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 email@example.com .
Once again this year, Canada Revenue Agency has announced a few changes that may affect the Income Taxes of people with disabilities and their families. They are:
Once again, it is time for us to prepare our annual income tax returns. Canadian Tax Returns must be filed by April 30 of the year following the tax year in question in order to avoid late filing penalties. Penalties for not filing your returns amount to 5% of any taxes owing plus 1% per full month that the return is outstanding up to 12 months. As you can see, filing on time is important. Even if you don’t have an income to report, it is still wise to file a return since the GST/HST credit may be available to you even when no income has been earned.
The Income Tax Act allows us to take advantage of a variety of different credits and deductions that can minimize the amount of tax that we have to pay. Families with members with disabilities have a number of benefits that can be taken advantage of if they are aware of their existence.
The purpose of this guide is three fold:
a) The Disability Amount (Disability Tax Credit)
Perhaps one of the most valuable tax credit available to people with disabilities and their families 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. Even if the person with the disability is not living with you, you may still be able to claim the DTC if the person depends on you for regular and consistent support for one or more of the basic necessities of life such as food, shelter or clothing. You may be asked to provide receipts or other documents to support this claim.
In the 2017 Taxation Year, the Disability Amount for a person who was 18 years of age or older is $8,113.00. If the person with the disability was under age 18 then there is also a Disability Tax Credit Supplement of $4,733.00 that is added to the disability amount. Both of these amounts can be transferred to a supporting family member if necessary. It should be noted that the supplement can be reduced in 2017 if someone claimed Child Care Expenses or Attendant Care expenses as a Medical Expense. Details of the Disability Amount can be found on Canada Revenue Agency’s web site by following the link at:
b) The Canada Caregiver Credit (CCC)
The Canada Caregiver Credit is designed to provide tax relief to caregivers of dependants who have an infirmity and who are dependant on the caregiver for support because of that infirmity. It is new for the tax year 2017 and it replaces the former Caregiver Credit, Infirm Dependant Credit and the Family Caregiver Credit all of which ended in the 2016 tax year.
The amount that can be claimed depends on the circumstances:
It should be noted that the dependant person no longer has to live with the caregiver but must be dependant upon the caregiver. Also, the Canada Caregiver Credit will be reduced dollar for dollar by the amount of the dependant’s Net Income above $16,163.00.
c) T2201 Disability Tax Credit Certificate
In order to qualify for the Disability Tax Credit, information relating to the disability must be reviewed by Canada Revenue Agency. This information is collected on form T2201, “Disability Tax Credit Certificate” which is submitted to CRA. A new form has been released by CRA which is only 6 pages in length instead of the old forms’ 12 pages. The new form can be obtained on line at http://www.cra-arc.gc.ca/E/pbg/tf/t2201/
An interesting feature of the new T2201 form is found in Section 3. When you are applying for the DTC for yourself or for your dependent child with a disability under age 18, you can tick the box on the form and have CRA adjust your tax returns for prior years. There is no longer any need to send a letter to CRA to have this done. However, in other circumstances you will still have to send the T1-ADJ or a letter requesting an adjustment of prior years’ returns. Generally, we recommend that a letter be used since this simplifies the process and so the procedure with the T1-ADJ is not being shared in this year’s Tax Tips document. Those circumstances in which a letter to CRA is still required are:
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:
The key to a successful application for the DTC is to fully describe the effect that the condition has on the person with the disability. To merely name the condition is not sufficient. You must be very specific as to how the condition affects the person. Your doctor will complete the form with his or her impression of the impact the disability has 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. 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 of taxes.
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.
Measures Requiring the Disability Tax Credit:
It should also be noted that approval for the Disability Tax Credit has a significant impact on several tax measures. It is a pre-requisite for the following:
Therefore, even if a person cannot use the Disability Tax Credit (due to income levels) there is still significant benefit in obtaining it.
