HIP
Housing In Peel
Subject: Imputed Rate Effective November 1, 2012
Publishing Date: February 14, 2013
Effective Date: November 1, 2012
Who is
required to
follow this
document
The policy and procedures contained in this document apply to the
following:
Municipal & Private NonProfit
Co-operatives
Federal Non-Profit
Rent Supplement*
*incl. former OCHAP/CSHP
Peel Access to Housing
(PATH)
Content
This document contains the following information:
Legislation
Purpose
Imputed Rate
Definition of Imputed Rate
Determining Imputed Income
Questions
Appendices
Legislation
O. Reg. 298/01 Sections 50 (1) (a) (ii); (8); (9); (9.1); (10) and (11)
(Note: Effective January 1, 2012 the above sections are still in effect
for the “determination of geared-to-income rent” under Section 50 of
the Housing Services Act, 2011 until otherwise indicated).
Purpose
The purpose of this document is to inform housing providers
of the imputed rate effective from November 1, 2012 to October 31,
2013, and
how to apply the imputed rate.
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 1 of 12
Imputed Rate
The imputed rate effective from November 1, 2012 to October 31,
2013 is 0%. This means that housing providers will not need to apply
an imputed income for rent-geared-to-income (RGI) calculations
involving non-income producing assets covering the above period of
time.
Note: Although no income will be calculated on these non-income
producing assets, verification documentation should still be requested
at the annual income review.
Definition of
Imputed Rate
The imputed rate is the same as the interest rate for the first year of
the most recent November issue of Canada Savings Bonds, rounded
down to the nearest whole percent.
This year, the interest rate for the November 1, 2012 issue is 0.5%.
Rounded down to the nearest whole percent it results in 0%.
Note: This information is released by the Government of Canada and
is available through the Canada Savings Bond website.
The imputed rate is used to determine the income on a household’s
asset that:
is non-income producing
does not have an available or identifiable interest rate (i.e. difficult
to determine)
(use actual when available and identifiable)
has been transferred or given away to a person who is not a
member of the household or to an organization
Reminder: The actual interest rate is to be used when it is available
and identifiable.
Determining
imputed
income
The following table describes the steps to determine the interest on
non-income producing (or transferred) assets.
Step
1
Action
Verify the current value of the asset/s.*
(* Proof of the value of the non-income producing asset
should be verified by a written appraisal or statement from
the appropriate institution or appraiser).
2
Note: The appendices provide a definition of non-income
producing assets as well as information and examples
pertaining to specific types of non-income producing assets.
Apply the imputed rate to the value/adjusted value of the
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 2 of 12
3
4
asset:
(value of the asset x imputed rate divided by 100 =
annual imputed income).
Divide the result by 12 to determine the monthly imputed
income.
Add the monthly imputed income to the gross monthly
household income before determining the RGI
rent/occupancy charge.
Questions
If you have any questions regarding the imputed rate of return, please
contact your Region of Peel Housing Programs Administrator.
Appendices
Appendix I, attached, provides:
definition of ‘family unit’
relevant sections in O. Reg. 298/01 pertaining to Imputed Income
examples of how to determine imputed income
Appendix II, attached, provides definitions and samples of non-income
producing assets.
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 3 of 12
Appendix I
Definition of “Family Unit”
“family unit” means,
(a) an individual, the individual’s spouse or same-sex partner and
all of the children of both or either of them who are living with them,
(b) an individual and the individual’s spouse or same-sex partner
living with him or her, if neither has any children,
(c) an individual and the individual’s children living with him or her,
if the individual has no spouse or same-sex partner, or
(d) an individual, if the individual has no spouse or same-sex partner
and no children; (“cellule familiale”)
Imputed Income – Non-Income Producing Assets
O.Reg. 298/01, Sec. 50
(8) A non-income-producing Registered Retirement Savings Plan,
Registered Education Savings Plan or Registered Disability Savings Plan shall
not be included in non-income producing assets for the purpose of subclause (1)
(a) (ii). O. Reg. 27/09, s. 2 (5).
