More than three million disabled people or families of disabled people who would qualify for the federal disability tax credit are not filing for it, planning experts say.

“Sixty per cent of people who qualify for the DTC are not getting it,” says Dan King, tax specialist at LifeTRUST Planning, a Newmarket, Ont.-based planning firm for disabled people and their families.

“Advisors should make sure the word gets out,” says Jack Styan, executive director of Vancouver-based Planned Lifetime Advocacy Network, a non-profit organization dedicated to helping the disabled and their families.

For the 2006 tax filing season, advisors should be aware of the Canada Revenue Agency’s recently released Medical and Disability-Related Information Guide. The guide, RC4064, and the disability tax credit certificate, Form T2201, can be found on the CRA Web site at www.cra-arc.gc.ca/E/pub/tg/rc4064/README.html.

Even with the new guide, the process of filling out the form and getting a DTC application accepted by the CRA remains difficult. “It’s a complicated form,” says Styan.

Eileen Reppenhagen, an accountant based in Tsawwassen, B.C., and a member of the CRA’s disability advisory committee, maintains clients need help.

One of the major barriers to qualification is getting proper medical evidence. Clients have to take the T2201 to their doctors, who often don’t know how to fill it in properly. LifeTRUST Planning often intervenes on behalf of clients. “Doctors consider themselves to be healers, not tax experts,” says King. “We work with them.”

Over the past two years, LifeTRUST Planning has helped 134 families recover more than $1 million in taxes that they should not have paid, says LifeTRUST Planning’s executive director, John Dowson. One client family recently recovered $50,800.

Dowson notes that in the 2004 federal budget, the Liberals brought in a 10-year limitation on “taxpayer-requested adjustments” such as reassessments. Prior to this change in the Income Tax Act, he says, clients could file reassessments back to the date of the establishment of the DTC.

In 1985, the DTC applied only to people who were blind or deaf. Then, in 1986, eligibility was broadened to anyone with a severe and prolonged disability limiting daily living activities. In 2005, eligibility was expanded further to individuals suffering from multiple symptoms that cumulatively restrict daily living. For example, someone suffering from multiple sclerosis may suffer from a combination of fatigue, depression and balance problems — none of which alone would necessarily markedly restrict the person’s daily living.

A 2001 Statistics Canada survey identified 3.6 million Canadians with this type of disability. However, based on tax data from 2003 — the most recently available — approximately 400,000 taxpayers claimed the DTC for themselves, and only 186,000 claimed it for disabled family members whom they supported.

Until 2000, only a parent could claim the DTC as a caregiver, says Dowson. After that year, a sibling, aunt, uncle, grandparent or grandchild can claim the DTC, he adds.

LifeTRUST Planning is lobbying Ottawa to reopen the ability to request reassessments for taxpayers utilizing only the DTC. It is requesting a five-year window to allow eligible taxpayers to backfile.

Dowson spoke with Finance Minister Jim Flaherty last No-vember, and passed on letters from several families at the time.

“The minister was made aware of that situation by Mr. Dowson,” says Chisholm Pothier, Flaherty’s press secretary. “He and the government are certainly interested in what they can do for people with disabilities.” (There was no mention of the issue in the 2007 budget.)

For the 2006 tax year, the DTC is set at $1,028.

It is also possible to get a deduction for “disability supports” to a maximum of $15,000. The deduction is to be applied to the costs of disability supports required to earn employment or business income or pursue an education.

Eligible supports include: sign-language interpretation, teletypewriters, software that allows blind people to read computer screens and attendant care services. Like the DTC, eligibility for this deduction requires certification from a medical practitioner.

A “caregiver credit” of $600 is available to caregivers who care for elderly or infirm relatives who live with them in the same home.

Qualifying for the DTC will also enable a disabled individual or caregiver to claim expenses under the medical expense tax credit. The amount that can be claimed is the total of the expenses minus the lesser of $1,884 or 3% of the caregiver’s or the dependent’s net income.

@page_break@The maximum amount of the METC that can be claimed on behalf of a dependent relative is $10,000. It can be claimed for any 12-month period ending in 2006, if the 2005 expenses haven’t already been claimed. Under the METC, there are 123 claimable items, Reppenhagen says, including glasses, aids for daily living, adapting a vehicle and travel expenses for medical treatment that isn’t locally available.

The CRA has listed the medical expenses that apply in the RC4064 guide. This information is also on the CRA Web site’s home page under “M” in the A-Z index. (For more details, see Reppenhagen’s Web site at www.taxdetective.ca. )

A major consideration often overlooked when filing for the DTC, says Reppenhagen, is ensuring that payment to a hired caregiver is properly documented. Clients who hire caregivers should comply with CRA and provincial payroll regulations, she says, including: keeping employment/time records; deducting and remitting amounts for income taxes, Canada Pension Plan and employment insurance; and issuing annual T4s.

Reppenhagen has written to the CRA requesting that payroll compliance for caregivers be an allowable expense. She is urging advi-sors to add their voices to this effort by writing to the CRA. IE