Social housing providers can now retain the money to help reduce the cost of housing for low-income families and households instead of returning the cash, says Candice Bergen, the minister of state for social development.
Bergen made the announcement in Vancouver, calling it a "common sense approach that will give some social housing projects greater flexibility."
It's all part of the federal government's focus to help "vulnerable Canadians lift themselves out of poverty and lead successful lives," she says.
The so-called Subsidy Surplus Fund is part of some operating agreements between social housing providers and the Canada Mortgage and Housing Corp. a Crown agency.
The new rules will apply retroactively, meaning that housing providers whose agreements have already matured and who have repaid CMHC will get a refund.
The Co-operative Housing Federation of Canada is welcoming the announcement, which comes on the eve of National Housing Day.
The Harper government committed an additional $1.25 billion to affordable housing in its budget earlier this year.