June 2016 Newsletter

The Income Tax Act (the “Act”) provides many potential benefits, credits and tax breaks to persons with disabilities.

In most but not all cases, the test to qualify for these benefits is based on qualifying for the “Disability Tax Credit”, which requires having a physician complete a Form T2201 (for some disabilities, other health-care providers also qualify), certifying that the person has a “severe and prolonged impairment” that affects the person’s “activities of daily living” in a particular way. The Act and Form T2201 have detailed requirements which must be met to qualify.

Once a person qualifies for the Disability Tax Credit, here are some other benefits that are available:

  • certain disability-related employment benefits (transportation, parking and an attendant) are non-taxable
  • deductions are allowed for a wide range of “disability supports” required to enable the person to work, study or carry on grant-funded research
  • medical expense credit for nursing home care, attendant, group home care or certain therapy
  • 15 % Home Accessibility Tax Credit, for qualifying expenditures
  • $750 Disability Home Purchase Credit
  • higher education credit for part-time student (eliminated after 2016)
  • higher Working Income Tax Benefit
  • eligibility for a Registered Disability Savings Plan
  • more flexible rules with a Registered Education Savings Plan
  • enhanced Home Buyer’s Plan (using RRSP to help fund a home purchase)
  • reduced withholdings if using the Lifelong Learning Plan (using RRSP to help fund education)
  • a “qualified disability trust” for the person can be taxed at low marginal rates not available to other trusts
  • a trust for the person can make a “preferredbeneficiary election” to allocate income to the person without paying it (104(14))

Where the taxpayer’s child has such a disability, the following are some of the available benefits:

  • the Disability Tax Credit can be claimed by the taxpayer for the child
  • higher Child Tax Benefit (called the Canada Child Benefit starting July 2016)
  • higher child-care expense deduction limits
  • higher children’s fitness and arts credits (these are eliminated after 2016)
  • there is a limited exclusion from the “kiddie tax” (tax on split income).

There are various other benefits and credits as well, which have varying requirements, many not as restrictive as qualifying for the Disability Tax Credit.

Last modified on May 14, 2016 12:00 am
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