(9) For the purpose of subclause (1) (a) (ii), the imputed income of a
member of a family unit for a month from his or her interest in a non-incomeproducing asset is the amount determined using the formula,
in which,
"A" is the value of the member's interest in the non-income-producing
asset,
"B" is one-twelfth of the annual interest rate payable in the first year on the
most recent November issue of Canada Savings Bonds, with the
annual interest rate rounded down to the nearest whole percentage.
O. Reg. 298/01, s. 50 (9); O. Reg. 220/04, s. 10 (3).
(9.1) Despite subsection (9), in the case of a family unit with one or more
non-interest bearing bank accounts, the imputed income of a member of the
family unit for a month from his or her interest in the bank accounts shall be
calculated on that part of the average minimum monthly balance that exceeds
$1,000. O. Reg. 309/07, s. 20 (6).
(10) If a member of a family unit transfers, by sale, lease, gift or in any
other manner, his or her interest in an asset to a person who is not a member of
the household, less than 36 months before the date the household begins to
receive rent-geared-to-income assistance, or any time after the household begins
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 4 of 12
to receive rent-geared-to-income assistance, the member shall be deemed, for
the purpose of section 8, subclause (1) (a) (ii) and subsection (9), still to have the
interest in the asset, unless the service manager is satisfied that the transfer was
effected in good faith and,
(a) not for the purpose of reducing the member's imputed income so as to
reduce the amount of geared-to-income rent payable by the
household; or
(b) not for the purpose of reducing the amount of the household's assets
for the purpose of qualifying for rent geared-to-income assistance, if
the service manager has implemented an asset limit under subsection
8 (3). O. Reg. 556/05, s. 12 (3); O. Reg. 309/07, s. 20 (7).
(11) If a member of a family unit is deemed under subsection (10) still to
have an interest in a transferred asset, the value of the member's interest in the
asset on a date that is after the date of the transfer shall be calculated, for the
purpose of "A" in the formula in subsection (9), by reducing the value of the
member's interest in the asset on the date of the transfer by an amount
determined by the service manager on each anniversary of the date of the
transfer. O. Reg. 298/01, s. 50 (11); O. Reg. 556/05, s. 12 (4).
Examples
The following are examples of how to apply an imputed rate in order to determine the
interest on a non-income producing asset or on an asset where the actual interest is
difficult to determine.
Example 1 – Mutual Funds – single ‘family unit’
Mrs. Jones is the only member of the household and she has mutual funds investments
worth $30,000.
The following table describes the steps to calculate her monthly imputed income. The
imputed rate in this example is 1%.
Step
1
Action
Apply the imputed rate (1%) to the $30,000 to calculate the annual imputed
income. ($30,000 x 1 divided by 100 = $300)
2
Divide the $300 by 12 = $25 monthly imputed income
3
Add the $25 to the gross monthly income before determining the monthly
RGI rent/occupancy charge.
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 5 of 12
Example 2 – Multiple Non-Income Producing Assets – single ‘family unit’
Mr. Smith lives with his spouse and two young children. He and his spouse have nonincome producing assets totaling $8,500, broken down as follows:
average minimum monthly balance of $3,500 in a non-interest bearing chequing
account, plus
$5,000 in stocks.
The following table describes the steps to calculate the household’s monthly imputed
income. In this example the imputed rate is 3%.
Step
1
Action
Deduct $1000 from the average minimum monthly balance in the noninterest bearing chequing account. ($3,500 less $1000 = $2,500)
2
Add the $2,500 to the value of the stocks ($2,500 plus $5,000 = $7,500)
3
Apply the imputed rate to the adjusted non-income producing assets
$7,500 ($7,500 x 3 divided by 100 = $75 annual imputed income
4
Divide the $75 by 12 to get the monthly imputed income ($75 divided by
12 = $6.25)
5
Add the $6.25 to the gross monthly income before determining the
monthly RGI rent/occupancy charge.
Example 3 – Multiple ‘Family Units’ Within the Household
The household lives in a four bedroom unit and consists of two family units:
Mrs. Brown and her 12 year old son (‘family unit’ #1); and
Mrs. Brown’s daughter, Helen, and her spouse and baby (‘family unit’ #2).
Calculate the gross monthly imputed income for each family unit as follows. In this
example the imputed rate is 1%.
Family Unit #1
Family unit #1 consists of Mrs. Brown and her son. Mrs. Brown has two non-interest
bearing chequing accounts. The minimum monthly balance in these accounts total
$3,500 ($2,000; and $1,500).
