Introduction
Poverty, income and wealth inequality exist in Canadian society because it is a choice governments have made. Despite multiple commitments to reduce and eradicate poverty, appropriate action has not been taken. In the last 40 years, the implementation of neoliberal philosophies that protect the free market and rely on the myth that a resulting trickle-down effect will lift everyone up have resulted in unabated poverty rates and rising inequality. Few but the wealthy are doing well off.
Poverty and inequality are rooted in colonialist and discriminatory practices that continue to manifest today, resulting in disproportionately higher poverty rates for those who face systemic marginalization: Indigenous Peoples, racialized people, newcomer and immigrants, 2SLGBTQ+, people with disabilities, in lone-parent families, among others.
Canada is at a critical juncture. The convergence of an affordability crisis, rising costs from protectionist tariffs, stagnant economic growth, and a labour market increasingly disrupted by automation and AI demands urgent policy intervention. These pressures are not isolated—they are systemic—and they threaten the financial security of millions. Now more than ever, we need a coordinated, resilient, and forward-looking income security system that can adapt to economic shocks, support workforce transitions, and uphold social stability.
Canada is a wealthy nation, which has the resources, knowledge and ability to swiftly address income inadequacy, insecurity and inequity. Human rights obligations dictate that maximum resources available must be deployed to enable the progressive realization of rights, including economic rights. It will require a shift in philosophy and bold political will.
Overview
The Market Basket Measure (MBM) is Canada’s Official Poverty Line. It costs out a basket of goods and services for various geographic regions that a family would need to have a ‘basic and modest’ standard of living. It is an absolute, consumption-based measure of poverty. According to the MBM, four million people live in poverty in the provinces.1Statistics Canada, “Table 3: Persons living below the poverty line (Market Basket Measure, 2018 base), Canada, 2019-2023”, The Daily, 2025, https://www150.statcan.gc.ca/n1/daily-quotidien/250501/t003b-eng.htm. The rate of poverty in the territories is more than double that of the provinces (22.8 per cent compared to 10.2 per cent).
The Census Family Low Income Measure, After Tax (CFLIM-AT) is a relative measure of poverty. Closely correlated with inequality, it examines the distribution of income across the spectrum. The low-income threshold is set by the median; anyone with an income below 50 per cent of the median is living in poverty. As income rises or falls, so does the threshold. According to the CFLIM-AT, 6.7 million people live in poverty, 17 per cent of the population.2Statistics Canada. Table 11-10-0018-01 After-tax low income status of tax filers and dependants based on Census Family Low Income Measure (CFLIM-AT), by family type and family type composition, July, 2025, https://www150.statcan.gc.ca/t1/tbl1/en/cv!recreate.action?pid=1110001801&selectedNodeIds=4D1&checkedLevels=0D1,1D1,2D1,4D1&refPeriods=20190101,20230101&dimensionLayouts=layout2,layout3,layout2,layout2,layout3,layout2&vectorDisplay=false More people are living in poverty now than they were prior to the pandemic. Relative measures are more highly closely correlated with health status and child developmental outcomes than absolute measures.
Not only are poverty rates rising, people are also living with less. The average low-income gap ratio—the poverty gap—shows how far below the low-income measure incomes fall and is expressed as a ratio of the low-income threshold. This can be a useful gauge, although, counterintuitively, the average distance to the poverty line can deteriorate if you lift those closest to the poverty line above it. Instead, the AFB tracks the proportion of those living in deep poverty, those whose income is below 75 per cent of the poverty line. Roughly half of Canadians living in poverty in 2022 lived in deep poverty.3Marc-Antoine Dionne and Lucie Raymond-Brousseau, Deep Income Poverty: Exploring the dimensions of poverty in Canada, Statistics Canada, 2025, https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2025001-eng.htm. The AFB strives to lift families above the poverty line and reduce deep poverty. (See the Macroeconomic chapter for the impact of AFB income supports on poverty rates and deep poverty rates.)
The rise of rates and depth of poverty is a significant concern as the cost of living has skyrocketed. Food and housing prices continue to grow at faster rates than overall inflation.4Statistics Canada, “Chart 2: Transportation prices contribute the most to the slowdown in headline inflation, due largely to lower gasoline prices,” The Daily, May 20, 2025, https://www150.statcan.gc.ca/n1/daily-quotidien/250520/cg-a002-eng.htm. Nearly half of Canadians are reporting that they are having difficulties meeting day-to-day expenses because of rising costs.5Statistics Canada, “Nearly Half of Canadians Report That Rising Prices Are Greatly Impacting Their Ability to Meet Day-to-Day Expenses,” The Daily, August 15, 2024, https://www150.statcan.gc.ca/n1/daily-quotidien/240815/dq240815b-eng.htm. Although higher costs affect everyone, low-income individuals and families spend a much greater share of their income on basic needs. At the same time, high growth in compensation and interest earned from investments has led to market income that grew three times faster, on average, for the top two quintiles than those in the lowest two.6Office of the Parliamentary Budget Officer, A Distributional Analysis of the Purchasing Power of Canadian Households Since 2019, October 8, 2024, https://distribution-a617274656661637473.pbo-dpb.ca/6edb20c1acaacc6cdcdfae3d8cd266902d19d6592d3d3292b2543848006d92d3.
