The "Special Needs" Planning Group

Tax Issues

This guide was compiled by Graeme Treeby of The Special Needs Planning Group. It is intended for free distribution to organizations serving the Special Needs Community, clients and friends of The “Special Needs” Planning Group (www.specialneedsplanning.ca) and anyone else who may be interested. It is not to be taken as Accounting or Tax 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. Graeme Treeby can be reached at 905 640-8285 or graemetreeby@sympatico.ca .

Items of Interest for 2012

A)  Family Caregiver Tax Credit

Effective January 2, 2012, the Federal Government has introduced the new Family Caregiver Tax Credit.  The credit is designed to provide new tax support for caregivers of infirm dependent family members.  Infirm dependents now include spouses, common-law partners and minor children.  The credit can reduce taxes payable by up to $300 on your 2012 tax returns.

B) Medical Expense Tax Credit

The $10,000 limit on the amount of eligible expenses a taxpayer can claim under the Medical Expense Tax Credit in respect of a financially dependent relative has been removed.  Now unlimited amounts can be deducted.

C)  Ontario Children's Activity Tax Credit

You can claim the Children’s Activity Tax Credit (CATC) if you were a resident of Ontario and you paid fees that relate to the cost of registering your or your spouse's or common-law partner's child in a qualifying children's activity program in 2012. The child must have been born in 1996 or later or, if eligible for the disability amount, in 1995 or later. For each eligible child, you can claim the lesser of $500 and the amount of eligible expenses paid for qualifying programs for that child in 2012.  If the child qualifies for the disability amount and is under 18 years of age at the beginning of the year, and at least $100 was paid for registration or membership fees for qualifying programs for that child in 2012, you can claim an additional $500 for that child.

D)   Children's Arts Amount

You can claim to a maximum of $500 per child the fees paid in 2012 relating to the cost of registration or membership of your or your spouse's or common-law partner's child in a prescribed program of artistic, cultural, recreational, or developmental activity.  If the child qualifies for the disability amount and is under 18 years of age at the beginning of the year, an additional amount of $500 can be claimed as long as a minimum of $100 is paid on registration or membership fees for a prescribed program.  This amount does not include amounts that can be claimed as the federal children's fitness amount.

E)  Ontario Trillium Benefit

The Government of Ontario has announced that they were implementing a new method for the distribution of some Provincial Tax Credits. Previously, the Ontario Sales Tax Credit, the Energy and Property Tax Credit and the Northern Ontario Energy Credit were provided to low income families as a lump-sum refund based on filing of their Income Tax Returns.  People often relied on these refunds to assist with large expenditures that they needed to make or to pay off some of their debts.  Under the new method, the tax credit money will be sent out on a monthly basis beginning in July of 2012.  The new credit is called the Ontario Trillium Benefit and should provide funds throughout the year to assist in monthly expenses. 

Tax Time - 2012

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:

1.   The Disability Amount (Disability Tax Credit)

 
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 2012 Taxation Year, the Disability Amount for a person who was 18 years of age or older is $7546.00. If the person with the disability was under age 18 then there is also a Disability Tax Credit Supplement of $4402.00 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

The Caregiver Amount (Caregiver Tax Credit)

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 $4402.00 for the 2012 taxation year. The credit is equal in value to the Disability Tax Credit Supplement which ends at age 18. (the Disability Tax Credit itself continues after age 18). 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 cannot 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”. The Family Caregiver Tax Credit can increase this amount by $2000.00 for qualified people. 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

T2201 Disability Tax Credit Certificate

In order to apply for the Disability Tax Credit, information relating to your disability must be reviewed by Canada Revenue Agency. This information is collected on form T2201, “Disability Tax Credit Certificate” which is submitted to CRA. This form can be obtained on line at http://www.cra-arc.gc.ca/E/pbg/tf/t2201/ . In order to assist you in determining whether or not you may qualify for the DTC, the T2201 form contains a self-assessment questionnaire. This questionnaire may be useful in helping you decide on how to proceed with the application.

It should also be noted that the Disability Tax Credit Certificate is a requirement for participation in the Registered Disability Savings Plan. Therefore, even if a person doesn’t need the Disability Tax Credit (due to income levels) there is significant benefit in qualifying for it.

If a person needs assistance in filling out the form and if they wish to appoint another individual or organization as their Representative for income tax matters, they must complete CRA’s form T1013, “Authorizing or Cancelling a Representative”. This form can be found on the web at http://www.cra-arc.gc.ca/E/pbg/tf/t1013/ The completed form will allow the named representative to have access to your records with CRA and to act on your behalf with respect to issues surrounding your tax matters.

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.

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.

2.   Get Back Taxes That You Should Never Have Paid

It 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 2002 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 hosted 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 15% to 30% of the refund for a task that can be completed by you in about 10 minutes? Some of those firms are not even trained Accountants.

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 several 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 $823 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.

There are two methods that can be employed to re-filing your tax returns for prior years. The first and easiest method is to simply mail a letter to Canada Revenue Agency outlining the details of your claim and asking that they review your file for the past 10 years. This is the easiest method but our understanding is that it takes longer for the refund to arrive.

The alternative method 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/README.html

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 the 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.

Line Numbers and Maximum Claim Amounts:

Once the form has been completed, it should be signed and mailed to your taxation office as indicated on the following page.  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.

Canada Revenue Agency Office Locations: 

3.   Tax Deductions, Credits and Benefits: 

The next section of this article 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. 

Deductions, Credits and Benefits Available to People With Disabilities Themselves:

NB!   For each of the following examples, further details can be found at CRA’s web site found at the following link.  

 http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/ddctns/menu-eng.html

Refundable medical expense supplement:

Deductions, Credits and Benefits Available to Caregivers of a Person With a Disability:

Medical Expenses:

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.  The maximum limit of $10,000 for each dependant has been eliminated for the taxation year 2012

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.

• Altered auditory feedback devices – for treatment of a speck 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, or a person who is severely affected by autism or epilepsy.

• Artificial eye or limb

• Attendant care expenses

• Audible signal - prescription required.

• Baby's breathing monitor 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

• Bone conduction receiver

• Bone marrow transplant

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-
350/330/llwxpns-eng.html

There are a number of expenses that are commonly claimed as medical expenses in error. Non-eligible expenses include the following:

• athletic or fitness club fees;

• birth control devices (non-prescription);

• blood pressure monitors;

• cosmetic surgery - expenses for purely cosmetic procedures including any related services and other expenses such as travel, incurred after March 4, 2010,cannot be claimed as medical expenses. Both surgical and non-surgical procedures purely aimed at enhancing one's appearance are not eligible. These non-eligible expenses include the following:

• liposuction;

• hair replacement procedures;

• botulinum injections;

• teeth whitening.

An expense, including those identified above, may qualify as a medical expense if it is necessary for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.

Refundable Medical Expense Supplement

• This refundable tax credit is available to working individuals with low incomes and high medical expenses.  You may be able to claim this credit if all the following apply:

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.

Disability Related Information Links:

The “Special Needs” Planning Group: www.specialneedsplanning.ca

Ontario Federation for Cerebral Palsy:www.ofcp.ca

Canada Revenue Agency Links:

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-10e.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

AdditionalDisability Deductions & 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