The following table describes the steps to calculate the monthly imputed income for
family unit #1.
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 6 of 12
Step
1
Action
Deduct $1000 from the average minimum monthly balance in Mrs.
Brown’s non-interest bearing chequing account. ($3,500 less $1000 =
$2,500)
2
Apply the imputed rate to the adjusted non-income producing assets
$2,500 ($2,500 x 1 divided by 100 = $25 annual imputed income
3
Divide the $25 by 12 to get the monthly imputed income ($25 divided by
12 = $2.08)
4
Add the $2.08 to the gross monthly income before determining the
monthly RGI rent/occupancy charge.
Family Unit #2
Family unit #2 consists of Helen and her spouse. They share a non-interest bearing
chequing account and keep a minimum monthly balance of $2,500 in the account.
The following table describes the steps to calculate the monthly imputed income for
family unit #2.
Step
1
Action
Deduct $1000 from Helen and her spouse’s average minimum monthly
balance in their non-interest bearing chequing account ($2,500 less
$1000 = $1,500)
2
Apply the imputed rate to the adjusted non-income producing asset
($1,500 x 1 divided by 100 = $15 annual imputed income
3
Divide the $15 by 12 to get the monthly imputed income ($15 divided by
12 = $1.25)
4
Add the $1.25 to the gross monthly income before determining the
monthly RGI rent/occupancy charge.
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 7 of 12
Appendix II
Content
Appendix II contains the following information:
Definition of Non-Income Producing Assets
Financial Holdings
Verification of Financial Holdings
Real Estate
Precious Metals, Gems, Art
Transferred Assets
Definition of
Non-Income
Producing
Assets
Non-income producing assets include all assets, investments or
holdings which are intended to increase in value rather than generate
regular income.
Non-income producing assets include, but are not limited to:
1.
Financial holdings (including non-interest bearing accounts)
2.
Real Estate
3.
Precious metals, gems and art; and
4.
Transferred Assets
The imputed rate of return is assigned to the value of these assets to
determine an imputed income for RGI calculation purposes.
For any income producing asset where the annual income is
difficult to determine, the imputed rate is applied to the current
value of the investment or asset.
Note: Interest received from or accrued in a prepaid funeral plan is
exempt from income [O. Reg. 298/01 s. 50. (3)19]. Iif the money is
withdrawn from the plan and not reinvested in another prepaid funeral
it is considered to be an asset. In this case, the actual or imputed
income earned on the money should be included in the RGI
calculation.
1. Financial
Holdings
Financial holdings that are considered to be non-income
producing assets include:
Cash, non-interest bearing chequing accounts or bank accounts
where interest is not provided (i.e. non-interest bearing
accounts in banks or credit unions).
Equity in a business or investment that does not generate an
income;
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 8 of 12
Taxi cab plates, taxi licenses;
Life insurance with a cash surrender value;
Non-income producing stocks, mutual funds;
Mortgages or loans with an interest rate less than the imputed
rate of return.
Verification of
Financial
Holdings
The following documents, as appropriate, may be used to verify the
current value of non-income producing financial holdings:
A copy of an updated bank passbook or financial statement from
the financial institution
A letter from the financial institution or professional in the field
related to the holding
A letter from the insurance company that indicates the policy
number and the cash surrender value in the case of life insurance
with a cash surrender value
Verification of the value of the taxi license from the owner of the
taxi license such as a receipt for the purchase of the license
The schedule of principal and interest pertaining to the loan or
mortgage. This should show the current balance of the loan or
mortgage as well as the term.
Note: Always record the name, address of the financial institution as
well as the account number.
Types of
Financial
Holdings
The following table describes the types of financial holdings and
how to determine the imputed income on the particular type of
financial holding.
If the financial holding
is...