Government transfers important in boosting income and reducing inequality
The rise in poverty rates is often correlated to job losses during recessions. However, Canada saw the lowest rates of poverty in 2020, the first year of the COVID-19 pandemic, despite the severe contraction of the labour force at that time, particularly for low-wage workers. The federal government moved quickly with transfers to individuals and families through their emergency response package, including the Canada Emergency Response Benefit (CERB) and one-time top-ups to existing transfer programs—including the Canada Child Benefit, the Goods and Services Tax Credit, Old Age Security and the Disability Tax Credit. Women, youth, Indigenous Peoples, racialized and marginalized people, and those with precarious attachment to the labour market were more likely to receive the CERB, as its entrance requirements were far lower than Employment Insurance (EI). The CERB had the effect of increasing the income floor in 2020 and reducing inequality. Poverty rates plummeted to 6.4 per cent, according to the MBM, or 13.3 per cent according to the Census Family LIM-AT (CFLIM-AT).
The CERB could be received incredibly quickly, it was more generous than social and disability assistance programs and the full-time minimum wage, and it was based on individual, not family, income, meaning more women could benefit. It enabled people to meet their basic needs, pursue further education and training, and reduce stress. But it missed those in the lowest-income brackets, anyone earning less than $5,000 was ineligible, and in most provinces and territories, it was clawed back for those who received social or disability assistance. This led to wildly overzealous forced repayments years after the fact. Anyone without regularized immigration status, or without a social insurance number or Canada Revenue Agency account, were ineligible.
The AFB will enhance the current system, raising adequacy levels and reducing barriers in administrative processes and eligibility requirements. In this time of economic uncertainty and affordability crisis, income supports will boost consumer spending and help balance the economy. The result will be a rights-based income security system that supports the population no matter where people are in the life cycle.
Actions
The AFB will accelerate ambitions for the poverty reduction strategy (PRS). There are only two targets in the federal PRS: to reduce poverty by 20 per cent by 2020 and by 50 per cent by 2030 (measured from 2015). Both targets were achieved well ahead of their timelines. The AFB will improve the PRS by implementing accelerated targets to reduce poverty by 50 per cent by 2028, according to multiple available measures: the MBM for the provinces, MBM-N for the territories and the CFLIM-AT. It will eliminate poverty by 2031. The AFB will also target a reduction in deep poverty by one third by 2028. This suite of targets will be applied to groups who experience higher rates of poverty as a result of historic and ongoing systemic marginalization, including Indigenous Peoples, racialized people, newcomers and immigrants, 2SLGBTQ+, people with disabilities, in lone-parent families, among others.
Four pillars of income support
Pillar 1: Children
The Canada Child Benefit (CCB) is a powerful program that protected nearly 600,000 children from falling into poverty in 2022.7Campaign 2000, Ending Child Poverty: The Time Is Now—2024 report card on child and family poverty in Canada, November 18, 2024, https://campaign2000.ca/wp-content/uploads/2024/11/Ending-Child-Poverty-The-Time-is-Now-2023-Report-Card-on-Child-and-Family-Poverty-in-Canada-Nov-18-2024.pdf. Although this is substantial, it left nearly 1.4 million children in poverty that same year. The AFB will introduce a new End Child Poverty supplement to the CCB (CCB-EndPov) targeted to children in deep poverty and expand eligibility to all children residing in Canada.
The CCB-EndPov will provide a maximum of $8,500 for the first child in a family earning less than $19,000, with scaled reductions for each additional child, irrespective of age. For example, in 2026, the maximum CCB amount a child under six is eligible for is $7,997. The EndPov Supplement would add an additional $8,500 for a family earning less than $19,000, raising the total benefit payment to $16,497 for the tax year, substantially improving family financial stability, in particular for lone-mother families and for children with disabilities.
The AFB will offset the cost of the CCB-EndPov supplement by more quickly scaling back the benefit amount in the final phase out stage. For families with an income greater than $81,941 reported in 2026, the CCB would be clawed back starting at 25 per cent. This adjustment targets families in the highest-income quintile, redirecting these public resources to families in the lowest-income quintile.
Pillar 2: Adults
Adults between 18-64 represent the largest proportion of people living in poverty. Income supports for this age group are dismally inadequate. The Canada Worker’s Benefit is the main program for this age group but requires individuals to earn working income, leaving out those in the deepest poverty. The Goods and Services Tax (GST) credit, while tiny, is not tied to employment and is one of the few income supports for this age group. Provincial and territorial income assistance programs are programs of last resort. They are punitive and stigmatizing, and do not provide a pathway out of poverty. They are also very difficult to access without a disability.
The AFB will create a new Canada Liveable Income (CLI) benefit for working-age adults who do not have children and who do not have disabilities. Low-income adults with children will be eligible for the new CCB EndPov supplement and adults with disabilities would be eligible for the new expanded Canada Disability Benefit (see below). The CLI will not require earned income to be eligible. This new benefit will provide $9,000 per year for individuals and $11,000 per year for couples and will not be subject to claw backs by provincial and territorial assistance programs. A benefit reduction rate of 50 per cent would begin on the first dollar of taxable income. As more income is earned, the benefit would begin to decrease.
