Disability Tax Credit and Other Tax Measures for People With Disabilities

By Fin MacDonald, Fin Tax Service

Scammers Still Out There

Before I look at the tax measures available for people with disabilities, a reminder that the telephone and on-line tax scammers are still preying on people. The Canada Revenue Agency (CRA) will

NEVER demand you buy gift cards and send them the PINs.

NEVER threaten you with jail or arrest. NEVER tell you to wire them money. If you receive a phone call or email that sounds fishy, hang up and phone the CRA @ 800-959-8281. DO NOT reply to an email.

Disability Tax Credit (DTC)

The federal government has a number of tax measures to achieve certain goals. One goal is to provide tax relief to people with disabilities; one measure is the Disability Tax Credit. To qualify for the DTC a person must have a severe and prolonged physical or mental disability. The disability must last at least a year. The person must be unable to perform one or more of the tasks of daily living, or be blind. The tasks of daily living are: speaking, hearing, walking, eliminating (bowel and bladder functions), feeding, dressing, and mental functions necessary for everyday life.

The DTC is a Non-Refundable Tax Credit. This means that it may be used to reduce the tax you, or a supporting person you transfer it to, has payable. If the DTC is for a person older than 18 it provides tax relief up to $1,580; if the person is under 18, the relief is up to $2,615. There is also a supplement to the Child Tax Benefit, the Child Disability Benefit (CDB), of $227.50 per month. The CDB is an example of a Refundable Tax Credit; it begins to be clawed back as the family net income rises above $65,000.

The DTC may be transferred from a child, spouse, parent or sibling. There is a requirement to demonstrate, at the first time of transfer, some level of support of the person with a disability by the person receiving the transfer.

To qualify for the DTC, a medical professional must fill out the Disability Tax Credit Certificate. A physician may fill out the form for any disability, a variety of other practitioners may for specific disabilities. For example: A psychologist for mental impairment, a physical therapist or occupational therapist for walking. Here is the link for the DTC Certificate: http://www.cra-arc.gc.ca/E/pbg/tf/t2201/README.html.

When the medical professional fills out the DTC Certificate they indicate when the disability began; this may be up to ten years prior to now. If the CRA approves the DTC Certificate, all the previous years can be reassessed to provide the retroactive tax relief.

Other Tax Credits

Most disability programs have their own requirements. Some allow qualification for another program to be a qualification for a benefit under theirs. One example is the Medical Services Plan Premium Assistance application. Each person in the family who has the DTC qualifies for a $3,000 reduction in income. This potentially lowers the amount of MSP premiums payable. You may go back up to six years to apply to lower your MSP premiums. http://www2.gov.bc.ca/assets/gov/health/forms/119fil.pdf

Provincial Fuel Tax Rebate

A refund of 18 cents per litre of gas purchased is available to people who qualify for this program. You may go back up to four years when claiming this rebate. The people who are pre-qualified for this are people who receive Provincial Disability Benefits from the Ministry of Social Development. For others, the requirements to qualify are one of the following : “Suffer loss of a limb

·       Are permanently dependent on a wheelchair

·       Have complete and permanent functional loss of the lower limbs

·       Have a permanent impairment of movement to the extent that it would be hazardous for you to use public transit (whether or not it’s available)

·       Have a permanent mental disability to the extent that it would be hazardous for you to use public transit (whether or not it’s available).

·       Have a permanent sight impairment to the extent that you are not eligible to hold a driver’s licence

·       Receive a 100% veteran disability pension through active service in any war while in Her Majesty’s forces”

Here is the link: http://www2.gov.bc.ca/gov/content/taxes/sales-taxes/motor-fuel-carbon-tax/fuel-tax-refund\

Federal Excise Tax rebate

There is also a federal gas tax rebate; but it is only 0.15 cents per litre. 100 litres gives a refund of $1.50; contrast that with 100 litres under the provincial program – refund is $18.00. http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/xcs-tx-eng.html

I would like to acknowledge the hospitality of the Victoria Brain Injury Society. Their Inreach Team sponsored a presentation I gave to their membership on June 15. Much of this article was part of that presentation.

In the September issue of the Beacon I will look at tax planning. As always, dear readers, I bring you this article through my lens of Helping You to Keep More of YOUR Money!

Fin MacDonald has over 20 years’ experience providing retirement and Income tax planning advise. Readers are however cautioned that responsibility falls on the taxpayer to ensure that all information is adequate and correct.

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