Many qualifying taxpayers miss claiming the Disability Tax Credit because they don’t think it applies to their situation, says tax preparation firm H&R Block Canada.
H&R Block offers the following advice for advisors and their clients who may qualify for the Disability Tax Credit:
Review your situation
The Disability Tax Credit has criteria you must meet in order for you to qualify. In particular, your disability must make it extremely difficult or time-consuming to carry out basic activities of daily living even if you are undergoing therapy and using appropriate devices and medications.
Duration of disability
The impairment must last or be expected to last 12 months and severely restrict your ability to see, walk, speak, hear or perform personal care activities or seriously affect your mental capacity to manage your personal affairs.
Multiple impairments
The disability definition has been expanded to allow for the cumulative effect of multiple impairments that individually would not be severe enough to qualify. For example, a taxpayer with multiple sclerosis who constantly experiences fatigue, depression and balance problems may qualify.
Complete paperwork before you file
You need to be approved by the Canada Revenue Agency before you can claim the Disability Tax Credit on your tax return. Your doctor needs to complete a T2201 (Disability Tax Credit certificate) and mail it to the CRA. Once you are approved by the CRA, you can claim the non-refundable amount on your tax return. You cannot claim the credit without CRA approval.
Non-refundable credit
The Disability Tax Credit cannot generate a refund on its own. It can only be used to reduce tax payable. The 2010 federal credit is $7,239 and works out to $1,086 in tax savings.
Transfer to spouse
If you cannot use all of your Disability Tax Credit on your return, you may be able to transfer the unused amount to a spouse or adult child.
Retroactive claims
If you did not realize you were eligible for the credit when you filed your return, you can request adjustments for up to 10 years under the CRA’s Taxpayer Relief Provisions. You will need to file a T1 Adjustment form for each year you need to amend.
IE