In June of 2023, The Canada Disability Benefit Act (Bill C-22) officially received Royal assent and became law. With applications opening in June of 2025, the first payments were issued to disabled Canadians in July that same year.
Eligible recipients of the Canada Disability Benefit (CDB) are between 18 to 64 years of age, with payments stopping the month the recipient turns 65. The beneficiary must have an approved Disability Tax Credit (DTC) certificate on file with the CRA, and they (and their spouse or common law partner, if applicable) must have filed their 2024 federal tax returns. Lastly, the recipient must be a either a Canadian citizen, a permanent resident, an individual registered or entitled to be registered under the Indian Act, a protected person, or a temporary resident who has lived in Canada throughout the previous 18 months.
The CDB is an income dependent benefit, meaning the benefit is reduced as the family income exceeds certain thresholds. Beneficiaries with a family net income under $23,000 (single) or $32,500 (couple) will receive the maximum payment of $204.20/month or $2,450.40/year as of July 16th, 2026. For every $1 earned above the threshold the benefit is reduced, hitting $0 once income exceeds $35,000 for singles and $44,500 for couples when one person is eligible for the CBD, and $56,500 when both people are eligible for the CBD. Payments can be made retroactively for up to 24 months from the application date, starting from June 2025 when the payment was first introduced.
Working income exception
The working income exemption allows eligible beneficiaries to exclude a portion of their income, including employment income, self-employment income, or taxable scholarships. This exemption can be up to $10,210 for a single person or up to $14,294 for a couple (as of July 2026), and works by increasing the income reduction thresholds.
Retroactive payments?
If someone was eligible back in 2025 but did not apply, they can receive retroactive payments dating back to June 2025, provided they meet the criteria for those months. The CRA back pays the previous 2 years automatically when the client is approved.
Check out the CDB calculator to estimate the payment a beneficiary is entitled to
Will payment from an RDSP trigger a clawback?
Under the current regulations for the Canada Disability Benefit (CDB), payments from a Registered Disability Savings Plan (RDSP) via a Lifetime Disability Assistance Payment (LDAP) or a Disability Assistance Payment (DAP) is fully exempt from the income calculation. This means that payments from an RDSP will not reduce CDB entitlement, regardless of the size of the withdrawal. The CDB is reduced by 20 cents for every dollar of income above a certain threshold, that is $23,000 for singles, $32,500 for couples in 2026. However, because the federal government excludes RDSP income (Box 42 of T4A form) from the definition of adjusted family net income for calculating the benefit, this income exempt from the 20% clawback formula.
What will trigger a clawback to CDB payments?
- Employment income, including self-employment income
- CPP-D (Canada Pension Plan Disability) payments
- Investment Income – that is, any interest accrued from a non-registered account
- Withdrawals from an RRSP or RRIF
- Payments from workers compensation such as Workplace Safety and Insurance Board (WSIB)
What will not trigger a clawback to CDB payments?
- Payments from an RDSP
- ODSP or provincial disability supports in all provinces and territories with the exception of Alberta. Recipients of the Assured Income for the Severely Handicapped (AISH) program will have their benefits reduced if they receive the CDB
- Ontario Works (OW)
- Canada Child Benefit (CCB)
- TFSA withdrawals
- GST/HST credits, or the new Canada Groceries and Essentials Benefit (CGEB)
How will payments from insurance such as Short Term Disability (STD) or Long term Disability (LTD) be affected?
There is the potential for the CDB to be reduced because of insurance payments and/or for insurance payments to be reduced because of the CBD.
Do payments from insurance reduce CDB payments?
This will depend on how the insurance payment is taxed, as the CDB is clawed back based on adjusted net family income. If the insurance premiums are paid out of pocket by the beneficiary with after tax money, then any payments are usually tax free and are not categorized as income. And because the money is not income, the Canada Disability Benefit will not be clawed back.
However, if the employer paid any portion of the premiums for the group insurance plan, the payments are usually taxable, and will likely count toward net income. In this case, the 20% clawback will be triggered once total income exceeds the $23,000 threshold for singles, or $32,500 for couples.
Do payments from the CDB reduce insurance payments?
Unfortunately, many private insurance policies have clauses which result in a reduction in benefits when the beneficiary receives any “other income” for their disability. Each insurance company will have their own set of rules.