Disability Tax Credit

Disability Tax Credit

Often clients will say, “Hey, I don’t have any disabilities, I am going to move into a Retirement home and enjoy my retirement life there.  I will be able to claim all the expenses in that facility as medical expenses on my tax return anyway.”

Actually… It’s not that simple and it doesn’t work like that – but it could if you are eligible for the DTC (Disability Tax Credit).

Can I Claim Retirement Home Expenses on my Tax Return?

You cannot claim retirement home expenses on your tax return if you are not eligible for the DTC. If you are eligible then you can claim.

When can you apply for DTC?  

You can apply for the Disability Tax Credit when you are as young as 18 years old. However, don’t be shy to apply for the Disability Tax Credit (DTC) when you are in your 70’s or 80’s or older.

DTC is based on a form that your family doctor fills in, here is the link to the form https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2201/t2201-18e.pdf

Your family doctor will determine if you are impaired and/or dependant on somebody else.

Measurements of your disability for the Disability Tax Credit is usually based on disabilities such as dementia and other mental functions lost, loss of hearing, speech, or walking, loss of abilities to feed oneself, including shopping for oneself, loss of ability for dressing oneself, use of washroom functions, and more. Contact your family doctor today to see if you can qualify.

How can Disability Tax Credit Help you?

The form will be sent to the CRA and then they will decide if you are eligible. If it’s approved, the time frame for DTC credit can go back up to 10 years. On your tax return, that could be $8k of Disability Tax Credits and/or an average of $25k eligible attendant care expense difference.

Here is a story:

Clients, Mr. and Mrs. Jones requested a review for their tax return.  The tax return is good, with no big issues, they are retirees with a good pension from Mr. Jones’ former employer. After a pension split, Mr. Jones has tax owing while Mrs. Jones gets a refund. I mentioned the Disability Tax Credit to them (because sometimes you can just tell physically when you meet with your client that they could qualify), and their reaction was “I don’t have any disabilities, I am living in my own house with my wife. I only have heart disease; I am not disabled.”  Sometimes people just don’t want that label, but it’s just in some government documents and can help you and your income quite a bit. Mr. and Mrs. Jones applied for the DTC, got approved from Canada Revenue Agency, and had $11,000 tax refund which covers the 10 years since 2009.

How will Disability Tax Credit impact your taxes?

If you are eligible for Disability Tax Credit on your taxes you will claim either the DTC + senior home expenses or senior home expenses only. We want to make sure you’re within the threshold to maximize your tax benefits. Our accounting department can help you determine which is best for your individual situation because everyone’s taxes are different.

If you have any questions about the tax impact, or how to apply it, contact us today.