Getting approved for the Disability Tax Credit (DTC) in Canada can provide several benefits for those who qualify. Here are some of the key benefits:
Retroactive Claims / Disability Tax Credit Refund
Registered Disability Savings Plan (RDSP)
Disability Bonds and Grants
Canada Caregiver Credit
The Child Disability Benefit
Canada Workers Benefit – Disability Supplement
Home Accessibility Expenses
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The Disability Tax Credit (DTC) is a non-refundable tax credit that can significantly reduce the amount of income tax paid. By claiming the DTC, you can reduce your taxable income and potentially result in a tax refund. This amount is usually over $2,200 per year and more depending on your circumstances.
If you are eligible for the DTC, you may be able to request retroactive disability tax credits for up to ten years. This means you could receive a disability tax refund for past years where you were eligible for the credit but didn’t apply and claim the credits. This can result in a substantial Disability Tax Credit refund of up to $50,000.
Keep in mind that the year of diagnosis can often be different than the year eligibility for the disability tax credit first began. Often time symptoms are present long before a diagnosis have been made.
Once approved for the Disability Tax Credit, you will continue to be eligible to receive the disability tax credit. The potential savings for the disability tax credit is $2,200 a year, more if you’re eligible for additional supplements or credits. Over ten years that is savings of $22,000 and often much more. That figure does not include the amounts for the Registered Disability Savings Plan (RDSP), Disability Bonds ($1,000/year), Disability Grants ($3,500/year), or Child Disability Benefits (over $3,500 a year), Canada Caregiver Credit ($1,129 or $2,350/year) or supplement to the Canada Workers Benefit ($737/year). All of the additional amounts depend on your specific circumstances, which we will fully explore with you.
Registered Disability Savings Plan (RDSP): Getting approved for the Disability Tax Credit is a prerequisite for opening an RDSP, which is a long-term savings plan. The RDSP allows contributions to grow tax-free, and you may also be eligible for government grants and bonds to enhance your savings. Once you get approved you do not want to overlook this program.
The Disability Savings Bond is a government bond provided to low to moderate-income earners for a long-term savings plan. Key features include:
- Interest is tax-free.
- The Disability Savings Bond is $1,000 a year with a $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.
- 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 will provide is $70,000.
- Earnings are tax-free.
If you are a caregiver of an individual who is eligible for the Disability Tax Credit, you may qualify for the Canada Caregiver Credit (CCC). The credit is aimed at helping individuals who provide care for dependents, such as parents, grandparents, siblings, or children with medical conditions. 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, which works out to $1,129 a year if it is for a spouse/common-law partner/adult dependent or $2,350 a year if it is for a child under 18.
The Child Disability Benefit (CDB) is a tax-free monthly benefit provided by the Government of Canada, of $264.41 a month/$3,173 a year. It is designed to assist families who care for children who qualify for the Disability Tax Credit. The CDB is intended to help with the additional costs associated with raising a child with a medical condition.
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.
The Canada Workers Benefit (CWB) is a refundable tax credit that provides support to encourage individuals 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 to the Canada Workers Benefits is $737 a year and is provided to individuals who qualify for the DTC or their caregiver. The Disability Supplement is intended to assist individuals who face additional financial challenges due to their medical conditions and to encourage them to stay in the workforce.
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, to make a home more accessible.
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.
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.
As you can see the Disability Tax Credit is a gatekeeper to many benefits. Qualifying is just one step of the process to determine how much you will receive. We are dedicated to helping you navigate the world of disability tax credits and access the benefits you deserve. Our experienced team specializes in assisting Canadians like you in maximizing your disability tax credit and related benefits, ensuring you receive the financial support you are entitled to.
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