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Disability Tax Credit

Disability Tax Credit – One Tax Credit That Could Save You Thousands

July 5, 2019

Do you know about the disability tax credit? Don’t feel bad if you haven’t heard about it, the government doesn’t publicize it too much, which is one of the reasons why only 40% of Canadians with a disability claim it. 

Also, many doctors and accountants are unaware of it and often mistakenly assume that their patients/clients do not qualify.

So, what exactly is the disability tax credit and what could it be worth to you?

It could be worth tens of thousands of dollars

The disability tax credit is a tax refund from the government for people with a health impairment or disability. It’s designed to give financial help to people with physical and psychological ailments that have an impact on their ability to function. 

You or your spouse must pay tax to receive the refund and it can be back-dated by 10 years. The annual amount you receive will depend on your province, but it can range between $1,600-$2,400. If you’ve had the condition for 10 years or more, this could mean an initial refund of over $20,000.

Qualifying for the disability tax credit also opens the door to other valuable government benefits, such as the Registered disability savings plan and the Working income tax benefit.  

You don’t have to consider yourself disabled to qualify

According to the CRA, you need to be “markedly restricted in at least one of the basic activities of daily living” or “significantly restricted” in two of them. Blind people and those needing life-sustaining therapy could also qualify.

You could be eligible if it takes you a significant amount of time (usually around three times longer than an able-bodied person) to perform the following tasks: walking, dressing, speaking, hearing, eating (including preparation), dressing and elimination (bowel or bladder functions). You could also qualify if you lack the mental functions necessary for everyday life.

The conditions that could mean you qualify

Some of the most typical ailments that would qualify you for the disability tax credit are:

  • Osteoarthritis
  • Chronic Obstructive Pulmonary Disease
  • Spinal stenosis
  • Degenerative disc disease
  • Rheumatoid arthritis
  • Stroke
  • Hip replacement/fracture
  • Back injury
  • Peripheral artery disease
  • Knee replacements

Other common conditions that can lead to qualifying for the disability tax credit include vertigo, Alzheimer’s/dementia, diabetes, heart disease, asthma and renal failure.

How to navigate the disability tax credit minefield

Applying for the disability tax credit is notoriously difficult, which is another reason why so few people apply for it.

To begin, you need to fill in Form T2201, which you can download from the CRA website. There are two parts to this form. You will need to fill in Part A with your personal details and then you will need your doctor to fill in Part B with details of your disability and how it impacts your daily life.

Part B can be tricky. Many doctors don’t understand the rules around the tax credit and assume their patients don’t qualify when they actually do. One mistake on the form and the application could be rejected.

For this reason, thousands of people turn to disability tax credit experts to manage the process for them. These are companies that specialize in helping people with qualifying health issues to successfully apply for the tax credit. Many of them have years of experience and know how to make a successful application.

There is a catch, of course. They do charge a fee for their services, which is usually 30% of your initial tax refund (but most charge nothing for unsuccessful applications).

For older Canadians, using a disability tax expert is a good option as the application process can be confusing and will be rejected if it is not done absolutely correct.

If you have an impairment that affects your ability to function, you should apply for the disability tax credit, either by yourself, or with help. It could be worth thousands to you!

Financing a disability

If you have a condition that affects your mobility, there are a number of ways that you can modify your home to make it more accessible. Wheelchair ramps, stair lifts, grab bars, walk-in baths, handrails and lift chairs can all help you to function in your home and keep your independence.

Home care services can also help with many tasks like cooking, cleaning, shopping, bathing, getting dressed and taking you to doctor appointments.

While a disability tax credit refund can go some way towards paying for these additional costs, it often isn’t enough to cover them all or on an ongoing basis.

If you’re 55 or over and own your own home, the CHIP Reverse Mortgage® could be the ideal solution for you. You can borrow up to 55% of your home’s value and receive it either in one lump sum or regular payments. The best part is, you don’t have to pay back what you owe until you decide to sell, so it won’t have an impact on your cash flow.

If you could use some extra financial help to make your disability more manageable and maintain your independence, contact us at 1-866-522-2447 to find out how much tax-free cash you could qualify for.

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