When an adult child on the Ontario Disability Support Program (ODSP) resides in the home of the parents or guardians, how does the family maximize the child’s provincial disability supports without creating tax implications for the parents? The following guide explores the ODSP shelter allowance, and how the Canada Revenue Agency (CRA) views family arrangements with respect to income taxes.
Maximizing the ODSP shelter allowance
ODSP payments are divided into two main parts, basic needs and shelter. If a recipient lives with their parents and is classed as being in a board and lodging living situation, they receive a lower amount. However, if the recipient is responsible for their own shelter costs, they can qualify for the maximum shelter allowance, which for a single person is $611 per month as of July 2026. To qualify this higher amount, the recipient must demonstrate they have a financial obligation to pay rent via rental agreement.
What are the tax implications? Does the rental income have to be claimed by the parents?
Once a parent begins charging their child rent, the next question is whether that money must be reported to the Canada Revenue Agency (CRA) as rental income. The answer is, it depends. According to the CRA, if a homeowner rents a room to a relative for less than the Fair Market Value (FMV), it is generally not considered a business arrangement, and the CRA views this as a cost sharing arrangement. If the rent charged is only intended to cover a share of the household expenses and there is no reasonable expectation of profit, the parents should not report this as income on their tax return. Consequently, the parent cannot deduct any rental expenses or claim a rental loss.
However, if the parents charge a rate that is comparable to the market rate (FMV) with the intention of turning a profit, the parents must report the income on their tax return. In this situation they would now be able deduct a proportional share of mortgage interest, utilities, and maintenance.
TL;DL – too long; didn’t read
The parents should charge the child an amount which is at or slightly above the ODSP monthly maximum for shelter allowance, but is below the fair market value of a room to ensure the arrangement is classified as a non-taxable cost sharing agreement while maintaining provincial benefits for the child.