Child Disability Tax Credit
The Disability Tax Credit (DTC) is a vital financial program provided by the Canadian government to individuals with medical conditions. Its primary goal is to alleviate the financial strain experienced by individuals and their caregivers.
For many individuals living with medical condtions, the associated costs of specialized equipment, medical care, and support services can be substantial. The DTC aims to address these financial burdens by offering tax relief to eligible individuals or their caregivers and family members. Caregivers play a crucial role in supporting individuals with disabilities in their daily lives, and the DTC acknowledges the financial challenges they may face in fulfilling this role.
Getting approved for the disability tax credit can result in a substantial disability tax credit refund which can range anywhere from $1,600 to $27,000 (this is for the base amount), depending on when the medical condition first met the eligibility requirements and the province the person resides in.
The Child Supplement (for those 17 or under)
If the individual getting approved for the disability tax credit is 17 or younger, they will also be eligible for the child supplement amount, for each year they qualify and are 17 or younger. This amount varies depending on the province they reside in. The federal amount for 2023 is $825 and the provincial 2023 amount ranges (for example Ontario: $282, New Brunswick $511, Nova Scotia $303, Alberta $1,216, Saskatchewan $1,093, British Columbia $265). As you can see the Child Supplement Amount can result in an additional $1,100 to $2,000 or more per year. Keep in mind, that this is in addition to the disability tax credit base amounts mentioned above.
The Child Disability Benefit
The Child Disability Benefit (CDB) is an addition to the Canada Child Benefit (CCB) that many parents receive. Once a child is approved for the disability tax credit, their caregiver will be eligible for CDB. The CDB is a tax-free monthly payment. It does not affect other benefits, such as the Canada Child Benefit (CCB) or provincial/territorial assistance programs. The maximum amount you may be eligible to receive for the period of July 2023 to June 2024 is $3,173 for each child that qualifies. The amount you receive is calculated in July of every year based on your previous income tax return filed. The amount you receive will be reduced if your family’s net income exceeds $75,537. Again, these amounts are in addition to the base disability tax credit amount and the child supplement. As you can see the benefits available to parents with a child who qualify for the disability tax credit are quite substantial.
The Registered Disability Savings Plan (RDSP)
The RDSP is a long-term savings plan designed to help individuals with medical conditions and their families save for the future. Contributions to the RDSP are not tax-deductible, but the investment grows tax-free until withdrawn. Additionally, individuals who qualify may be eligible for the Canada Disability Savings Grant and the Canada Disability Savings Bond, which can further boost savings in the RDSP.
Once your child gets approved for the DTC you can set up an RDSP for them at any bank in Canada. The program is quite generous and an amazing tool to enhance your child’s savings for the future. The main benefits are the Disability Grant program and Disability Bond program.
- Canada Disability Savings Grant (CDSG): The CDSG matches contributions made to the RDSP, with the matching rate depending on the beneficiary’s family income and contribution level. On the first $500 contributed, the government will provide $1,500 (3 to 1 contribution). On the next $1,000, the government will provide an additional $2,000 (2 to 1 contribution). That’s a total of $5,000 from a $1,500 contribution, every year. The grant can be received up to a lifetime maximum of $70,000.
- Canada Disability Savings Bond (CDSB): The CDSB is available for individuals with lower family incomes. It provides a fixed amount of money annually into the RDSP, even if no contributions are made. The amount provided is $1,000 per year. The lifetime maximum for the CDSB is $20,000.
Adult Children
For those with adult children still residing at home (18 or over) who qualify for the disability tax credit, you may be eligible for the Canada Caregiver Credit.
What’s next?
Getting your child approved for the disability tax credit is an important step in receiving all of the benefits listed. The application must be completed properly to ensure your child’s chances of approval are as high as possible. If you would like a free review to determine if your child may qualify for the disability tax credit and all the benefits listed above, do not hesitate to reach out to us. You can request a review to get started right away.