As a disabled Canadian, you may be wondering how much you can earn while receiving Canada Pension Plan (CPP) disability benefits. The good news is that you are allowed to work and earn income while receiving CPP disability, but there are limits to how much you can earn before it affects your benefits.
First, let’s talk about what CPP disability is and who is eligible to receive it. CPP disability is a tax-funded, monthly payment provided to Canadians who are unable to work due to a severe and prolonged disability. To be eligible for CPP disability, you must have made sufficient contributions to the CPP and meet the definition of “disability” as set out by the Canada Pension Plan.
How Much Can You Earn While Receiving CPP Disability Benefits?
The answer is, it depends on your situation. There is a yearly exemption called the “work income exemption” that allows you to earn a certain amount of money without it affecting your CPP disability benefits. This exemption is reviewed every year and is adjusted for inflation.
For the 2023 tax year, the work income exemption is $6,600. This means that you can earn up to $6,600 in work income before it starts to affect your CPP disability benefits. Any income earned above this amount will result in a reduction of your CPP disability benefits.
But here’s the fun part: the reduction is not a dollar-for-dollar reduction. Instead, your CPP disability benefits are reduced by 50 cents for every dollar you earn above the work income exemption. So, if you earn $7,100 in work income in 2023, your CPP disability benefits would be reduced by $500 (the amount above the work income exemption of $5,500) at 50 cents on the dollar, which equals $250.
It’s important to note that this reduction in benefits only applies to work income. Other types of income, such as investment income or rental income, do not count towards the work income exemption and will not affect your CPP disability benefits.
Rules And Exemptions Applying To CPP Disability When Self-Employed
There are also some special rules and exemptions that apply to self-employed individuals receiving CPP disability. If you are self-employed and receiving CPP disability, you can earn up to $6,600 in net business income before it affects your benefits. Net business income is calculated by subtracting your business expenses from your business income. Any income earned above this amount will be subject to the same 50 cents per dollar reduction as mentioned above.
It’s also worth noting that if you are receiving both CPP disability benefits and Employment Insurance (EI) sickness benefits at the same time, the work income exemption for EI sickness benefits may be different from the work income exemption for CPP disability. The EI sickness benefit work income exemption is currently $1,000 per week.
So, to sum it up, you can earn income while receiving CPP disability benefits, but there are limits to how much you can earn before it affects your benefits. It’s important to keep track of your work income and understand how it may impact your CPP disability benefits. It may also be a good idea to speak with a financial advisor or a representative at Service Canada to better understand your options and ensure you are maximizing your benefits.
Working while receiving CPP disability can be a great way to supplement your income and maintain a sense of independence, but it’s important to understand the rules and limitations in order to make informed decisions about your financial situation. With the right information and a little bit of planning, you can successfully navigate the world of CPP disability and work income to find the right balance for you.
