Life Can Be Taxing  

Tax credits for disabled persons

Living with a disability or caring for someone with a disability can create financial hardship for many Canadians. Fortunately there are various programs and tax credits to help offset the costs associated with the disability. The Disability Tax Credit is one such credit designed to help.

The disability tax credit is a non-refundable tax credit that can be applied against income taxes otherwise payable. In British Columbia this amounted to a $1,460 tax reduction in 2011. If the person with the disability is not otherwise taxable, the credit can be transferred to a person who provides financial assistance or care for them. This means that individuals caring for a child, spouse, parent, or grandparent that would otherwise qualify for the credit may be eligible for a significant reduction in the taxes they would otherwise be liable for.

To qualify for the disability tax credit the disability must have existed for more than one year or be expected to last more than one year. The types of disabilities that qualify include impairments to vision, hearing, speaking, walking, elimination, feeding, mental functions necessary for everyday life, and dressing. In addition people who require life-sustaining therapy such as insulin may qualify. Conditions like MS, ALS, and cancer will often qualify. It should be noted that the criteria used in determining whether one qualifies for the credit are different than the criteria used to determine ones eligibility for Canada Pension Plan Disability Benefits.

Another qualification requirement requires that a doctor or other qualified practitioner complete Form T2201. The completed form is then sent to the Canada Revenue Agency for approval. Once approved the CRA will notify the individual of qualification and when qualification will expire. In situations where an individual has been certified as having a disability that began previously, and the disability tax credit has not previously been claimed, the individual can request that previous year’s tax returns be adjusted to include the claim. This requires that the doctor indicate when the disability first began. This retroactive claim can lead to significant refunds.

Children under 18 years of age eligible for the disability tax credit may also be entitled to an additional supplement that can be claimed by them or transferred to a supporting person. In 2011 the amount is up to $852 for residents of British Columbia. A similar Caregiver Tax Credit of up to $852 is available if you a caring for an adult child or parent that qualifies for the Disability Tax Credit.

The Disability Tax Credit and Caregiver Tax Credit are two examples of credits that can provide assistance to individuals affected by a disability. Care should be taken when claiming any tax credits to ensure they are claimed by the correct individual and that their interaction with other potential tax credits are considered. For more information on the Disability Tax Credit visit Canada Revenue Agency’s website or speak to your accountant.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

More Life Can Be Taxing articles

About the Author

Andrew Pitre is a Chartered Accountant with K. Hecht & Associates Inc. Andrew specializes in the area of accounting and tax for individuals and owner managed businesses. His areas of practice include year-end notice to reader and review engagement reports and associated corporate tax filings. In addition, Andrew's practice includes tax planning for individuals, corporations, and trusts.

Andrew graduated from the University of Victoria in 2005 with a degree in Economics. In 2005 he began his career in public accounting and in 2008 he obtained his Chartered Accountant designation. In 2010 Andrew completed the Canadian Institute of Chartered Accountants In-Depth Tax Course.

Andrew's interests include most water sports, snowboarding, squash, and hiking. He is the current President of the Kelowna CA association and treasurer of the West Kelowna Daybreak Rotary club.

Andrew can be reached at [email protected] or www.hecht.ca.

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories