This guide was written by Graeme Treeby of The Special Needs Planning Group and edited by Douglas Cronin, Certified General Accountant. It is intended for free distribution to Community Living York South ( www.ysacl.on.ca ) Th e Ontario Federation for Cerebral Palsy, ( www.ofcp.on.ca ) clients and friends of The “Special Needs” Planning Group ( www.specialneedsplanning.ca ) and any organization or individual who may be interested. It is not to be taken as Accounting or Taxation advice but rather, as a resource to provide a starting point for your journey through the maze that is Income Tax Preparation and Planning for people with a disability and their families.
The Federal Government has created the Registered Disability Savings Plan which is intended to create a long term savings plan for people with disabilities in Canada. The plan, which can be set up by the person with a disability or their parent or guardian allows for contributions of up to $200,000 to be made now, for use in the future. Depending on family income, the Federal Government will provide Canadian Disability Savings Grants up to a maximum of $3500 for a contribution of $1500 per year up to a maximum of $70,000 or until the beneficiary of the plan reaches age 49. For low income families, they will provide a $1,000 Canadian Disability Savings Bond without any contributions to the plan up to a maximum of $20,000 or until the beneficiary of the plan reaches age 49. The income figure that is used in the calculation of grant and bond eligibility is the income of the parents if the person with the disability is under 18 years of age or the person himself if he is over 18 years of age.
In order to qualify for the RDSP, a person with a disability must first qualify for the Disability Tax Credit. They need not actually be taking advantage of the Disability Tax Credit but need only qualify for it. The information contained below on how to apply for the DTD is therefore even more important. If a person wishes to take advantage of the Canadian Disability Savings Grants and Bonds for 2009, they must have qualified for the DTC in the 2007 taxation year and must have filed a 2007 income tax return; even it they have no taxable income to report. The deadline for applying for 2009 grants and bonds was December 31, 2009. The March 2010 Federal Budget, if passed by Parliament, may allow for back filing for Grants and Bonds in the future.
An important feature of the RDSP is that it will not affect people's entitlement to Disability Benefits in most Provinces. Check with your benefits program administrator to see if your Province has exempt the RDSP from claw back
Many families have established RESP 's for their family members with disabilities. The Government has extended the time limits for contributions by 10 years to 35 years for a taxpayer who is disabled and the deadline for plan termination has also been extended by 10 years to 40 years for taxpayers who qualify for the Disability Tax Credit.
The Tax Free Savings Account is a new government program that allows Canadians to save money without ever having to pay tax on its growth. Each year, $5,000 can be contributed to a TFSA. In Ontario, people with disabilities are able to accumulate up to $100,000 in a TFAS combined with other exempt life insurance policies etc. as long as the TFSA is issued through a Life Insurance Company . The exemption only applies with Life Insurance Company product. The exemption may not apply in provinces other than Ontario. Please check with your local programs for clarification.
Tax time is once again upon us. At this time of the year, many of people with disabilities and their families hear stories about all the tax deductions that they are entitled to but of which they are unaware. The purpose of this guide is three fold:
• To introduce you to the Disability Amount, Caregiver Amount and the T2201 Disability Tax Credit Certificate used to secure them.
• To share a FREE Re-File Process to Get Back Taxes That Should Never Have Paid in the first place.
• To highlight many of the Tax Deductions, Credits and Benefits that are available to people with disabilities and their families.
Perhaps one of the most commonly missed and often the most valuable tax credit available to people with disabilities is the Disability Amount. This credit is most often called the Disability Tax Credit ( DTC ). It is a non-refundable tax credit which can reduce the amount of tax that a person with a disability has to pay. If the DTC is not required by the person with a disability to reduce their taxable income to zero, then it may be transferred in whole or in part to a family member who supplied some or all of the basic necessities of life such as food, shelter and clothing to the person.
In the 2009 Taxation Year, the Disability Amount for a person who was 18 years of age or older is $7196.00. If the person with the disability was under age 18 then there is also a Disability Tax Credit Supplement of $4198.00 that is added to the disability amount. Both of these amounts can be transferred if necessary. Details of the Disability Amount can be found on Canada Revenue Agency's web site by following the link at:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-
350/316/menu-eng.html
Another commonly missed tax credit is the Caregiver Amount or Caregiver Tax Credit. If, at any time in the year, you maintained a dwelling where you and a dependant lived, you may be able to claim this amount. The caregiver tax credit is the same dollar amount as the Disability Tax Credit Supplement which is $4198 for the 2009 taxation year. The dependant must be 18 years or older when they lived with you and must be dependent on you due to a mental or physical infirmity. This credit can not be claimed for a person who was only visiting you. It cannot also be claimed if you claim the “Infirm Dependant Credit”, an amount of similar value to “The Caregiver Tax Credit”. More information on the Caregiver Tax Credit can be found on Canada Revenue Agency's web site by following the link at:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-
350/315/menu-eng.html
In order to qualify for the Disability Tax Credit, the Caregiver Tax Credit and a variety of other credits, the person with a disability must meet the criteria as set out by Canada Revenue Agency.
