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The Disability Tax Credit and Associated Benefits

October 3, 2019

The Disability Tax Credit (DTC) is offered to Canadians with physical and mental disabilities, as well as to caregivers with dependants who have disabilities. To qualify for the DTC, Canadians seeking eligibility must fill in a form, the Disability Tax Credit Certificate; parts of the form must be filled out by the applicant’s physician. Should you or your dependant be deemed eligible, there are a number of benefits that become available to you.

The Disability Tax Credit

The most essential component of the DTC is the tax credit itself. This is a non-refundable tax credit; that means that while it can reduce your amount owing, you won’t be paid the excess if your DTC total is greater than your taxes owing. The DTC total claimable for the year of 2018 was $8235; for claimants under the age of 18, an additional $4804 can be claimed. As with all things tax related, it’s not quite so simple; the additional amount of $4804 is reduced by $2814, though payments made for child or attendant care services can be claimed against the $2814. This means that the maximum claimable for a child under 18 in the DTC schema is $13039, though you may only be able to claim $10225.

Caregivers for dependants claiming DTC may be eligible to claim a portion of their dependant’s DTC; this occurs if the dependant does not need to claim all or part of their DTC. To see if you qualify, read Line 318; this workbook can be used to calculate the DTC amount you or your dependants are eligible to claim.

It’s worth noting that the DTC is a non-refundable tax credit; that means that while it can be used to reduce taxes owed, amounts in excess of the taxes you owe are not paid out.

The Child Disability Benefit

The Child Disability Benefit (CDB) is similar to the Canada Child Benefit (CCB). You can qualify to receive the benefit if your child qualifies for the DTC, and you qualify for the CCB. This benefit starts July 1st of each year, and ends June 30th of each year; it’s adjusted periodically. From July 2018 to June 2019, the maximum a family could receive per child was $2771 each year, divided into payments of $230.91 per month.

There’s quite a bit of math that goes into determining the amounts payable for both the CCB and the CDB; it’s adjusted based on your adjusted family net income (ADFI), which is your family’s net income, minus your family’s universal child care benefit and registered disability savings program (which we’ll discuss next) income. When your ADFI is over a certain amount, the CDB you can receive is reduced. You can take a look at worksheets for CCB/CDB calculation if you want to look into the nitty gritty of the process. This is not an undertaking you have to take on by yourself, a good CPA is very useful in this situation.

The CDB is paid with your CCB; the benefit is non-taxable (yay!). It’s worth noting that both the CCB and the CDB are different that the universal child care benefit. It’s also worth noting that the number of children you have affects the amount of CDB you’ll receive. Finally, the CDB, like the CCB is paid to the primary caregiver. When a two parent consists of a male and a female parent, the female parent is automatically considered the primary caregiver; if the male parent is the primary caregiver, the female parent must attach a note confirming the CDB should be paid to the male parent.

Registered Disability Savings Plan

Having a disability can reduce your potential earnings; to mitigate this, Canada has introduced Registered Disability Savings Plans (RDSPs). When money is in an RDSP, it isn’t taxed. Even better, the government actually contributes to an individual’s RDSP, matching up to 300% of contributions (to a limit of $3500 per year and $70000 in your lifetime). They’ll also contribute a Bond, up to $1000 per year. To learn more, read about Canada Disability Saving Grants and Bonds.

You need to be eligible for the DTC to be the beneficiary of an RDSP. There are a number of different people and organizations who can open an RDSP for an individual. For children under the age of majority, their parents, guardians, or other individuals or organizations who are legally authorized to act on their behalf can open RDSPs for them.

For individuals who have reached the age of majority, there are a few different possible scenarios. Those who are deemed “contractually competent”, in other words, able to enter a contract with a full understanding of the implications, and of their own free will, can open an RDSP themselves. They might already have an RDSP under their name, opened when they were minors; they can become joint holders of this RDSP.

The spouse, common-law partner, or parents of an individual who is over the age of majority, but is not contractually competent, can open an RDSP for that individual. Should that individual be considered contractually competent at a later point, they become the holder of the RDSP.

Money in an RDSP is not taxed, but withdrawals from the RDSP can be. Payments can be made into an RDSP until the end of the year the beneficiary turns 59. For more information on RDSPs, see the Government of Canada’s RDSP page.

The Working Income Tax Benefit

Low income earners may be eligible for the Working Income Tax Benefit (WITB). Those who also qualify for the DTC will receive a disability supplement. This benefit is particularly complex to calculate, and depends on your income, your marital status, and whether or not one or both of you are eligible for the DTC. As such, it’s difficult to give a precise estimate of how much you can be eligible for; if you’re curious, here’s the worksheet for the WITB in Manitoba.

Provincial Benefits

Those who qualify for the Federal DTC may also qualify for benefits in their province. Most of our readers are likely to be Manitoban; as such, here’s a link to the Manitoba Disability Amounts (for Self) and the Disability Amount Transferred From Dependant; you can use this worksheet  to calculate. Other provinces have different rules and regulations, so if you’re outside of Manitoba, use this page to find your potential benefits.

Disability Benefits Not Based on DTC

There are a number of disability benefits you might be able to claim if you’re receiving DTC, but that aren’t based on DTC; in other words, receiving the DTC does not automatically mean you will qualify, but is a good indicator that you should look into the benefits.

The Disability Supports Deduction is a list of expenses that you can claim if you needed them to go to work, study, or do research that you received a grant for. There are also a number of eligible medical expenses you might be able to claim, depending on the nature of your disability. This might include nursing home services, home care services, braille services (including note-taking devices), tutoring services, and more.

Finally, the Canada Pension Plan (CPP) has a number of benefits for which DTC recipients may qualify; note, however, that CPP has more stringent criteria for qualifying for disability benefits than the criteria for qualifying for the DTC. In other words, qualifying for the DTC does not guarantee you’ll qualify for CPP disability benefits; it may, however, be worth applying. Given the different qualifications, we won’t get into detail here, but you can read more on the Disability Benefits page.

As you can see, the rules and regulations surrounding the DTC and it’s associated benefits are pretty nuanced and complex. You might want more information or guidance, in order to make sure you’re maximizing the benefits you or your dependent are receiving; don’t hesitate to get in touch with us. We can help.

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Rhonda Spivak, Editor

Publisher: Spivak's Jewish Review Ltd.

Opinions expressed in letters to the editor or articles by contributing writers are not necessarily endorsed by Winnipeg Jewish Review.