Income-tested and in-kind: The material wellbeing effects of the Canadian Dental Care Plan

By Geranda Notten, Graduate School of Public and International Affairs, University of Ottawa.

Rich countries increasingly rely on income-testing and their income-tax system as part of their efforts to deliver cash and in-kind transfers to recipients. Measuring the effectiveness of such transfers is challenging because the metric used to determine eligibility, income, does not capture programs’ effect as they reduce spending needs rather than increase income. Moreover, using income thresholds for program eligibility and generosity may miss the mark when tax income does not align with actual living standards.

The research estimates that the CDCP reduced seniors’ dental care deprivation rate by 8.7 percentage points, a 62 percent decline compared to the baseline. It is further estimated to have averted close to 700,000 cases of dental care deprivation. This suggests that the CDCP substantively contributes towards addressing the affordability barrier it is designed to reduce and that material deprivation indicators can detect such impacts.

While tax income is administratively useful for determining eligibility, it remains an imperfect proxy for living standards and a poor measure of the direct effect of many in-kind benefits. Families with similar taxable incomes can face very different needs, costs, assets and debts. And tax-based delivery can also miss non-filers and create discontinuity through annual renewal.

Income-testing should be treated as a practical instrument but not as a complete targeting strategy. Adding outcome-based measures—such as inability to afford dental care—to program performance frameworks makes otherwise invisible benefits observable and provides a common basis for cost-effectiveness analysis.

“The result is that families who look identical for in the eyes of income tax system may require different levels of financial resources to meet the same basic needs thus culminating different living standards. Second, even in countries like Canada, about 10-12 percent of potential tax filers do not file taxes and therefore miss benefits they would otherwise receive.”

Links to the working paper and related documents:

Income-tested and in-kind: The material wellbeing effects of the Canadian Dental Care Plan
Notten, G. (August 2026), Working paper #2606E, Department of Economics, University of Ottawa, 1-39.

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Income-tested and in-kind: The material wellbeing effects of the Canadian Dental Care Plan

By Geranda Notten, Graduate School of Public and International Affairs, University of Ottawa.

Links to the working paper and related documents:

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