Information for Disabled Persons

Disability

In a previous article we discussed the way in which an individual must establish proof of a disability in order to claim certain tax credits. In this article we touch on some of what is available for disabled persons under the Income Tax Act.

The rules in this area are very complex (OK, downright confusing!!) and we will hit the highlights here, but for a more detailed discussion with examples, the CRA offers an excellent guide in its publication RC4064-Medical and Disability Related Information.

Disability Tax Credit

The most common credit is the disability amount ($7,546 for 2012) available to all persons who qualify. An additional supplement of up to $4,402 may be available if you are under 18 years old at the end of the year. Any unused credit can be transferred to your spouse, or to another relative under certain circumstances if you lived with them and you were dependent on them for support.

The disability amount cannot be claimed, however, if you are claiming as a medical expense credit, either the cost of a full-time attendant or full-time care in a nursing home (see below). If you are in this situation, you must make a choice to determine which claim would be more beneficial to you.

Full-Time Attendant or Nursing Home

If you or your spouse pay the costs of a full-time attendant or full-time care in a nursing home, these costs may be claimed as medical expenses.

Other Attendant Care Expenses

There is a separate rule that allows you to claim up to $10,000 of attendant care expenses (full or part time) as a medical expense credit without hampering your ability to claim the disability amount (this claim could overlap with the full-time care credit described above). So if you want to claim the disability tax credit, this rule gives you the opportunity to claim some (if not all) your attendant care costs in combination with the disability tax credit. (Didn’t I warn you about the confusing thing?). Take care to ensure that the amounts paid to a group home are broken down on your annual receipt between eligible medical costs (such as salaries paid for food preparation, laundry, housekeeping and medical care services) and non-eligible costs (such as rent, food and operating costs of the home).

Don’t Forget the Registered Disability Savings Plan

If you or your child is disabled and under the age of 60, then you should consider starting a Registered Disability Savings Plan. The amounts you contribute can earn income tax-deferred (similar to an TFSA), and you may also be eligible for additional government grants that would supplement your contributions.

Family Caregiver Amount

Finally, for 2012 and future years, a new $2,000 “Family Caregiver Amount” is available as a supplement to certain amounts you may be eligible to claim for dependents. For example, if you claim a personal tax credit in respect of your dependent spouse or child, and that person is also disabled, then you may add $2,000 to that claim.

 

 

 

Employment Insurance for the Self-Employed

Did you know that self-employed individuals can now apply for Employment Insurance?

Changes in the Employment Insurance Act recently enacted have made it possible for self-employed taxpayers to opt in to the EI program. Since January 1, ,2010, if you are a Canadian citizen or a permanent resident you can register with the EI program and pay premiums. In order to qualify for benefits you must earn a minimum of $6,222 per year.

The premiums are identical to those paid by employees. For 2012 they are equal to 1.83 percent of your self-employed earnings (1.47 percent in Quebec). The maximum annual premium is $839.97 ($674.73 for Quebec), based on maximum annual earnings of $45,900.

Self-employed individuals are not required to pay any employer portion of EI premiums, and the amounts paid are eligible for a non-refundable tax credit.

If you opt in to the program you would be eligible for maximum benefits of 15 weeks for maternity leave, 35 weeks of parental/adoptive  benefits, 15 weeks of sickness leave and 6 weeks of compassionate care benefits.

You must be registered and paying premiums for at least one year prior to making any claim for benefits. In order to qualify for benefits you must have an “interruption of earnings” which is defined as a more than 40 percent reduction in the time devoted to your business activities as a result of pregnancy, illness, injury, quarantine, the need to care for certain children or the need to provide care or support to certain family members. The 40 percent reduction is based on your “normal level” of time devoted to your business.

You would be entitled to benefits of up to 55 percent of your average weekly earnings to a maximum for 2012 of $485 per week.

If you register, you can decide to opt out at any time in the future, provided you have never made a claim for benefits. Otherwise, you must remain in the program for as long as you remain self-employed.

In Quebec, self-employed taxpayers are automatically required to participate in the Quebec Parental Insurance Plan (QPIP) which provides additional benefits to self-employed persons who sustain an interruption of earnings due to maternity leave, paternity leave, parental leave or adoption leave.

Establishing Disability

The Income Tax Act contains many provisions dealing with disabled persons. Such things as the disability tax credit, certain medical expense deductions, the registered disability savings plan and other provisions are currently available.

But before taking advantage of any of these rules, the first step is to establish that you have a disability that qualifies. To be more precise, you must be a person with a “severe and prolonged mental or physical impairment”.

An impairment is considered “severe and prolonged” if it is expected to last continuously for more than 12 months and markedly restricts your ability to perform a basic activity of daily living.

Activities of daily living include:

  • Mental functions of daily life, such as memory or problem-solving
  • Blindness
  • Feeding or dressing oneself
  • Speaking
  • Hearing
  • Eliminating (bowel or bladder functions); or
  • Walking

You would also qualify if you require life-sustaining therapy administered at least 3 times a week for a total time of at least 14 hours per week. This includes time spent by parents of children to administer life-sustaining medication such as insulin.

You can read more details explaining what constitutes a marked restriction for each of the above impairments by consulting form T2201. You can also take a short questionnaire on the CRA website which offers more details on the above criteria.

If you believe you have an impairment that qualifies under the above criteria, then you must obtain form T2201 (and if you live in Quebec form TP-752.0.14) and have it completed and signed by a doctor or other qualified medical practitioner. A qualified medical practitioner other than a doctor must be a medical professional that is recognized as such in the province where you reside. Optometrists, audiologists, psychologists, or physiotherapists are examples of medical practitioners that would be authorized to sign the form. Examples of practitioners who have been denied the authority to sign the form are massage therapists, acupuncturists and naturopaths (depending on their status in the province where they practice).

Once the form is completed and signed, it must be submitted to the CRA for assessment and approval. This process can take several weeks. You can either attached the form to your income tax return or send it in alone prior to filing your return, to avoid delays in processing your claims.