Ask Member Support: Rent-geared-to-income and COVID-19 benefits
Question:
As a community housing provider, how should I treat a tenant’s income at their first annual rent-geared-to-income (RGI) review after they received COVID-19 temporary benefits in 2020 or 2021, which are no longer in pay?
In particular, I’m wondering about tenants who were not entitled to receive the benefit but did, and also the seniors that received it, and, as a result, saw a decrease in their pensions.
Answer:
This question has come up a lot. It may continue to be relevant into the first half of 2022 for RGI households who received COVID-19 emergency benefits. This response will cover best practice for conducting RGI reviews for RGI households who received these benefits in 2020 or 2021.
The Canada Emergency Response Benefit (CERB) and the temporary doubling of the Guaranteed Annual Income System (GAINS) payments were included as income for RGI households who received them in the 2020 tax year. Subsequent COVID-19 benefits received beyond 2020 (such as the Canada Recovery Benefit [CRB]) are also included as income for RGI purposes.
Impacts on tenants
In most cases, the loss of work or reduced income due to the pandemic caused a drop in income for RGI households. This would have resulted in a decrease in RGI. In other cases, the temporary benefits received by an RGI household exceeded the household’s pre-pandemic income.
When these emergency and recovery benefits expire and are no longer in pay, RGI households are seeing their income reduced. Low-income seniors, in particular, have lost their entitlement to the Guaranteed Income Supplement (GIS) or have seen it drop due to the increased income they received in 2020.
Therefore, the income of RGI households reported on their Notice of Assessment (NOA) for the 2020 income tax year may not reflect their current financial circumstances.
Using approximated net income (ANI)
Normally, the annual net income of an individual member of a household is determined based on their most recent income tax return. Sometimes, the tax-based net income amount does not accurately reflect current average income. In these cases, an alternate amount can be used.
This is called “approximated net income” (ANI). Under this method, the net income of a household member is the amount that best approximates the household member’s net income for the next 12-month period, using a regular statement of income (e.g. pay stubs, letter from an employer, or statement from Service Canada or other agency). Service managers will have guidance on the use of this alternate method and what type of income verification is required.
Recommendation to service managers
The Ministry of Municipal Affairs and Housing (MMAH) issued SH Notification 21-05 RGI Calculations – Treatment of Temporary Benefits in August 2021.
In the notification, service managers were asked to exercise discretion under Section 6 (4) of Ontario Regulation 316/19 and use approximated net income (ANI) rather than tax-based net income in determining adjusted family net income (AFNI) for RGI households whose COVID-19 temporary benefits were ending. The use of ANI in these cases could help stabilize particularly vulnerable tenancies.
Housing providers should have received further guidance on this issue from their service manager. However, it has come to ONPHA’s attention that this information may not have been communicated broadly.
Reach out to your service manager
Housing providers should reach out to their service manager first. Follow their guidance before conducting RGI reviews for those households who received COVID-19 benefits in 2020 and beyond.
Best Practice for housing providers
In the absence of guidance from your service manager, here is a recommended best practice for community housing providers:
Benefits that ended before July 1, 2021
If an RGI household member was receiving COVID-19 recovery benefits that ended before July 1, 2021:
- Use the approximated net income (ANI) method as part of an in-year or annual RGI review. Adjust the RGI accordingly, regardless of whether or not the household’s total annual net income dropped by 20% or more.
- Base RGI on the approximated net income (ANI) of the current amounts, as communicated by the member of the household at the time of the RGI review (e.g. statement from Service Canada, pay stubs, etc.). Check with your service manager on what documents they will accept for verification.
Benefits that ended on or after July 1, 2021
If an RGI household member continued to receive COVID-19 recovery benefits on or after July 1, 2021:
- Remind the household that they must notify you when the COVID-19 temporary benefit ends.
- When the COVID-19 temporary benefit ends, determine if this has resulted in a reduction in their net annual household income of 20% or more.
- If the ending of the COVID-19 recovery benefits has:
- resulted in a 20% or more reduction in total annual household net income (limited to once annually), conduct an in-year review and use the approximated net income (ANI) method to recalculate the rent. Adjust the RGI accordingly.
- not resulted in a 20% or more reduction in total annual household net income, continue to charge the current RGI until their next annual RGI review.
Do you have more questions on this topic, or another question related to operating community housing in Ontario? ONPHA members have access to our team of housing professionals. Contact us today at member.support@onpha.org.
Want to take a deeper dive into rent-geared-to-income administration?
Take ONPHA’s popular online course The New, Simplified World of Rent-Geared-to-Income (RGI) Administration. The next course will be offered in Spring 2022.
