Disability Tax Credit
The Income Tax Act contains several special tax relief provisions for persons with disabilities and their caregivers. The intent of the special provisions is to alleviate the additional costs borne by individuals with a disability and their caregivers. Unfortunately, many eligible individuals are not aware that such relief exists. It has been estimated that less than 20% of the disabled population is aware of such income tax relief. The result is that thousands of dollars of available disability tax relief are not claimed by eligible taxpayers each year.
Disability Tax Credit
The Disability Tax Credit is a non-refundable tax credit that may be claimed by certain persons with one or more disabilities to reduce the amount of tax they pay.
In order to qualify, the person must have an impairment that has lasted, or can reasonably be expected to last at least 12 months.
The impairment must result in either:
- a marked restriction in a basic activity or daily living, or;
- a significant restriction in two or more basic activities of daily living that individually do not qualify the person,where the cumulative effect of the restrictions is equal to a marked restriction.
To qualify, a qualified practitioner must complete Form T2201 “Disability Tax Credit Certificate” to certify that the person meets the requirements for the credit. This form is filed with the Canada Revenue Agency and reviewed by the Disablity Tax Credit Unit. The Disability Tax Credit may be transferred to a parent in most cases.
Value of the Disability Tax Credit
The credit results in actual tax savings can be $1,715 to $2,715 depending on the claimant’s taxable income and the age of the person with the disability or disabilities.
Other important disability measures include the following:
- the disabled individual may be able to transfer the credit to a supporting person;
- the supporting person may be able to claim the “caregiver tax credit” where he or she supports a child that has attained the age of 18 before the end of the year; and
- child tax benefits may be increased for children qualifying for the disability tax credit.
The disability tax credit may be available to individuals with more severe learning disabilities.
The Government is presently reviewing the disability tax relief program. Fortunately, the Technical Advisory Committee on Tax Measures for Persons with Disabilities is presently exploring legislative changes that will expand eligibility to some individuals with a learning disability that otherwise would not qualify.