Cash, non-interest bearing
chequing accounts or bank
accounts where interest is
not provided
Then the imputed income is based
on the...
annual average minimum monthly
balance in the account or a typical
recent minimum monthly balance in
the account less $1000 from the total
sum of all the non-interest bearing
accounts for each family unit within
the household. (Refer to Example 3 in
Appendix I)
Equity in a business or
investment that does not
generate an income
Taxi Cab Plate/Taxi
confirmed current equity amount in the
business
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
appropriate portion of the appraised
Page 9 of 12
License is used by more
than one taxi driver
value of the plate
Example 1
If a taxi cab plate owner uses the
plate for 8 hours and gives/rents it
to other drivers, who are not part of
the household, for the other 16
hours
then 2/3 of the value of the cab
plate is considered as a nonincome producing asset
Life Insurance with a cash
surrender value
Non-income producing
stocks, mutual funds
Mortgage or loans with a
loan interest rate less than
the current imputed rate
Example 2
If a taxi cab plate owner
gives/rents the plate to another
household member
then the greater of the actual rent
for the cab plate or the appropriate
imputed income is included in the
gross income of the cab plate
owner.
current cash surrender value of the
policy plus any accumulated
dividends.
current value of the stocks or shares.
current outstanding principal of the
loan or mortgage. Use the imputed
rate of return that was in effect the
year the mortgage or loan was
established.
Note: Unlike other non-income
producing assets, once the imputed
income is determined it will not
change until the end of the term of the
loan or mortgage.
2. Real Estate
The following table describes the treatment of real estate assets for
households who receive RGI assistance.
If the real estate asset ...
is a residential property suitable
for year-round accommodation
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Then ...
within 180 days (6 months) of
beginning to receive RGI or
acquiring the property if already
in receipt of RGI, each member
of the household must:
Page 10 of 12
divest himself or herself of
any interest in the property;
and
give written notice to the
housing provider of the
divestment.
The housing provider must
inform Peel Access to Housing
(PATH) of the sale.
non-residential property, which is
defined as property that is:
(Refer to HIP P&P #7 dated
June 21, 2002 for further details
on the process for tracking the
sale of the property.)
treat as a non-income producing
asset even if it is rented or
producing some income.
• not suitable for year round
occupancy (non-winterized
cottage)
• landholding including farm
land
• real estate producing rental
income
3. Precious
Metals, Gems,
Art
Precious metals, gems and art are investments that are intended to
increase in value rather than generate income.
These do not include personal jewelry, family heirlooms, old family
furniture or other personal effects that do not normally increase in
value, such as an automobile.
The value of the asset can be verified by a written evaluation from a
qualified appraiser or through an insurance appraisal.
4. Transferred
Assets
Timing of Asset Transfer
If a member of a household transfers or gives away any assets to a
person who is not a member of the household less than 36 months
before applying for RGI assistance, or anytime after beginning to
receive RGI assistance, the member is considered to still have the
asset for rent calculation purposes.
If an asset is transferred or given away to a person who is not a
member of the household, the value of that asset is treated as nonincome producing.
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Page 11 of 12
Exceptional Circumstances
In certain exceptional circumstances assets that have been transferred
or given away may not be included in the RGI calculation.
For example, if the asset was transferred during the 36 month period
prior to applying for subsidized housing and then the applicant
experienced an unexpected financial decline or loss, then the transfer
of the asset may be forgiven and not included for RGI calculation
purposes.
Examples of serious financial decline would include:
loss of spouse due to death, abandonment or divorce
prolonged or permanent loss of employment income (due to illness,
injury, plant closing, long-term layoff or other unexpected causes).
Annual Write Down of Transferred Assets
There is a $2000 annual write down on the value of a transferred
asset. The annual write down continues until the full value of the
asset is reduced to the final $2000 or less.
For example, if the value of the asset is $50,000 at the time of transfer,
then
Year 1 (year of transfer), the value of the asset is $50,000
Year 2, the value of the asset is reduced by $2000 to $48,000, etc.
Verification of Transferred Assets
Tenants/members are required to provide verification of the current
value of the asset.
The following table will describe how transferred assets should be
verified.
If the transferred asset...
has not been sold but there is a
major reduction in value
is real estate
Human Services
10 Peel Centre Drive, Suite B, 5th Floor,
P.O. Box 2800, STN B, Brampton, Ontario, L6T 0E7
Telephone: 905-453-1300 www.peelregion.ca
Then the tenant/member
should...
provide documentation to prove
the reduced value of the asset
provide a certified appraisal as
soon as the transfer is complete
Page 12 of 12