Tax Tip Thursday

Tax Breaks for Disabled Taxpayers

We saw a few changes to DTC this year. What is DTC, you ask? It stands for Disability Tax Credit.

Criteria:

There is a tax credit for those who qualify. The eligibility requirements are somewhat complex, but simply-put you must be at least one of the following:

  1. Blind,
  2. Markedly restricted in at least one of the basic activities of daily living,
  3. Significantly restricted in two or more of the basic activities of daily living (can include a vision impairment), or
  4. Need life-sustaining therapy.

In addition, your impairment must be all of the following:

  1. Prolonged, which means the impairment has lasted, or is expected to last for a continuous period of at least 12 months; and
  2. be present all or substantially all the time (at least 90% of the time).

If you think you qualify, there is a form that needs to be submitted to the CRA: the T2201. This needs to be filled out by a doctor, and the real key to it is that the disability must be prolonged and be present 90% of the time.

The Credit

This is a significant credit! It can be up to $8,600, lowering your taxes payable by up to $1,300. If you do not NEED it, the CRA does not give you a choice in the matter. You can also transfer portions of the credit, but first your tax payable must be reduced to zero.

Depending on the circumstances, you can transfer it to most any of your family members, such as your or your spouse’s or common law partner’s parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece, or nephew.

There are specific conditions that apply, but usually there is an opportunity to take advantage of the credit if you are caring for someone with a disability. The criteria:

  1. You need to be their caregiver (which COULD also entitle you to other credits of up to $9,500, which translates into another $1,400 in tax savings)
  2. You need to be named on the T2201 as the person to transfer the amount to
  3. To get the caregiver amount, the person with the disability must make less than $24,361, and
  4. You need to write a letter to the CRA outlining how and to what degree you are the caregiver.

If you have a child that has a disability there is an additional $2,300 credit, which translates into an additional $350 in tax savings.

Other Benefits

There are other benefits, too! For example:

  1. RDSP — Registered Disability Savings Plan (operates similarly to an RESP, which most people are familiar with)
  2. Canada Disability Savings grant Plan, where the government contributes to your RDSP
  3. Child Disability Credit, which is a monthly payment
  4. CPP Children’s Benefit, which is a monthly payment
  5. Disability Pension Benefit, which is a monthly payment
  6. Federal Excise Gasoline Tax Refund Program — this is a really pathetic $0.0015 per kilometer and per litre
  7. Disability benefits for Veterans

Does This Apply to You?

So if you are disabled or have someone in your family who is, you can see that there are a number of tax credits and other programs available to you or to them, and you should see if you qualify! To get help figuring this all out, give us a call or make an appointment!

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.