One of the lesser known tax credits is the disability tax credit(DTC). If a person has difficulty with at least one of the basic activities of daily living such as speaking, hearing, seeing, eating, walking, dressing, bladder functions, or mental functions to the point of it impacting their life significantly they may qualify for the DTC.
If a person needs life sustaining therapy they may also qualify. Examples might be diabetes with daily insulin injections, or continuous oxygen therapy. A medical professional must complete the assessment and complete the tax from T2201.
Two facts: Note I didn’t say taxpayer I said person. Children may also qualify for the DTC, which would enable the parent(s) to pay less tax. Also any medical professional may complete the form it doesn’t have to be a doctor. One example would be a speech pathologist.
A study done in 2018 by the Senate Committee on Social Affairs, Science and Technology found that less than 40% of the adults who qualify for the DTC actually claim it. And the report doesn’t even include children who could qualify. The Federal credit in 2019 is 15% of $8416 which means a taxpayer would save as much as $1262 federal taxes. The provincial credit in Alberta is $14940 which means a taxpayer could save an additional $1494. That is a lot of money in unclaimed tax refunds. Plus there are other tax credits associated with the care of the disabled person that can also be claimed.
There are qualified professionals who can help an applicant navigate through the application process.
If a person qualifies for the DTC and he or she is under the age of 49 they could open a Registered Disability Savings Plan (RDSP). The RDSP can receive contributory grants of up to 300% and non contributory bonds if the beneficiary’s income is low or 0.
Both the DTC and the RDSP are underutilized due to lack of awareness. That is a shame because disabled people need access to money to be able to have the supports necessary for a good quality of life.
The last federal budget proposed more relaxed rules for withdrawals from the RDSP. However, that proposal never made it into law.
If a taxpayer has contributed to the Canada Pension Plan, is younger than 65 years old, has a severe and prolonged disability that is not expected to improve, and prevents them from working they may qualify for a Canada Pension Plan Disability Pension. Alberta also has the Assured Income for the Severely Handicapped(AISH) which can provide income support where a person cannot work or only work marginally.
With Canada’s population continuing to age, discussing the topic of disability is of utmost importance. I am sure that every reader knows someone in their life that would benefit from this information.
Canada Revenue Agency
Investment Executive Oct 2018