Ottawa introduced tax measures in Wednesday’s budget aimed at improving the lives of people with disabilities and of their caregivers.
Acting on recommendations made in a December 2004 report to the finance minister, the budget proposes several measures including:
- Extending eligibility for the disability tax credit to individuals who suffer from multiple impairments that have a cumulative effect, impairing their daily living activities. This was a recommendation the advisory committee sought for sufferers of diseases that are episodic in nature, such as multiple sclerosis.
- Amending the tax credit to ensure eligibility for more individuals requiring extensive life-sustaining therapy on an ongoing basis. People suffering from kidney disease, cystic fibrosis and diabetes are expected to benefit.
- Clarifying other parts of disability tax credit-eligibility criteria, including the provisions dealing with impairments in mental function.
- Increasing the maximum amount of the refundable medical expense supplement to $750 from $571 a year. This is directed at low-income Canadians. Since the supplement is “refundable” they can get it even if they don’t pay tax.
One of the key changes affecting people with disabilities proposed in the budget is reforming the RESP contribution period for disability tax credit-eligible students to 25 years from 21 years and the time for liquidating individual RESPs to 30 years from 25 years. Students with disabilities often have special needs that must be accommodated to allow them to pursue post-secondary education. In particular, they may need extra time to complete a post-secondary education program.
This change applies only to single-beneficiary RESPs. But if an individual who qualifies for the disability tax credit is a beneficiary under a family plan, says Ottawa, that individual’s share of the family plan can be transferred into a single beneficiary RESP to ensure access to these extended limits.
Meanwhile, Ottawa is doubling the maximum amount of medical- and disability-related expenses that caregivers can claim on behalf of their dependants, beginning in the 2005 taxation year when it goes to $10,000.
Ottawa is also proposing to update the list of expenses eligible for the medical expense tax credit. Some examples include: phototherapy equipment used to treat psoriasis, oxygen concentrators and medical marijuana. These changes will be effective for the 2005 and subsequent tax years.