Registered Disability Savings Plan
There are different tax measures that assist people with disability. These tax measures offer tax relief to individuals eligible for the DisabilityTax Credit or their families.
Below are just a few tax measures that assist people with disabilities and their caregivers include:
The Disability Tax Credit
This credit allows partial compensation to disabled taxpayers for the extra expenses incurred as a result of their disability.
In order for a person to qualify for this credit form T2201 (Disability Tax Credit Certificate) must be properly completed by a licensed doctor. The T2201 form enables the government to determine if the applicant meets the definition of "disabled". The requirements are met in cases where a taxpayer has a severe and prolonged mental and physical impairment, lasting for at least 12 consecutive months, which makes it very difficult to carry out the basic daily activities such as feed and dress oneself, hear, see, bladder and bowel functions and walk.
The completed form must be sent to:
The Disability Tax Credit Supplement for Children
The Childrens Fitness tax Credit allowed parents to claim up to $500 that relates to the cost of registering the child in a prescribed program of physical activity. The child must be under 16 years of age or under 18 years of age if he/she qualifies for the disability amount , at the beginning of the year when the fitness expense was paid.
The Medical Expenses Tax Credit
The credit is available to qualify medical expenses in excess of the 3% of an individual's net income. Taxpayer may claim may claim medical expenses incurred by them, their spouse, also in certain circumstances, medical expenses incurred by specified dependent relatives.
The Caregiver Credit
This credit provides tax relief to individuals that provide in-home care for a parent or grandparent 65 years or older, or for an infirm dependent relative 18 years or over, sister, brother, niece, nephew aunt or uncle provided they reside with the tax payer.The credit is reduced if the dependent has an income.
The Infirm Dependent Credit
This credit may be claimed by taxpayers supporting a child or a grandchild 18 years or older, parent , grandparent, sister, brother, aunt, uncle, niece, or nephew who is dependent due to a mental or physical infirmity. The credit is reduced if the dependent has an income.
The Disability Support Deduction
This support deduction provides tax relief for the cost of disability supports incurred for the purposes of employment or education. Example of these would be sign language interpretations services or talking textbooks. Only the person with the impairment can claim the expenses for the disability support deduction.
The Refundable Medical Expense Supplement
This supplement reduces the work disincentives associated with the loss of benefits and services when a person with high medical , disability-related expenses moves from social assistance into the labour force. To qualify for this supplement certain rules apply.
Tax planning is always important especially under the Canadian income tax system that incorporates a progressive rate schedules with rules that allow or disallow certain transactions and courses of action.
Federal and provincial laws and policies are constantly changing, and these tend to have a direct effect on specific tax strategies, and for these reasons it is best to consider professional advice. We study the new tax changes made by Revenue Canada so that our clients can rest assured that their tax return is prepared accurately.
At EP accounting you will always receive up to date tax information and trends for all your tax planning needs.