Rights Tax law

Tax credits for Canadians with disabilities: Know the options

If you are a Canadian with a disability, you may be unaware that there are several programs and services available to you and your caregivers. These programs are designed to help Canadians with disabilities participate fully in society and to generate an income stream and retirement savings plan. It’s a good idea to get informed about these deductions and credits, as they can save you significantly when it comes time to do your taxes.

tax credits

There are many tax credits and deductions available to persons with disabilities. Of these, the most important is the Disability Tax Credit. This is a non-refundable tax credit that can be used by Canadian taxpayers to reduce the amount of income tax payable.

To be eligible to claim the tax credit, the taxpayer must have his or her doctor or health care provider fill out and sign the Disability Tax Credit certificate. This document states that the applicant has a severe physical or mental impairment or disability that significantly impacts the basic activities of daily living. The criteria further state that the disability must have lasted or be expected to last for at least a period of 12 consecutive months. A wide variety of conditions fall under the eligibility criteria, including many conditions that are commonly diagnosed in childhood, such as autism, anxiety disorders, and learning disabilities as well as Spina Bifida and other birth defects. Conditions such as diabetes, epilepsy and bipolar disorder may also qualify an applicant for this tax credit. Following the submission of that document to the Canada Revenue Agency, the CRA will either approve or deny the application.

The Disability Tax Credit can be used retroactively. When you apply, your tax returns can be assessed as far back as 10 years and eligibility payments can be made as far back as then.

Deductions for persons with disabilities
There are other tax deductions that can help Canadians with disabilities as well. The disability supports deduction helps Canadians to deduct expenses associated with the cost of going to work, school or conducting research. Similarly, the Working Income Tax Benefit disability supplement is aimed at encouraging disabled Canadians to seek and keep employment.

In terms of tax credits for homeowners with disabilities, the government offers a Home Buyer’s Tax Credit that allows the homeowner to claim a certain amount of deductions for a home purchased to meet the needs of a person with a disability.

Deductions for caregivers
If you are the caregiver of an eligible dependant with a disability, the Caregiver tax credit will help to offset the expenses associated with the caregiver role. In addition to this, you or anyone else can contribute to a Registered Disability Savings Plan (or, RDSP) in your dependant’s name. Although these contributions are not themselves tax deductible, the government with partially match the contributions by way of Canada Disability Savings Grants and Bonds.