By Ron Clarke
For residents of Canada with disabilities there is a multitude of specific government benefits, credits and plans, or enhancements to regular benefits, credits and plans.
In order to qualify and receive these, most require a Canada Revenue Agency (CRA) approved Disability Tax Credit (DTC).
The DTC is a detailed application made on the T2201 CRA form requiring a medical doctor’s input.
To quote CRA, the person must have a “severe and prolonged impairment” affecting “activities of daily living” as compared to the average person.
And this form has to be signed by the doctor.
In certain cases, detailed letters from various health professionals may suffice for some of the tax aids available to persons with disabilities. Having said this, it is best to pursue a DTC.
With an approved DTC, available for tax return filings is a $8,576 non-refundable credit to the disabled person, or if not needed, the credit can be transferred to a spouse or in some cases a caregiver.
For a person under 18, the DTC is increased $5,003.
In the case of a disabled child, the parent or caregiver is able to claim the DTC for the child plus claim the child’s associated qualified medical expenses. Also, enhanced child care expenses can be claimed, and the Canada Child Benefit is topped up.
Some other tax return aids include the ability to claim expenses incurred to make a home accessible to the disabled person, both from the federal and the BC governments. Or in the case of purchasing a home, there is a Disability Home Purchase Credit and if an RRSP is used to set up a Home Buyer’s Plan, the use of that plan is enhanced.
Regarding a tax return medical claim, attendant care expenses can be claimed whether living at home or in an accredited nursing home, and for living in a nursing home, the associated expenses for living there can be claimed as a medical expense.
Depending on level of earned income, the Canada Workers Benefit is enhanced for a disabled person.
And on the employment front, there are non-taxable benefits paid by an employer such as transportation and parking.
CRA allows deductions for needed supports that enable a disabled person to work or study.
Further, the government offers an enhancement to a Registered Education Savings Plan, and for a Life Long Learning Plan set up within an RRSP Plan, there are exceptions to the rules to aid a disabled person.
Additionally, there are plans exclusive to a disabled person including the Registered Disability Savings Plan, and the Canada Disability Savings Grant and Savings Bond Plans.
An option also exists to establish a Qualified Disability Trust for those with severe disability, yielding accountable control of income and expenses.
CRA taxes this trust at lower rates than other personal trusts.
Speaking of taxation, topical for this tax season in particular, any COVID payment received that is specific to a disability is tax free.
Ron Clarke is owner of JBS Business Services in Trail, providing accounting and tax services.