A person may be eligible for the disability amount if a qualified practitioner certifies on Form T2201 Disability Tax Credit Certificate, that you have a prolonged impairment, and that the effects of the impairment are such that one of the following applies:
You are blind, even with the use of corrective lenses or medication.
You are markedly restricted in any one of the following basic activities of daily living:
speaking;
hearing;
walking;
elimination (bowel or bladder functions);
feeding;
dressing; or
performing the mental functions necessary for everyday life.
You need, and must dedicate a certain amount of time specifically for, life-sustaining therapy to support a vital function.
For 2005 and later years -you do not quite meet the criteria for blind or markedly restricted, but the following conditions apply:
because of your impairment, you are significantly restricted in two or more basic activities of daily living, or you are significantly restricted in vision and at least one of the basic activities of daily living, even with appropriate therapy, medication, and devices;
these significant restrictions exist together, all or substantially all the time; and
the cumulative effect of these significant restrictions is equivalent to being markedly restricted in a single basic activity of daily living.
The T2201 Disability Tax Credit Certificate form is available in a number of formats. A pre-printed copy can be ordered from Canada Revenue Agency or you can access the web site and fill in the personal information, print the form and take it to your doctor for completion. That form is available on the web at:
http://www.cra-arc.gc.ca/E/pbg/tf/t2201/
Your doctor will complete the form with his or her impression of the impact your disability has on you in the various categories. The doctor should also complete the full details of the effects of the impairment on the last page of the form. The more information provided the easier it will be to approve the application. It is also important to stress to the doctor that the “onset of impairment” date be listed as the very first date upon which the impairment began. This is important when any back-filing actions are undertaken. (see below for details on back-filing)
Once the form is completed, you should sign it, and forward it to Canada Revenue Agency. These forms can be reviewed at any time of the year so you needn't wait until tax time for submission. In fact, it often takes several months for Canada Revenue Agency to approve the form and so it would be prudent to send it in as soon as it has been completed by your doctor.
The Disability Amount is available to people based on the date of onset of the impairment. If you have been approved for a period of time for which you have not claimed the credit, you may re-file for those years and receive a refund for taxes that you have previously paid for as many as 10 years. Please see the next section to see how to back-file for prior years.
I t is quite possible that you may not be keeping as much of your hard earned money as you are entitled to. A well known Ottawa Accountant who works in the field of taxation with a specific focus on people with disabilities and their caregivers has estimated that about 50% of people who are entitled to the Disability Tax Credit and the Caregiver Tax Credit are actually claiming it. This means that people in the special needs community are giving the Government thousands upon thousands of dollars in tax revenue that should stay in our community. But this doesn't have to continue. By following a few simple steps, people with disabilities and their caregivers can claim the DTC from this year onward and for up to 10 years in the past where they have not claimed the credit. In addition, caregivers can also claim back as far as 1999 for the Caregiver Tax Credit provided that your dependent is over age 18 in each of the years being claimed. These credits could result in you receiving tax refunds of $10,000, $16,000 and even much more when combined with the other tax credits or deductions that you may have missed over the years and which are still available to you.
At a recent Tax Seminar sponsored by the Ontario Federation for Cerebral Palsy and Canada Revenue Agency, the guest Speaker stated that “to re-file is so simple that my 6 year old daughter could do it in about 10 minutes.” Therefore, why pay any of the many tax re-file firms that have sprung up in our community in the last few years anywhere from $1500 to $3000 and even much more of your refund for a task that can be completed by you in about 10 minutes? Some of those firms are not even trained Accountants and yet they will charge you between 15% and 30% of your refund to fill out a one page form, which is available on the internet, and to submit it to Canada Revenue Agency.
The choice is yours. If you are not comfortable with completing and submitting forms, then by all means talk to an Accountant and have him or her re-file for you for a couple of hundred dollars (ask your accountant for rates). If you are not comfortable using an Accountant, then by all means talk to one of the re-file firms and have them re-file for you for a few thousand dollars. However if you are interested in saving your hard earned dollars and are willing to do a little work on your own, then simply follow the step by step instructions that follow to re-file for previously paid taxes.
