Taxes and benefits for individuals with disabilities and their caregivers

Learn about federal tax measures and other benefits available to individuals living with a disability, and their caregivers.

The 2017 Federal Budget consolidated and simplified tax credits available to caregivers into a new Canada Caregiver Credit (CCC). A key change is that to claim the new credit the dependent does not necessarily have to live with the caregiver. This will be particularly helpful for families that care for an adult family member with a developmental disability that lives independently.

To help with navigating the tax system for individuals with a disability and caregivers, I have prepared a primer on taxes and benefits for individuals with disabilities. It provides information on tax measures such as the Disability Tax Credit (DTC) and the Medical Expense Tax Credit. As many benefits are also delivered through Canada’s tax system, the primer also includes information on benefits for persons with disabilities, as well as the Registered Disability Savings Plan (RDSP).

Here are three tips for people to consider when accessing disability-related measures:

  • Many of the tax credits and benefits available to individuals with a disability are linked to the DTC. The first step is to have form T2201 DTC Certificate completed and certified by your doctor or nurse practitioner, and mail it to the Canada Revenue Agency to determine your eligibility.
  • If you have tax payable, you may be able to claim a non-refundable medical expense tax credit for eligible itemizable medical and disability-related expenses. The amount you can claim is the lesser of three per cent of your net income and an indexed dollar amount, for medical expenses paid in any 12-month period in the tax year.
  • The RDSP is a savings vehicle for individuals under 60 years of age who have a long-term disability and are eligible for the DTC. If you have an RDSP you can apply for a Canada Disability Savings Grant or Bond.

The new CCC replaces the existing federal Caregiver Credit, Infirm Dependant Credit and Family Caregiver Tax Credit. The CCC is a non-refundable tax credit, which means it can be used to reduce personal income tax payable. The maximum credit amount is $6,883 for the 2017 taxation year (for spouses or common-law partners and minor children, the amount is $2,150). Based on a credit amount of $6,883, the tax relief available is $1,032 (15 per cent x $6,883). The credit amount is income-tested; therefore, it is reduced starting at income of $16,163 and completely phased-out at income of $23,046.

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Disclaimer

The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

About the Author

Vania Karam, CPA, CGA

Vania is the owner of a small tax business and also works for the federal government. She volunteers with Families Matter Cooperative, helping families caring for adults with a developmental disability. She can be reached at vania@vaniakaram.com or on Twitter @VaniaKaram.