You’re an adult, you’re tripping along, living life, working hard, and then the universe sends you splat, and suddenly you’re seeing doctors, suffering, in pain, not working, and watching your bank account slide into the red. While you may be receiving good help for what ails you, you’re probably not getting good help for what ails your bank account. I’ve learnt recently how few know about Canada’s disability tax credit; worse, I’ve also learnt how community care workers don’t know the difference between net and gross income (!) or between taxes and government support programs. With such gross ignorance in the professional population, how then can people with disabilities in Canada know what’s available to them, especially those with brain injuries? Well, for tax information, this blog post will help. I hope. I won’t be covering government support programs, which have their own separate application programs and serve a totally different function. Tax credits and benefits are strictly to help income-earners reduce their tax load. Government support programs provide direct financial support for those who can hardly work, if at all.
To begin: after, or while, you’re in the process of applying for CPP Disability and/or your province’s disability support program (in Ontario it is ODSP or Ontario Disability Support Program), it’s also a good time to look at tax relief.
The first and biggest one is Canada’s Disability Tax Credit Certificate or Form T2201. Basically, if you’re disabled, working or earning an income above the basic personal exemption, this will help you reduce your tax load. Remember CPP disability is taxable so you may not be working or working minimally but will still have to pay taxes. (This is so unfair, I think. But the government gives with one hand and takes back half with the other as they did to me with my first CPP cheque. The rest not so bad. Still…) But if you, the disabled person earns nothing or so little the tax credit doesn’t apply, then your spouse or common law partner or the person supporting you financially — Canada calls that person the “support person” — can use the disability tax credit to get relief from their taxes. And as a third option, you can both use it if you’re working enough to need some of the credit but not all of it. What you don’t use, your support person can.
You fill out the basic information, and you take the form to your GP or primary specialist who knows your disability best. They then fill it out, after which you mail it off. Do NOT mail it in the same envelope as for your tax return. You should hear back in 12 to 16 weeks. I’ll also say for those with brain injuries, this form will seem daunting, overwhelming, and not doable. Forget about that. Just focus on your name and address portion and let your most trusted doctor take care of the rest.
As a person with a disability, you’ll have medical and disability expenses. I learnt recently that there are medical expenses and then there are disability expenses, both of which you can claim. You can only claim medical expenses when they reach at least 3% of your net income. However, there’s a caveat. Not all medical expenses are eligible. Those vitamins your doctor insists you take and that do make you feel better are not eligible but prescribed medications not reimbursed by an insurance plan or provincial drug plan are. It is important to keep all your receipts (easier said than done I know when you can’t remember where you filed the darn things) not only for your tax return but also in case you’re audited a few years down the road. The same holds true for all expenses you claim.
In addition to medical expenses, you can claim disability supports that you need in order to work, study, or do research for which you have received a grant. There is quite a range of eligible disability supports from job coaching and note taking (something I definitely would need if I ever got to the point where I could study again) to voice recognition software. So it’s worth checking out.
There are many more credits and deductions that you may be able to claim. The government’s website has a full list and explanation of each one. I suggest you peruse it as it’s pretty extensive covering everything from spouses to caregivers to children to tuition.
Since people with disabilities are usually the poorest Canadians, you will probably be eligible for GST and/or HST credits. These are tax-free quarterly amounts intended to reimburse you for goods and services taxes paid, and they are paid directly into your bank account — whenever possible have the government deposit funds right into your account rather than mail you a cheque. First off, you won’t have to remember to deposit it. Secondly, you have limited energy or time, so don’t spend it on stupid little chores like depositing cheques when computers can do that for you more quickly and safely.
Also there are a host of things that are GST/HST exempt. Check out this list to ensure you’re not paying unnecessary sales tax.
If you are under 49 years old* and receive the Disability Tax Credit, there is a savings account available for you: the Registered Disability Savings Plan (RDSP). (Some in the media say this is for parents to set up for their children with disabilities. It is but it’s also for adults with disabilities to set up for themselves. Children will benefit more only because they and parents can contribute for more years.) Basically, you open an RDSP at a bank and put in up to $1,500 per year up until you turn 49. And the government will match your funds and double or triple them; plus if you cannot contribute anything or have very low income, the government will deposit $1,000 per year. This is strictly a savings vehicle; there are no tax advantages. Anyone can contribute to your RDSP. However, you cannot withdraw funds — yours or the government’s — for 10 years minimum after you deposit else you will lose the government’s matching amounts. The idea is to save for your future, and the rules are in place to ensure you don’t take the funds out prematurely.
Not all banks are participating — it’s most disappointing to see that that great savings bank ING does not offer the RDSP — and of those few who do, only one seems to know what they’re doing. I suggest calling around before locking in with one bank. And, as well, because most banks offer a terrible savings rate, I recommend putting in just the $1,500 in order to receive the maximum matching grants and bonds, and then if you have additional funds put them in a Tax-Free Savings Account, which is not only more advantageous tax-wise, but will also give you greater choice in decent interest rates. And if you have more than that, put them in a safe savings vehicle that’s insured under the bank act. IMHO, these are not funds to put in stocks or mutual funds, but in vehicles that only go up, even if slowly. But you may disagree!
(*You will only receive matching government grants and bonds until age 49, but you can contribute until age 59. There are maximum contribution limits too.)
If your income is low, you have a disability, and your tax situation is simple, Canada will help you file your taxes through a community volunteer program. Just call 1-800-959-8281.
And finally Canada has the Working Income Tax Benefit for low income earners. There is also a disability supplement to this benefit. If you are eligible, then you may be able to apply for advance payments for the next tax year. In other words if you receive the benefit for the tax year you filed for it, you may receive advance payments for the following tax year. The government has a handy calculator (or try the online one) so that you can see if you qualify and if so, how much of a benefit you will receive. Very low income earners won’t be able to take advantage of this benefit, from what I understand.
The government has been slowly adding tax credits and benefits to help those with a disability but it has a long way to go. There is one particular glaring hole: no national pharmacare, vision care, and dental care program. Being able to claim medical expenses doesn’t help pay for medications, eyeglasses, and the dentist if your income is too low to take advantage of it. If you’d like to see more help, I recommend getting in touch with your MP. If you know of anything not covered here, please leave a comment and a link to where to find the tax credit or benefit. And remember whatever tax credits you receive federally, you also receive provincially because of the integrated income (and in some provinces, goods and services) tax system.
[And for Toronto homeowners with disabilities or low income, there are the property tax relief programs, the water rate relief program, the side door garbage pick-up program, and the snow shovelling program. You’ll either have to call 311 or your Councillor to get help with the latter two. Unfortunately, there’s no public transit program like Calgary has for those who find the TTC unaffordable.]