Canadian Disability Tax Credit
Do you Qualify?
The Canadian government has made tax grants and credits available to persons with disabilities. The government recognizes that persons with disabilities incur costs of living that the average person would not have to incur and, therefore, have made the disability tax grant (and credit) available to disabled people. The disability tax credits are Doctors Tax Planning significant but often go unclaimed for several reasons including:
many people don’t realize that the disability credits exist;
many people have never asked their doctor if they qualify for the credit;
many people assume that because they don’t have a high enough income to pay tax, the disability credit is useless to them; and
many people don’t know that they may be entitled to a huge refund if they are certified as disabled.
This article is intended to help you understand that you may, in fact, not only qualify as disabled for the purposes of the disability tax credit, but you or a family member may also be entitled to huge credits on income taxes.
So, what is the disability tax credit? It is a credit that a person may claim on their taxes if that person is certified as disabled by their doctor. That means that if you or a supporting family member has paid tax, you may be entitled to get a refund. Because the credit can be claimed retroactively for the past ten years, in some cases the refunds can be large.
The legal test to qualify for the disability credit is quite different than other disability tests (such as those required to qualify for CPP or Worker’s Comp). Many doctors aren’t even aware of the difference in the legal test. For example, there are instances where doctors have mistakenly told their patients that they don’t qualify for the disability tax credit because the patient can work. However, the ability to work has nothing to do with the disability tax credit.
There are nine categories under which a person can be certified as disabled for the purpose of the disability tax credit. They are vision, hearing, speaking, walking, elimination, feeding, mental functions necessary for everyday life, dressing, and life-sustaining therapy. If your doctor determines that you are markedly disabled in any one of these areas then that doctor can certify you as disabled for the purposes of the disability tax grant or credit. If you are not quite markedly disabled but still significantly disabled in more than one of the nine categories, then you will may qualify for the disability tax credit. To qualify for the disability credit, the disability must have existed for more than one year or must be expected to last for more than one year.
The certification and tax credit forms must be filled out by a qualified health practitioner (medical doctor, optometrist, audiologist, occupational therapist, physiotherapist, psychologist, and speech language pathologist). Clearly, certain health practitioners can only certify certain types of disabilities.
It is true that many elderly people qualify for the disability tax credit but are not aware they qualify. The elderly are often unable to walk any significant distance and this inability to walk markedly affects their life. The inability to walk could be due to any number of illnesses such as stroke, arthritis, osteoporosis, balance issues, COPD, etc. In addition, elderly people often suffer marked disabilities in mental functions (such as memory), hearing, vision, feeding, dressing, and elimination.
Why would an elderly person (or anyone for that matter) claim the disability tax credit if they do not declare any income on their tax returns? Well, the great thing about the Canada disability tax credit is that it allows supporting family members (or anyone else providing some financial support the disabled person) to be the claimant. Therefore, the supporting person could get a hefty refund.
Many people simply don’t know they would qualify for the tax credit. For instance, many individuals who suffer motor vehicle accidents experience debilitating back pain. That person may still force themselves to work but the pain is often unbearable. The injured person is often unable to walk any significant distance or is unable to dress themselves because they can’t bend over or raise their arms. In addition, this pain may result in depression for the injured person. The combination of these problems may make the injured person certifiable as disabled for the purpose of the disability tax credit.
Canada Revenue has qualified many individuals as disabled for the purposes of the disability tax credit. The types of illnesses and injuries that have qualified or may qualify for the disability tax credit include, but are not limited to: