The Disability Tax Credit and ODSP
One misconception many people have about the Disability Tax Credit (DTC) is that it’s of no use to recipients of the Ontario Disability Support Program (ODSP).
One component of the Disability Tax Credit which most people tend focus on is the non-refundable tax credit portion of the Disability Tax Credit. This part of the credit cannot be used directly by an ODSP recipient because it reduces taxes payable and most ODSP recipients do not have any taxes payable. That does not mean that someone on ODSP cannot take advantage of the many other benefits of Disability Tax Credit has to offer.
Even if the Disability Tax Credit cannot be used while on ODSP, it can be transferred to a relative who has provided assistance. The relative could be a common law spouse, sibling, aunt, uncle, son, daughter, parent, grandparent, or grandchild.
The assistance has to be in the form of what the Canada Revenue Agency (CRA) calls the ‘basic necessities of everyday life.’ The CRA has defined this to mean financial assistance towards either food, shelter, or clothing expenses. It’s important to note that assistance has to be provided in only one of the three categories, not all three.
The support provided has to be in the form of financial assistance towards at least one of those three things (food, shelter, clothing). The support must be provided in the years you want to transfer your disability tax credits. The CRA do not often request receipts, although they can. What they will often do is send you a letter requesting further information about the amount of support provided and what month and year it was given. You should provide as many details as you possibly can.
By getting approved for the disability tax credit and transferring your credits to a relative, you could be putting significant savings into your family members pocket, as much as $22,000 in some cases.
If you have don’t have a relative to transfer your disability tax credits (DTC) to, you should still get approved for the disability tax credit because you can likely make use of the Registered Disability Savings Plan (RDSP).
Registered Disability Savings Plan (RDSP) and Disability Savings Bonds
Being approved for the Disability Tax Credit also allows ODSP recipients to take advantage of the Registered Disability Savings Plan (RDSP). If you are on ODSP and approved for the disability tax credit then you should be able to make use of the Disability Savings Bond.
The Disability Savings Bond is a $1,000 bond given to Canadians with disabilities who setup a RDSP and have a low to modest income, which unfortunately includes ODSP recipients. The $1,000 bond will be provided every year, until you reach either the lifetime benefit maximum of $20,000 (20 years) or the age of 50.
It should also be noted that money provided by the Registered Disability Savings Plan (RDSP), Disability Savings Bonds and Disability Savings Grants are exempt from $6,000 ODSP asset limit.
If you are on ODSP it is worth getting approved for the disability tax credit (DTC). If you cannot transfer your non refundable tax credit portion of the disability tax credit you can still most likely take advantage of the registered disability savings plan (RDSP).
To read more about the RDSP, check out What is the RDSP?
It should be noted that the eligibility criteria for the Disability Tax Credit and ODSP are completely different. Eligibility criteria for ODSP focuses primarily on an individual’s ability to work.
In order to qualify for the Disability Tax Credit one must be restricted in one of the activities of daily living outlined by the Canada Revenue Agency (CRA) in the T2201 Disability Tax Credit Certificate. If you’re not sure if you qualify, you can get a Free Disability Tax Credit Assessment.
My father has been on ODSP since 2012, previous to that he was receiving income from WSIB.
In the last 6 years while on ODSP I have provided food and clothing for my father.
How can I/he claim this and how can he start the process? If there is any retroactive payments will it effect his current assistance from ODSP? Will they cut him off?
I am on odsp and just filled out the disability tax credit forms(my doctor filled out his portion of the forms) and sent them. Is the article saying I don’t get any refunds? or do I have to transfer it to someone else.. a relative perhaps. What if I have a relative but don’t want to do it? thx
Hi, my parents have been receiving ODSP for last few years. My sister has also been supporting them by providing financial assistance (shelter, they are living in her condo while paying a small amount of rent). My sister earns over 50K (gross) per year. I was wondering whether we could transfer the tax credit to her or not.
To answer your question, your parents can most likely transfer their disability tax credits to your sister. There are a couple other issues we would need to explore first, such as attendant care expenses, other non-refundable credits claimed, etc which can impact the amount received by claiming the DTC. I’ve sent you an email so we can discuss the specifics of your case in greater detail.
i always tought it would com in the form of a monthy cheque ? am i wrong ? i am 34 have sufferd for 6yrs with crohns disease , so i wold not personaly be allowed this money ? i would havto transfer it to a fam member ?
The disability tax credit (DTC) is a non-refundable tax credit that can be used every year when you or your caregiver files a tax return. You do need to have paid federal income tax, in order claim the credit in any given year. Often, when on ODSP, you will not have paid enough federal income tax in order to claim the non-refundable tax credit portion of the credit. This is why you may want to explore the option of transferring your DTCs to a relative.
Also, remember that getting approved for the DTC isn’t just about receiving the non-refundable tax credits. Getting approved for the DTC offers a number of additional benefits, such as the Registered Disability Savings Plan (RDSP), etc. Read more about the benefits, here
I am on ODSP and am 48 and have NO ONE to transfer this “DTC” too.
Is it worth applying and what is the charge for me for you to do it?
It’s worth it. There are a number of additional benefits you may be entitled to once you get approved for the disability tax credit. The Registered Disability Savings Plan (RDSP) being one of them. To read about some of the benefits of getting approved for the DTC,
This is too complicated and who can explain this with less verbage?
Hi Ugo, thank you for your feedback. I’ve sent you an email explaining a bit more about the disability tax credit. I look forward to hearing from you.
My 23 year old daughter lives with me, but my son in Ontario, who has a taxable income has been sending money to help support her since September 2010. Would we be able to transfer the disability tax credit to him??
Hi Karen, the support would have to be in the form of financial assistance towards either food, shelter or clothing expenses. Your son would have to have been providing financial assistance towards one of those three basic necessities during at least three months of each year you want to transfer your daughters disability credits to him (2010 and 2011 presumably). I’ve sent you an email with further details. I’m looking forward to hearing from you.
I would like to know if I qualify for this tax credit.
Hi Larry, the quickest way to determine if you qualify for the disability tax credit is to complete the quick Disability Tax Credit Assessment . If you have any questions, don’t hesitate to ask.