As a financial advisor in Toronto, am I still reveling in what most people call spring and I call tax season?
Yes. Yes, I am. And let me count the ways…
First, I explored the new home office deduction rules. Next, I helped you to calculate your deductible medical expenses. Today, I get to talk about the Disability Tax Credit.
No, it hasn’t been fun for all of us to work more from home during this pandemic year. And managing a medical condition is never a good time.
And people with disabilities continue to face barriers to full participation in society, including economic disadvantage. All of these are sobering issues.
But tax credits can put a spring in our steps because they put money in our pockets. That’s why I have been focusing on easy-to-implement tax tips for the 2020 tax season these past few weeks.
It’s nice to get something back when times are tough.
So, let’s look at the Disability Tax Credit (DTC)…
If you or a loved one has a disability, you already understand the additional medical and living expenses required to assist with daily life. The purpose of the DTC is to offset some of those additional costs.
What is a Disability Tax Credit?
The DTC is a non-refundable tax credit used to reduce the amount of income tax paid. It also includes a supplement for children under 18 years of age.
For the 2020 tax season, the federal non-refundable DTC for an adult is $8,576, and a child under 18 can receive an additional supplement of up to $5,003. Together, that adds up to $13,579.
In Ontario, a DTC of $13,579 is worth as much as $2,790 (15.5% federal plus 5.05% provincial) in tax savings.
If you have no income, or you don’t need the entire credit to bring your tax payable to zero, you may transfer all or part of it to your spouse, common-law partner, or another supporting relative.
Who is eligible for the Disability Tax Credit?
a) Those who are blind.
b) Those who receive life-sustaining therapy.
c) Those whose impairment restricts them in one or more of the basic activities of daily living listed below… AND the impairment has lasted or is expected to last for a continuous period of at least 12 months:
- Speaking
- Hearing (i.e. hearing aids, poor hearing)
- Walking (i.e. knee/hip problems, osteoarthritis, poor circulation, foot disorders)
- Eliminating (i.e. prostate)
- Feeding (i.e. IBS, Crohn’s/Colitis, incontinence)
- Dressing (i.e. weak/shaky hands or arms, back/neck problems)
- Performing the mental functions necessary for everyday life (i.e. memory loss, confusion, Alzheimer’s, dementia, depression, ADHD)
Further eligibility for children
Children who have the following may be eligible for the DTC:
- ADD (Attention Deficit Disorder)
- ADHD (Attention Deficit Hyperactivity Disorder)
- FASD (Fetal Alcohol Spectrum Disorder)
- Autism
- Asperger’s Syndrome
- Bipolar disorder
- Manic depression
- Anxiety disorders
- IBS (Irritable Bowel Syndrome)
- Type 1 and Type 2 diabetes
- Epilepsy
- Learning disabilities
How do you apply for the Disability Tax Credit?
To qualify for the DTC, you must submit the Form T2201, Disability Tax Credit Certificate, and the CRA must also approve your application before you file your taxes. The disabled person (or family member) completes Part A of the form and, depending on the disability, a medical doctor or other health practitioner (i.e. audiologist, optometrist, psychologist) fills out Part B.
How many years back can you claim the Disability Tax Credit?
Depending on the onset of the disability, you may use the credit in the current year and going back as far as 10 years. This could result in a sizable refund, if approved.
What other tax benefits are available?
The disabled person could also be eligible for a registered disability savings plan (RDSP), the working income tax benefit (WITB) disability supplement, and the child disability benefit.
You will not be labelled as disabled.
It is important to understand that all claims and benefits within the program are independent and confidential within the CRA and with your medical practitioner. The information will not be released without your express written permission.
The DTC does not in any way formally designate you as disabled or label you as a disabled person. It simply allows you to qualify for an annual tax deduction. It’s not a medical standing. It’s a tax standing. If you think you may qualify for the disability tax credit, please give me a call and we can discuss your next steps.
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It’s hard to find a greater polymath than Noam Chomsky. The 92-year-old Professor of Linguistics has published over 150 books on a wide range of topics, including history, philosophy, media, politics, cognitive science, and even the climate crisis. Among his many prizes and accolades, he is a Turing Award Winner for his contributions to computer science, as his linguistics concepts have helped to create programming languages, and he has been awarded the US Peace Prize for his work in human rights. He has also earned the interesting title of the “most quoted living author.” Chomsky caused a stir in 2020 when he told The New Yorker that Donald Trump is the “worst criminal in human history,” partly for Trump’s attack on democracy. As private as he is prolific, Chomsky’s work has touched all of our lives—in multiple ways and in multiples fields—whether we’re aware of it or not.
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