It is quite possible that you may not be keeping as much of your hard earned money as you are entitled to keep. Many 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 supporting family members 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 2007 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, $18,000 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.
Once the DTC has been approved by Canada Revenue Agency, a number of things can happen. If you were able to take advantage of the new T2201 form section where you can tick the box in Section 3, CRA will re-evaluate your returns from prior years and if appropriate, they will issue a refund to you. If you are not able to take advantage of Section 3 then you can commence the back filing process.
The back-filing process is very simple; so simple in fact that virtually anyone can do it. 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.
The alternative method is to acquire the Canada Revenue Agency T1 Adjustment Request form. Since this is a more difficult method, we suggest that if you wish to re-file in this manner, you arrange for an Accountant to do it for you.
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 35% of the refund for a task that can be completed by you in about 10 minutes? The Federal Government has some serious concerns about the amount that these firms are charging and so has launched an enquiry process with a view toward limiting the amount they are allowed to charge. Some of those firms are not even represented by trained Accountants.
The choice is yours. If you are not comfortable with submitting a letter to Canada Revenue
Agency asking for a review of previous years’ tax returns, 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 money and are willing to do a little work on your own, then simply mail a letter to Canada Revenue Agency outlining the details of you claim and asking them to review your returns. CRA will do the work for you.
As a general rule of thumb, if an ODSP recipient lives with his or her family and receives support from them, the 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. In addition, if the family member provides some or all of the person’s food, shelter or clothing on a regular and consistent basis the credit may be able to be transferred even if the person does not live with the family member.
The next section of this guide relates to the various deductions, credits and benefits that are available to people with disabilities and their caregivers. 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.
This is a major section of potential deductions that may be available to people with disabilities themselves or to caregivers of people with disabilities. You can claim eligible medical expenses paid in any 12-month period ending in 2017 and not claimed by you or anyone else in 2016. 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 is done 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. There is no maximum amount that can be claimed in any given year.
You do not have to send any supporting documents relating to the Medical Expense claims to Canada Revenue Agency when you submit your return. This applies to income tax returns submitted electronically or those submitted on paper. You still need to keep them for at least 6 years in case CRA asks to see them at a later date. Those receipts must show the name of the company or individual to whom the expense was paid. Receipts for attendant care or therapy paid to an individual should also show the individual’s social insurance number.
If you are submitting a claim for medical expenses, speak with your Pharmacy and ask for a print out of your prescriptions for 2017. All Pharmacists in Ontario and some other provinces are required to provide you with a listing free of charge. This can be useful in preparing your returns.
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.
In addition to the cost of the animal, the care and maintenance (including food and veterinarian care) are eligible expenses
Reasonable travel expenses for the person to attend a school, institution, or other place that trains him or her in handling such an animal (including reasonable board and lodging for full-time attendance at the school) are eligible expenses. The training of such animals has to be one of the main purposes of the person or organization that provides the animal.
If you think that any of these items may apply to your particular situation, please follow the following link for more details.
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.
o Alberta Health Care Insurance Plan
o Manitoba Health Plan
o Medical Services Plan of British Columbia
o New Brunswick Medicare Division of Provincial Department of Health
o Newfoundland Medical Care Plan
o Northwest Territories Health Insurance Services Agency of Territorial Government
o Nova Scotia Medical Services Insurance
o Ontario Health Insurance Plan
o Prince Edward Island Health Services Payment Plan
o Quebec Health Insurance Board (including payments made to the Health Services Fund)
o Saskatchewan Medical Care Insurance Plan
o Yukon Territorial Insurance Commission; or
In conclusion, we trust that this guide has been useful to you. Again, remember that we are not providing Accounting or Tax Planning or preparation advice. 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:
Canada Caregiver Credit:
T2201 Disability Tax Credit Certificate:
Prior Years Re-File Form:
Allowable Medical Expense Listing:
Additional Disability Deductions & Credits:
Working Income Tax Benefit:;
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