The Government of Canada offers a variety of tax benefits to people with disabilities. These benefits are provided under the assumption that people with disabilities will have unavoidable and additional expenses that would not otherwise be incurred if they did not have this disability. Claiming the disability tax credit can save you approximately $1,500 per year and it can be claimed retroactively up to 10 years.
The disability tax credit is intended to act as a fairness measure for people with disabilities and their families and it is designed to help offset the additional expenses associated with the disability. To qualify for the disability tax credit, the general rule is that there is a severe and prolonged impairment in physical or mental functions, which markedly restricted a person’s ability to perform at least one basic activity of daily living. Also the impairment must have lasted or is expected to last for a period that is at a minimum 12 months. The disability tax credit would be applicable if the person, even with the appropriate therapy, devices and medication, is generally not capable of dressing and/or feeding himself or herself.
The disability tax credit can also be transferred to someone who has claimed that person as a dependent. This measure is allowed because often the person with the disability is not generating enough income to claim the full benefit from the credit.
In addition, if a family gets the disability tax credit, and the Canada child tax benefit, then they become eligible to also receive the child disability benefit, which is an income supplement that they will automatically begin to receive. The amount received is approximately $200 /month per child with a disability and the benefit ends when the child reaches the age of 18.
Another benefit of being approved for the disability tax credit is the registered disability savings plan (RDSP). If you or someone you know is able to contribute money to the RDSP, this will provide you with considerable savings through Canada Disability Savings Grants. Every year, the first $500 you contribute to the RDSP the government will provide you with a $1,500 disability savings grant. Thus, the government will match your contribution three to one, on the first $500 you or someone else contributes to your RDSP if the beneficiary’s family income is below $81,941. If you or someone else contributes an additional $1,000 to your RDSP, the government will match your contribution with a disability savings grant of $2,000. Thus matching your contribution two to one. The end result is that if you or someone else is able to contribute $1,500 to your RDSP, the government will match it with disability savings grant of $3,500. You can do this every year, up to a lifetime benefit of $70,000.
To be eligible for the disability tax credit in Toronto the person and a qualified practitioner must complete the disability tax credit form and send the form to the CRA. More detailed information can also be found on the CRA’s website.
The disability tax credit is a tax break provided by the government to people with disabilities and their families to alleviate some of their financial issues. If you know or are caring for someone who is affected by disabilities and you are not taking advantage of the disability tax credit in Toronto then please contact SRJ Chartered Accountants today to get help in filing this credit on their behalf. We can also help in Digital Media Tax Credit Toronto and encourage you to contact us for further assistance.