The Income Tax 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 that must be met to qualify.
Once a person qualifies for the Disability Tax Credit (which is worth $1,286 as a federal credit in 2020, plus a provincial credit), here are some other benefits that are available:
- $600 non-taxable federal government payment to help with the effects of COVID-19, to be paid this fall
- 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 Canada Workers Benefit (formerly called the Working Income Tax Benefit)
- eligibility for a Registered Disability Savings Plan, along with the government-provided Canada Disability Savings Grant and Canada Disability Savings Bond
- enhanced entitlement to a Registered Education Savings Plan
- enhanced Home Buyer’s Plan (using RRSP to help fund a home purchase)
- limited exclusions from the Tax on Split Income (which taxes family members at a high rate, typically where income-splitting is done through a corporation)
- 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 “preferred-beneficiary election” to allocate income to the person for tax purposes without paying it out
- refund of 1.5¢ per litre of gasoline purchased, under the Federal Excise Gasoline Tax Refund Program (CRA Form XE8), for anyone with “an impairment of mobility to such a degree that using public transportation would be hazardous”.
Where the taxpayer’s child has such a disability, the following are some of the available benefits, in additional to those above where they can apply to a child (e.g., medical expenses):
- the Disability Tax Credit can be claimed by the taxpayer for the child
- higher Canada Child Benefit payments (formerly called the Child Tax Benefit)
- higher child-care expense deduction limits