Wednesday, October 22, 2008

Canadians - Are You Aware of the Disability Tax Credit?

Thought I would stay on the topic of tax exemptions again today and also thanks to Mary for her reminder about the following.:

Canadian tax payers who have a qualifying impairment, may be eligible for a non-refundable tax credit recorded on Line 316 of your tax forms. The key word is "qualifying" as you have to send a completed Form T2201, Disability Tax Credit Certificate to the Canada Revenue Agency and await their approval, dependant of course on your particular medical condition. Follow this link and answer a few questions to first determine if you "may" qualify for this exemption before rushing to acquire the form.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/316/lgbl-eng.html

If it appears you might be eligible, then you obtain the form at http://www.cra-arc.gc.ca/E/pbg/tf/t2201/README.html and note there are both printable and fillable available there. There is also a self-assessment on the form, and you or your representative is required to complete Part A, while the remainder is to be completed by a qualified physician. Sometimes your family doctor can complete the form rather than your specialist, as this may speed up the process. The CRA will advise you if additional information is required.

It is very important to note that this particular form does take quite awhile to process by CRA, due an individual's particular health condition so if you think you may qualify, it is best to have it completeed ASAP. Even if you have not received a reply from your original application by tax time, you should submit your tax return before the deadline to avoid penalty and interest charges, and if you receive approval of the T2201 after tax filing, then you just forward a T1-ADJ Adjustment Request Form and your tax return will be adjusted. Here is the link for additional information when requesting an adjustment http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/chngrtrn-eng.html


It is also important to note, that if you do receive approval from CRA for the Disability Tax Credit, this is NOT monies you will receive. It is a Non-Refundable Tax Credit which will help to reduce your taxes owing. You may also be able to transfer all or a portion of this tax credit to your spouse or common-law partner or to another supporting person
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/316/clm-eng.html



Links to both forms are once again listed below

Form T2201, Disability Tax Credit Certificate

T1-ADJ T1 Adjustment Request


Viewers from other countries should check with their government's tax authorities to inquire about similiar tax exemptions for which you may be eligible.

2 comments:

Mary said...

Thank you for posting this. I know my husband receives this credit and it sure helps. I get to claim his unused portion and that also makes the refund cheque look nicer. It is well worth checking out.

Brian Poncelet, CFP said...

If one gets a DTC, one may qualify for the RDSP.

In a nutshell if one is under 49 years old extra grants can be added. Like an RESP.

So $20,000 can be turned into $164,000 over twenty years assuming 4% rate of return