Canada’s Disability Tax Credit

Introduction: Canada’s Social Safety Net

 

Canada has a long and proud history of taking care of its most vulnerable citizens. Our taxation system features many tools to help those Canadians who need assistance, such as those who spend money on medical costs and healthcare, disabled people, single parents, and families with young children. It also provides incentives to those who are investing in themselves and their family members (e.g. through education or starting their own business).

 

Canada is also home to many disabled Canadians who are inspirational and heroic, the most prominent example being Terry Fox. Some have gone to achieve great fame (e.g. Michael J. Fox) and others have performed tremendous feats (e.g. Chantal Petitclerc).

 

Accordingly, Canadians with disabilities have the opportunity to take advantage of programs that compensate them and their loved ones for their added hardships in life. This may include difficulty finding employment, the high cost of medical expenses, or having to spend large amounts of time trying to improve one’s life with a disability.

 

The Disability Tax Credit: Opening Up a World of Opportunities

 

The Disability Tax Credit (DTC) allows Canadians claim the disability amount (on their tax returns), and allows their supporting relatives to do so their behalf. In certain provinces, it also enables disabled people and their caregivers to claim additional provincial credits and tax reduction. The Disability Tax Credit allows parents of disabled children to collect the Child Disability Benefit (CDB) on their behalves. Furthermore, it allows disabled individuals to set up a Registered Disability Savings Plan (RDSP) , where certain contributions made to the plan are matched by the federal government.

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Qualifying for the Disability Tax Credit

 

For someone to qualify for the Disability Tax Credit, they must be ‘markedly restricted’ in one of the following daily life functions:

 

Vision

Walking

Hearing

Speaking

Feeding

Dressing

Mental functions

Elimination (bowel and bladder functions)

Life-sustaining therapy (at least 3 times per week, for at least 14 hours per week)

 

For years 2005 and later, individuals are allowed to have ‘cumulative restrictions’ in two or more of the above functions that add up to a marked restriction, with a few exceptions.

 

The Disability Tax Credit Certificate must be signed by either a medical doctor or one of these professionals, with respect to the categories above:

 

Optometrist

Occupational therapist

Audiologist

Physiotherapist

Psychologist

Speech-language pathologist

 

Claiming on Behalf of a Disabled Relative

 

As a non-refundable tax credit, the Disability Tax Credit only benefits you on your personal income tax returns, if you had sufficient taxable income over the course of a year. The taxable income usually comes from employment. Some disabled Canadians are unable to work. Consequently, the Disability Tax Credit is one of the few credits that can be claimed on behalf of a disabled spouse or relative.

 

The relative can be your spouse, or you or your spouse’s or common-law partner’s parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece, or nephew. The supporter or caregiver must have also either lived with their disabled dependant, or supported them financially in the areas of food, shelter, or clothing.

 

Conclusion: A Look Forward

 

The Disability Tax Credit is both a qualification and a non-refundable tax credit found on personal income tax returns. It is a great asset to disabled Canadians, and also allows them to set up an RDSP and their parents to claim CDB (for children only). If the credit cannot does not benefit a disabled individual, it can be transferred to a supporting family member.

 

Some political parties have advocated for an additional refundable tax credit that directly benefits those disabled Canadians who did not have a sufficient income in a certain tax year. This is something for disabled Canadians and their advocates to look forward to in the future.

 

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