
Example: Lump sum greater than the exclusion amount and installments
On May 18, 2022, Mr. Z, an available for employment recipient, is awarded $300,000 for loss of physical integrity. He directs IVAC to pay the amount in 24 installments of $12,500 plus interest. Due to the excess amount, Mr. Z's case file is cancelled for June 2022. In July 2023, Mr. Z files a new application and demonstrates that he has spent the full $178,000 received up to the date of filing the application (installments of $175,000 [$12,500 x 14 months] plus interest totaling $3,000). Interest paid is added to the initial lump sum award and expenses are deducted. The remaining $125,000 is taken into account in determining the benefit:
| (Total lump sum allowance | + | interest paid | ) - | Expenses | = | Remaining amount to take into account |
| ($300,000 | + | $3,000 | ) - | $178,000 | = | $125,000 |
Since the remaining amount is less than the exclusion, Mr. Z is eligible for a benefit as of the date of his application. When Mr. Z receives his monthly payment, the capital portion ($12,500) is not to be taken into account. Interest paid is added to the lump sum each month and is excluded since the total amount (capital + interest) is less than the exclusion.
Assessment of forfeiture and squandering
Where the total lump sum is less than the liquid asset exclusion, no specific action is taken even if the person has squandered or forfeited it without due consideration. However, if the total lump sum is greater than the exclusion, an assessment must be made as to whether the person acted in a manner that would make him or her eligible (refer to Section 03.03.12). As a result, in the above example, there must be an assessment of forfeiture and squandering since Mr. Z's total amount is greater than the exclusion amount.
Transformation of the compensation
Assets acquired by a client or a family member with amounts covered by the new liquid asset exclusion are excluded from the benefit calculation:
- From the date of the first lump sum payment. Assets acquired prior to this date are included in the calculation of the benefit;
- No time limit;
- No limit to the number of transformations;
- Up to the amount of compensation received or the maximum applicable amount, if any;
- Only for the person receiving the compensation – successors cannot benefit from the exclusion.
Generally, it is assumed that the client purchased the property with the compensation amount received.
When an investment is made
When the person makes an investment, the capital from the lump sum payment is excluded.
Interest earned through the investment of lump sum compensation received is excluded as income but is included in liquid assets.
Refundable assistance
A person is not required to repay the amount awarded under the Income Security Program when the realized right results from compensation for an injury or loss of physical or psychological integrity.
Amounts paid as a result of a judgment, a class action, an agreement or by the government
Amounts paid as a result of a judgment, a class action, an agreement or by the government and received on or after January 1, 2022, or when a vested right is lost, are eligible for the new liquid asset exclusion only if the lump-sum compensation is for an injury or loss of physical or psychological integrity. It should be noted that sums received by the government as part of land claim settlement or specific claim settlement agreements are considered to be sums paid to compensate for a loss of integrity.In the case of another type of compensation, such as for financial loss, it will be included in the liquid assets held on the last day of the month.
Example:
- In March 2023, a settlement is reached following a class action to compensate a group of people for their loss of income. These people cannot benefit from the exclusion because the amounts are not used to compensate for an injury or loss of physical or psychological integrity and are not a death benefit.
In July 2025, a settlement is reached following a class action to compensate for the moral damages for pain and suffering incurred by a group of people. These allowances are intended to compensate for a loss of physical or psychological integrity and are eligible for the exclusion