A second phase of the CLI would provide an additional $1,640 per adult, adjusted for family size (two adults, no children). This second phase would start to claw back for family income over $24,824, at the lower rate of five per cent. The smaller value of the second phase but with a longer phase out would aid those with incomes at or above the poverty line.
Pillar 3: Adults with disabilities
The new Canada Disability Benefit for adults with disabilities rolls out this year for the first time. Federal budget 2024 committed a maximum annual amount of $2,400, far short of what is needed to address disability poverty. Eligibility for the CDB is determined solely by the Disability Tax Credit Certificate, which is costly and time consuming to obtain. It is also much harder to obtain for certain illnesses, such as mental health or episodic disabilities. More than 1.5 million people with disabilities live in poverty. At maturity, the benefit in its current design would lift only 25,000 people with disabilities out of poverty on an annual basis. At that rate, it would take 60 years to eradicate poverty for people with disabilities.
The AFB will immediately increase the CDB amount to $9,000 in the first year. The AFB will expand eligibility of the CDB to include those who have already been approved for other publicly administered disability income support programs, including the CPP Disability program as well as provincial and territorial disability social assistance programs. The AFB will also examine the possibility of receipt of long-term workers’ compensation and private disability insurance as eligibility for the purposes of the CDB. The current design of the CDB enables it to be clawed back by provincial and territorial income support programs. Most, but not all, provinces have committed to not claw back the benefit. There are also no safeguards in legislation to prevent private insurance companies from deducting or offsetting the benefit amount from payments provided to an insured person with a disability. The AFB will convert the CDB to an automatic refundable tax credit to protect it from being clawed back from disability income supports. The AFB will amend the Canada Disability Benefit Act to include provisions that prevent the CDB from being recovered by private insurance companies.
Pillar 4: Seniors
The poverty rate for seniors has decreased significantly over the past decades. Government income support programs, including the Canada Pension Plan (CPP) and Old Age Security (OAS) provide a foundation of income for most seniors. The non-taxable Guaranteed Income Supplement (GIS) provides an additional supplement to seniors in low income. Despite these programs, seniors’ poverty persists, particularly for single seniors, women, racialized and immigrant seniors.
The new Liberal government platform promised a temporary five per cent increase to the GIS for one year. The AFB will double the increase to 10 per cent and make it permanent. The AFB will offset this cost by cancelling the recent 10 per cent increase to the OAS for those over 75, while also more quickly reducing OAS payments for seniors who make over $92,582.53 a year from 15 cents on the dollar to 17 cents on the dollar.
Sponsored immigrant seniors who have lived in Canada for less than 10 years are not eligible to receive the GIS. Given higher rates of poverty and vulnerability of this group, the AFB will broaden eligibility to sponsored immigrant seniors living on low income regardless of the number of years of residency in Canada.
Leaving no one behind
The AFB will strive to ensure low or no-barrier access to income supports. The AFB will ensure access to income supports to individuals and families regardless of 1) lack of identification like social insurance number (SIN), 2) immigration or citizenship status, 3) a Canada Revenue Agency (CRA) account or a fixed address, or 4) work status (standard versus precarious, casual or home-based work). Specifically, the AFB will repeal s.122.6(e) of the Income Tax Act, which ties the eligibility of the CCB to immigration status.
Income security supports are delivered through the personal income tax system and although it is broad, it is not universal. Community volunteer tax clinics that operate during the tax season support people, often who have low income and face compounding barriers to successfully file taxes and receive benefits they are entitled to. The AFB will expand the Community Volunteer Tax Program (CVTP) pilot to a year-round program that provides free tax filing support to people with low income. It will do this by adding another $5.9 million to double the size starting in 2025-26.
While these efforts to broaden access to the personal tax system are important poverty reduction measures, some people experiencing systemic marginalization would still face barriers to accessing benefits they are entitled to. The AFB will develop a parallel direct cash transfer system administered by trusted community-based organizations to ensure income benefits reach those who are without a permanent address or bank account, without identification and those who work in informal, cash-based or criminalized economies. The AFB will draw from jurisdictions around the world that experienced success reaching low-income and unbanked populations with various forms of digital and cash transfer systems, using methods that could include mobile wallets or reloadable credit cards. Many community-based organizations are already providing various forms of direct cash transfers to their service users in need and the AFB will partner with these organizations as they are most likely to reach these populations through trusted relationships.
Most income security benefits are assessed annually, after tax filing, but major life events can drive the need for changes to benefits within the year. The pandemic response—the Canada Emergency Response Benefit (CERB) demonstrated that the CRA does have the ability to assess and deliver benefits quickly throughout the year. The AFB will immediately cease all prosecutions for CERB payment in error, except in the case of clear fraud. The AFB will ensure rapid responsiveness and strive to deliver benefits within one month of major life changes, such as the onset of a disability, a family change, etc. The AFB will use various data points it has to proactively alert residents of benefits they may be eligible for.