As a general rule of thumb, when an ODSP recipient lives with his or her family and receives the standard boarder rate of $796 per month, a family member who provides support to the ODSP recipient ordinarily would be able to get a transfer of the full Disability Tax Credit. If the ODSP recipient earns other income, there are some restrictions which must be taken into account. Please refer to Canada Revenue Agency tax guides if this is your situation.
The first step in re-filing your tax returns for prior years is to acquire the Canada Revenue Agency T1 Adjustment Request form. A fillable form can be found on the web at:
http://www.cra-arc.gc.ca/E/pbg/tf/t1-adj/t1-adj-fill-08e.pdf
It is a one page form and comes complete with written instructions. A separate form should be submitted for each year that you wish to have adjusted. On line, you can fill in the information with respect to your Identification, Authorizations, and Adjustment Details.
If you, as a person with a disability are applying for an adjustment to the Disability Amount for yourself, the line number the Adjustment Details section is 316 and the name of the line is “Disability Amount”. If you are applying for an adjustment for an amount transferred from a dependant, the line number is 318 and it is called “Disability Amount Transferred From a Dependant”. It would include both the Disability Tax Credit plus the Supplement Amount if your son or daughter is under the age of 18 . The caregiver claim may be reduced if a claim has also been made for child care, attendant care or certain related medical expenses. If you are a caregiver who qualifies under t h e Caregiver Tax Credit and who is back-filing for the Caregiver Tax Credit, the line number is 315 and the name of the line is “Caregiver Amount”. The amount to be printed in the Revised Amount column can be taken from the chart on the following page .
Taxation Year |
DTC Amt. Self |
DTC From Dependent |
DTC Supplement |
Caregiver Tax Credit |
|
(Line 316) |
(Line 318) |
(Line 318) |
(Line 315) |
2009 |
$7196.00 |
$7196.00 |
$4198.00 |
$4198.00 |
2008 |
$7021.00 |
$7021.00 |
$4095.00 |
$4095.00 |
2007 |
$6890.00 |
$6890.00 |
$4019.00 |
$4019.00 |
2006 |
$6741.00 |
$6741.00 |
$3933.00 |
$3933.00 |
2005 |
$6596.00 |
$6596.00 |
$3848.00 |
$3848.00 |
2004 |
$6486.00 |
$6486.00 |
$3784.00 |
$3784.00 |
2003 |
$6279.00 |
$6279.00 |
$3663.00 |
$3663.00 |
2002 |
$6180.00 |
$6180.00 |
$3605.00 |
$3605.00 |
2001 |
$6000.00 |
$6000.00 |
$3500.00 |
$3500.00 |
2000 |
$4293.00 |
$4293.00 |
$2941.00 |
$2386.00 |
1999 |
$4233.00 |
$4233.00 |
NIL |
$2353.00 |
1998 |
$4233.00 |
$4233.00 |
NIL |
$2353.00 |
Once the form has been completed, it should be signed and mailed to your taxation office as indicated in the following chart. Be sure to keep copies of all forms that are submitted to Canada Revenue Agency and remember that a separate form must be submitted for each year that you wish to have adjusted. It will take several weeks or months but eventually you should receive your refund.
If you are normally served by the tax services offices in: |
Send your form or letter to: |
British Columbia, Yukon, or Regina |
Surrey Tax Centre |
Alberta, Manitoba, Northwest Territories, Saskatoon, Thunder Bay, London, or Windsor |
Winnipeg Tax Centre |
Toronto East, Toronto North, Toronto Centre, Toronto West, or Sudbury (the area of Sudbury/Nickel Belt only) |
Sudbury Tax Centre |
Nunavut, Montréal, Laval, Sherbrooke, Rouyn-Noranda, Ottawa, or Sudbury (other than the area of Sudbury/Nickel Belt) |
Shawinigan-Sud Tax Centre |
Québec, Chicoutimi, Rimouski, Trois-Rivières, Outaouais, or Montérégie-Rive-Sud |
Jonquière Tax Centre |
Nova Scotia, New Brunswick, Newfoundland and Labrador, Kingston, Peterborough, or St. Catharines |
St. John's Tax Centre |
Prince Edward Island, Belleville, Hamilton, or Kitchener/Waterloo |
Summerside Tax Centre |
International Tax Services Office |
International Tax Services Office |
The next section of this paper relates to the various deductions, credits and benefits that are available to people with disabilities and caregivers of people with disabilities. It is intended that we will list the categories that are available to people with disabilities themselves and categories that are available to the caregivers of people with disabilities. We suggest that you scan each of the descriptions and if it sounds like that particular deduction may apply to you and your situation, then you can investigate further into the details of the rules and regulations.
