Things you may not know about the disability tax credit

If you or someone in your family lives with a disability, you are already aware that financial hardship often goes hand in hand with having a disability. In many cases, it’s difficult or impossible to work full time, depending on the nature of the disability. What’s even more difficult is that there are also often additional costs for care and accommodation for those with a disability. It’s not surprising that debt accumulates as a result.

disability tax credit

“When you have a disability and are carrying debt, it can be extremely difficult to make ends meet. You can lessen the financial burden of living with a disability by taking full advantage of tax credits that are available to you, which can help increase the cash flow into your household,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.

The Disability Tax Credit

The disability tax credit (DTC) is a non-refundable tax credit intended to help reduce income tax for those who have a disability (or their families). You need to have medical proof that you have a prolonged and severe disability that extends over a 12 month period or longer. The application process for this tax credit can be lengthy, which can be daunting for some people.

“It’s worthwhile to follow the process to get the maximum amount available to you. Qualifying for the DTC can also help open doors to other benefits that can be helpful to your household budget,” says Schwartz.

If you get approved for the DTC, it is usually retroactive for up to 10 years and will stay in place for a number of years.

Here are some other tax benefits that you can take advantage of in addition to the disability tax credit.

Registered Disability Savings Plan

Once you get approved for the DTC, you also qualify for the Registered Disability Savings Plan. The RDSP is a tax-sheltered savings plan intended to help parents of people with disabilities save money for longer term financial security. In an RDSP, the investment continues to grow, tax-free until it is withdrawn. Helping your savings go even further is the RDSP grant, where the Federal Government matches your contributions 3:1.

Child Disability Benefit

This tax-free income supplement can help with costs of raising a child under 18 with a disability. Like with the DTC, in many cases this benefit is retroactive.

Renovation tax credit

If you need to renovate your home to make it more functional or accessible because of a disability, those renovations may be tax deductible under the Home Accessibility Tax Credit.

Home Buyers Plan

First time homebuyers are eligible for a non-refundable tax credit to assist with the costs of purchasing a home. However, if you are disabled, this tax credit applies to any home purchase- not just your first one.

CPP Disability Benefit

If you’ve contributed enough to the CPP during your working years and are no longer able to maintain regular employment, you may be eligible for the CPP disability benefit. This tax benefit also extends to dependent children of disabled people who meet the criteria.

Has a disability created financial challenges for your family, which has caused you to turn to debt? We can help you get back on track. Call one of our trained credit counsellors at 1-888-294-3130 or check out our online debt analysis.

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