Pattie Lovett-Reid: The $10,000 reason to explore the Disability Tax Credit
In a perfect world, you would never have to apply for a disability tax credit.
This credit is only available for individuals with a prolonged or severe physical impairment and is subject to CRA approval. There is an effort here on the government’s part to level the playing field by allowing some relief for disability costs.
I've met many who have been challenged their whole life in a variety of ways but have been self-reliant, and would never deduct for a disability for fear of acknowledging weakness. But the credit is there for a reason, and everyone who is eligible for it can and should make use of it. The federal disability tax credit amount varies by province. By not exploring the benefit you could in fact be paying twice — once with the out-of-pocket-expense, and again by missing the credit you are entitled to.
If you or a family member are living within a seniors' residence that offers housekeeping, medication administration, special meal preparation, etc., come tax time, you will receive a letter from the resident administrator outlining how much was paid to rent as well as how much was paid for services provided. This allows you to explore the disability tax credit more thoroughly. A senior can also claim part-time care in their home as long as qualifying conditions are met.
The key to the tax credit is the disability tax certificate. To qualify, an individual must have a mental or physical condition that impairs daily functioning. CRA requires not only a self-assessment but also validation from a medical practitioner. If you can prove the disability has existed for some time you can request a review going back up to 10 years.
Filing a T2201 will allow people to claim fees they are paying for, which are not considered to be discretionary costs. It can make a considerable difference in a senior's lifestyle, as up to $10,000 of deductions are eligible each year. And that can be the deciding factor whether some seniors can continue with the services they require.
For more information and a further breakdown of qualifying expenses you can go to disabilitycreditcanada.com.
This is the final installment of a four-part series on financially navigating the current retirement landscape in Canada.