Disability Supports Deduction: If you are a person with a disability you may be able to deduct disability supports expenses you incurred in the year to work, go to school, or to do research for which you were paid. The Disability Supports are actually claimed as medical expenses on your Income Tax Return and some examples are:
• Attendant Care Services
• Bliss Symbol boards
• Braille Note-takers
• Braille Printers
• Deaf-blind intervening services
• Devices or software to enabler reading of print
• Electronic speech synthesizers
• Full time attendant care services
• Job coaching services
• Note taking services
• Optical scanners
• Page turning devices
• Reading services
• Real time captioning
• Sign language interpretation services
• Talking textbooks
• Teletypewriters
• Tutoring services
• Voice recognition software
• Disability Amount: As previously mentioned, this is a non-refundable tax credit which can reduce the amount of tax that a person with a disability has to pay.
• Tuition Fees: Some tuition fees can be claimed for courses taken in the taxation year.
• Education Amount: A person can claim a full-time education amount for each month in the year that your were enrolled in a qualifying program.
• Textbook Amount: People may be able to claim an amount for textbooks. Unless specialized, generally only for the 2009 year.
• Working Income Tax Benefit: • This benefit is available to people who qualify for the Disability Tax Credit and who have employment income in the year. In 2009, the basic claim in most of Canada is $925 for and individual and $1,680 for individuals with an eligible spouse or dependant. A supplemental benefit of $462 is also available for individuals who qualify for the Disability Tax Credit. These amounts may be adjusted depending on where you live in Canada and on your family income levels.
• Medical Expenses: See the Medical Expenses section below.
• Child disability Benefit: Families with children who qualify for the disability amount may be eligible for the Child Disability Benefit. It is income tested based on family income.
• Children's Fitness Amount: To encourage better fitness in our children, an amount of up to $100 for each disabled dependant may be deducted.
• Child Care Expenses: If you have paid someone to look after your child who qualifies for the Disability Amount, you may be able to deduct up to $10,000 for child care expenses.
• Amount for Eligible Dependant: If you did not have a spouse or common- law partner and you supported a dependant with whom you lived in a home you maintained you may be able to claim this amount.
• Amount for Infirm Dependants Age 18 and Over: You may be able to claim an amount for a dependent child or grandchild if that child was mentally or physically inform and was born in 1991 or earlier.
• Caregiver Amount: As previously stated, if, at any time in the year, you maintained a dwelling where you and a dependant lived, you may be able to claim this amount.
• Disability Amount Transferred From a Dependant: If the DTC is not required by the person with a disability to reduce their taxable income to zero, then it may be transferred in whole or in part to a family member who supplied some or all of the basic necessities of life such as food, shelter and clothing to the person. The person with the disability does not have to live with the family member in order to make the transfer.
• Tuition, Education and Textbook Amounts Transferred from a Child: If the person with a disability does not require these amounts, a supporting person may be able to claim all or part of the unused amount.
This is a major section of potential deductions that may be available to people with disabilities themselves or to caregivers of people with disabilities. If you are claiming for yourself, your spouse or common law partner or for a child under the age of 18, you claim the expenses on line 330 of your return. The expenses you claim for all other dependants on line 331 of your return. The amount claimed for a person with a disability is reduced by formula based on his or her income and is limited to a maximum of $10,000 for each dependant.
The following is a partial listing of eligible medical expenses. It is not exhaustive. Once again, we suggest that you scan each of the descriptions and if it sounds like that particular deduction may apply to you and your situation, then you can investigate further into the details of the rules and regulations.
Acoustic coupler - prescription required.
Air conditioner - 50% of the amount paid up to $1,000 for a patient with a severe chronic ailment, disease, or disorder - prescription required.
Air filter, cleaner, or purifier - paid for someone to cope with or overcome a severe chronic respiratory ailment or severe chronic immune system disorder - prescription required.
Ambulance service to or from a public or licensed private hospital.
Animals - the cost of a specially trained dog or other animal for use by someone who is blind, profoundly deaf, or has a severe and prolonged physical impairment that markedly restricts the use of their arms or legs.
Artificial eye
Artificial limbs
Attendant care expenses
Audible signal - prescription required.
Baby's cry signal designed to be attached to an infant to sound an alarm if the infant stops breathing
Bathroom aids to help someone get in or out of a bathtub or shower or to get on or off a toilet - prescription required.
Bliss symbol boards
Blood transfusion - prescription required.
Bone conductor receiver
Bone marrow transplant
Brace for a limb
Braille note-takers - prescription required.
Braille printers
Breast prosthesis
Cancer treatment
Catheters , catheter trays, tubing, or other products required for incontinence caused by illness, injury or affliction.
Certificates - the amount paid to a medical practitioner for completing and providing additional information in regard to Form T2201 and other certificates.
Chair - power-operated guided chair to be used in a stairway, including installation - prescription required.
Cochlear implant
Colostomy and ileostomy pads including pouches and adhesives.
Computer peripherals designed exclusively to be used by someone who is blind - prescription required.
Contact lenses - prescription required.
Cosmetic surgery
Crutches
Deaf-blind intervening services
Dentist
Dentures
Detoxification clinic
Devices or software designed to be used by someone who is blind or has a severe learning disability to enable them to read print.
Diapers or disposable briefs
Diathermy - prescription required.
Doctor
Driveway access
Drugs
Drugs and medical devices bought under Health Canada's Special Access Programme
Elastic support hose - prescription required.
Electric shock treatments - prescription required.
Electrolysis
Electronic bone healing device - prescription required.
Electronic speech synthesizers - prescription required.
Elevators or lifts - prescription required.
Environment control system (computerized or electronic) - prescription required.
Extremity pump - prescription required.
Eyeglasses - prescription required.
Furnace - prescription required.
Gluten-free products - incremental cost
Group home
Hair transplant surgery
Hearing aids
Heart monitor - prescription required.
Holistic treatment
Home care services
Homeopathic services paid to a medical practitioner.
Hospital - public or private.
Hospital bed - prescription required.
Hydrotherapy - prescription required.
Infusion pump including disposable peripherals - prescription required.
Insulin - prescription required.
In vitro fertility program, not including donations
Iron lung
Kidney machine
Laboratory services - prescription required.
Large-print on-screen device - prescription required.
Laryngeal speaking aids
Laser eye surgery
Liver extract injections - prescription required.
Marihuana or marihuana seeds for medical purposes.
Medical devices
Medical Practitioner
Moving expenses - to housing that is more accessible to the person
Needles and syringes - prescription required.
Note-taking services
Nurse
Nursing home
Optical scanner - prescription required.
Organ transplant
Orthodontic work
Orthopaedic shoes, boots, and inserts - prescription required.
Osteogenesis stimulator (inductive coupling) - prescription required.
Oxygen concentrator
Pacemakers - prescription required.
Page-turning - prescription required.
Phototherapy equipment
Premiums paid to private health services plans
Premiums paid to provincial or territorial prescription drug plans
Pre-natal and post-natal treatment - prescription required.
Private health care services
Reading services
Real-time captioning
Rehabilitative therapy
Renovating costs
Respite Care services
Rocking bed
School for people with an impairment in physical or mental
Scooter
Sign-language interpretation services
Spinal brace
Talking textbooks - prescription required.
Teletypewriters
Television closed caption decoders - prescription required.
Tests - prescription required.
Therapy
Training
Truss for hernia
Tutoring services
Vaccines - prescription required.
Vehicle - 20% of the amount paid for a van that has been adapted
Vehicle modification to permit someone confined to a wheelchair to gain independent access to and drive the vehicle - prescription required.
Visual or vibratory signalling device - prescription required.
Vitamin B12 injections - prescription required.
Voice recognition software
Volume control feature - prescription required.
Walking Aids - prescription required.
Water filter, cleaner, or purifier - prescription required.
Wheelchairs and wheelchair carriers
Whirlpool bath treatments
Wigs - prescription required
If you think that any of these items may apply to your particular situation, please follow the following link for more details.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-
350/316/menu-eng.html
We trust that this guide has been useful to you. If you have any questions regarding your Income Tax Returns, please contact a Tax Accountant or Canada Revenue Agency for assistance.
The “Special Needs” Planning Group www.specialneedsplanning.ca
Community Living York South www.ysacl.on.ca
Ontario Federation for Cerebral Palsy www.ofcp.on.ca
Disability Amount:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-
350/316/menu-eng.html
Caregiver Tax Credit:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-
350/315/menu-eng.html
T2201 Disability Tax Credit Certificate:
http://www.cra-arc.gc.ca/E/pbg/tf/t2201/
Prior Year Re-File Form:
http://www.cra-arc.gc.ca/E/pbg/tf/t1-adj/t1-adj-fill-08e.pdf
Allowable Medical Expense Listing:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-
350/330/llwxpns-eng.html
Disability Deductions and Credits:
http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/ddctns/menu-eng.html
Working Income Tax Benefit:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-
485/453-eng.html