The Benefits of the Disability Tax Credit

 

Benefits of the Disability Tax Credit (DTC) in Canada.Getting approved for the Disability Tax Credit (DTC) in Canada can provide several benefits for individuals with disabilities and their caregivers. Here are some of the key benefits:

Tax Savings
Retroactive Claims / Disability Tax Credit Refund
Future Savings
Registered Disability Savings Plan (RDSP)
Disability Bonds and Grants
Canada Caregiver Credit
Canada Workers Benefit – Disability Supplement
The Child Disability Benefit
Home Accessibility Expenses
Additional Supplements
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Tax Savings

The Disability Tax Credit (DTC) is a non-refundable tax credit that can significantly reduce the amount of income tax you owe. By claiming the DTC, you can reduce your taxable income, which may result in lower taxes payable or potentially lead to a tax refund.

Disability Tax Credit Refund /Claiming in Previous Years

If you are eligible for the DTC but did not previously claim it, you may be able to request retroactive claims for up to ten years. This means you could receive tax refunds for past years where you were eligible for the credit but didn’t apply. This can result in a Disability Tax Credit refund of up to $40,000.

Keep in mind that the year of diagnosis can often be different than the year someone’s eligibility for the disability tax credit first began.  Often symptoms can present long before being officially diagnosed with a condition. 

Future Savings

Once approved for the Disability Tax Credit, you will continue to be eligible to receive the disability tax credit every year. The potential savings for the disability tax credit is $2,200 a year, more if you’re eligible for additional credits.  Over ten years that is savings of $22,000. These figures do not include the additional amounts for the Registered Disability Savings Plan (RDSP), Disability Bonds and Grants, or if you’re claiming on behalf of a dependant under the age of 18 or if you qualify for the Canada Caregiver Credit.

The Registered Disability Savings Plan (RDSP)

Registered Disability Savings Plan (RDSP): Qualifying for the DTC is a prerequisite for opening an RDSP, which is a long-term savings plan designed for individuals with medical conditions. The RDSP allows contributions to grow tax-free, and you may also be eligible for government grants and bonds to enhance your savings. You can read more about the RDSP here, Registered Disability Savings Plan (RDSP)

The Canada Disability Savings Bond

The Disability Savings Bond is a government bond provided to low to moderate-income earners for a long-term savings plan. 

  • Interest-free.
  • The Disability Savings Bond is $1,000 a year and $20,000 lifetime limit.
  • Your family income must be $45,916 or less.
  • If your family income is above $30,000 but less than $45,916, you will receive a portion of the $1,000 Disability Bond.

The Canada Disability Savings Grant

The Disability Savings Grant is a matching program to incentivize those who qualify for the DTC and RDSP to set up a long-term savings plan. 

  • When you contribute $500 to an RDSP, the government will contribute $1,500 to your RDSP. You can do this once per year.
  • When you contribute an additional $1,000 to your RDSP, the government will contribute $2,000 to your RDSP.
  • That results in the RDSP accumulating $5,000 every year, from a $1,500 contribution, $3,500 being provided by the government.  The lifetime limit the government of Canada will provide is $70,000.
  • Earnings are interest-free. 

The Canada Caregiver Credit

If you are a caregiver of an individual with disabilities who is eligible for the DTC, you may qualify for the Canada Caregiver Credit. The credit is aimed at helping individuals who provide care for dependents, such as parents, grandparents, siblings, or adult children with disabilities. The CCC consolidates three previous caregiver credits: the Caregiver Credit, the Infirm Dependent Credit, and the Family Caregiver Tax Credit. It provides a non-refundable tax credit that can be claimed by eligible individuals on their income tax return.

Canada Workers Benefit – Disability Supplement

The Canada Workers Benefit (CWB) is a refundable tax credit in Canada that provides support to workers and encourages them to stay in the workforce. It is designed to supplement the income of individuals and families who have employment income and meet certain eligibility criteria.

The Disability Supplement is an additional amount of $737 provided to eligible individuals who qualify for the DTC or who have a dependant who does. The Disability Supplement is intended to assist individuals who face additional financial challenges due to their medical conditions.

The Child Disability Benefit

The Canada Child Disability Benefit (CDB) is a tax-free monthly benefit provided by the Government of Canada, in the amount of $264.41 a month or $3,173 a year. It is designed to assist families who care for children with severe and prolonged disabilities. The CDB is intended to help with the additional costs associated with raising a child with a disability.

The CDB is paid in addition to the Canada Child Benefit (CCB), a tax-free monthly payment made to eligible families to help with the cost of raising children under the age of 18. The amount of the CDB and CCB is based on various factors, including the family’s net income, the number of children in the household, and the child’s eligibility for the disability tax credit.

Home Accessibility Expenses

This program is set up for those who want to make their homes more accessible. The program aims to assist individuals in maintaining independence and improving accessibility within their homes. You can claim an amount for expenses for qualifying renovations to a dwelling. 

If you have an eligible expense that also qualifies as a medical expense, you can claim the expense as a medical expense and a home accessibility expense.

Additional Benefits

Medical Expenses: Having the DTC can potentially increase the amount of eligible medical expenses you can claim on your taxes. This includes expenses related to medical treatments, therapies, assistive devices, home modifications, and other disability-related costs.

Access to Other Programs and Services: Qualifying for the DTC may make you eligible for other government programs and services. These could include disability support programs, grants, and subsidies designed to assist individuals with disabilities and their families.

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Request a Free Eligibility Assessment for the Disability Tax Credit and more