Information for Disabled Persons


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.




Love Conquers CRA

LovewifeLast year, during my travels through Jordan, our tour guide, Ali, who was about to leave us after 2 days in the southern part of the country, mentioned to me that he had a long drive ahead of him. He was not going home. He was making the 3 hour drive back up north to Amman, as he had been doing every evening, to visit his wife in the hospital. Each morning, he would drive back to the south for 3 hours to resume his duties. I found this type of dedication to be remarkable and, with a shy smile, he replied simply, “I love my wife”.

Later, after drying the mist from my eyes, I asked myself whether the cost of such a commute, if made by a Canadian taxpayer, would be considered eligible for the medical expense tax credit. (This paragraph was added as a dramatic segue. Everything else in this post is true. :-))

Eerily, the answer recently came across my desk in the form of the Tax Court case of Jordan v. R. (I kid you not!). Terri Jordan, a resident of Weyburn Saskatchewan was struck by an aneurysm at age 48 and suffered brain damage. She required treatment in a rehabilitation centre in Regina. Her husband Bill commuted 120 kilometres to visit his wife daily, over a period of 102 days during 2010. His auto and meal costs totaled more than $15,000 and he sought to claim these as medical expenses.

The law provides that travel costs qualify as medical expenses if they are reasonable outlays incurred in respect of the patient and, where the patient has been certified by a medical practitioner to be unable to travel without the aid of an attendant, in respect of one person who accompanied the patient, to obtain medical services in a place that is at least 80 kilometres from the locality where the patient dwells and equivalent services cannot be obtained in that locality.

In the Jordan case this provision was interpreted by the CRA as applicable only to the transportation of the patient, and they allowed only the cost of one round-trip.

Judge Woods, however, interpreted the rule as applying not simply to the cost of moving the patient, but to those additional travel and accommodation expenses incurred by an attendant during the period of rehabilitation.

The court noted further that Ms. Jordan was required to receive medical treatment in Regina for a protracted length of time and that Mr. Jordan’s daily presence contributed significantly to her recovery. The appeal was allowed.

Now go hug someone you love, and………..


What’s Your Tax Issue? Travel For Medical

The Tax Issue

Last year, I was vacationing in Florida and experienced some shortness of breath. I went to the hospital and they suggested I return home to Canada on an emergency basis for further workup. My flight back home cost $1,198. Can I claim this as travel for medical attention?

The Answer

According to the law, transportation costs to receive medical attention are only allowed in very restricted circumstances. First of all, the travel must be from your home to wherever you seek attention, and only if substantially equivalent medical services were not available near your home. The distance traveled must be at least 40 kilometres from your home, and it must be reasonable to expect that you would travel to that place for attention.

If you had to travel at least 80 kilometres (one way) from your home to obtain medical services, you may be able to claim accommodation, meal, and parking expenses in addition to your transportation expenses as medical expenses.

In your case, since the travel was not from your home I would suggest that your plane fare would not qualify as a medical expense.

For more information, visit the CRA’s web page on this topic.

Private School = Tax Break?

It’s back-to-school season and that means time for that question we hear quite a bit over at The Tax Issue desk. Some folks are often surprised and a bit miffed when they discover that tuition fees only provide a tax credit when they are paid in respect of post-secondary education.

So where does that leave the parents of children who attend those oh-so-expensive private elementary and high schools? Generally, these fees provide no tax credit or deduction; however, there may be another way….

Could it be a Donation?

The most common alternative is that part of what we call tuition may sometimes be considered a charitable donation. It is therefore common for private schools to issue official donation receipts to parents paying private school tuition.

This practice is fraught with danger for both the payer and the school. In order for a payment to qualify as a donation, the gift must be made voluntarily and without expectation of return. No benefit of any kind may be provided to the donor or to anyone designated by the donor. Where any “donation” is mandatory as part of tuition, it is really not a gift for income tax purposes. The CRA and Revenue Quebec have both had their battles with taxpayers and private schools regarding this issue.

If a school is also a registered charity, the issuance of donation receipts for what really amounts to a portion of tuition is not, contrary to popular myth, a qualifying charitable donation.

The only exception to the above is where all or a portion of the tuition fees are in respect of religious studies. For federal tax purposes only (Quebec does not grant this concession) that would be considered as a qualifying donation, and a separate donation receipt may be issued for the religious studies portion of the annual tuition.

How About a Medical Expense?

The next alternative is not quite as popular as the charitable donation, and that is to claim the private school tuition fees as medical expenses.

The law allows as a medical expense an amount paid for care and training at a special school. A clear example would be a school dedicated to children with hearing deficits, such as the Montreal Oral School for the deaf.

A not-so-clear-example, is where a child has a learning disability, such as attention deficit disorder, and is placed in a private school offering tighter structure and smaller classes, where, perhaps the staff has had some training in dealing with such students.

This was the subject of the case of The Queen v. Scott . The taxpayer’s son was diagnosed with several learning disabilities. The court of appeal laid out the requirements for deductibility as follows:

  1. The taxpayer must pay an amount for the care or care and training at a school, institution or other place.
  2. The patient must suffer from a handicap.
  3. The school, institution or other place must specially provide to the patient suffering from the handicap, equipment, facilities or personnel for the care or the care and training of other persons suffering from the same handicap.
  4. An appropriately qualified person must certify the mental or physical handicap is the reason the patient requires that the school specially provide the equipment, facilities or personnel for the care or the care and training of individuals suffering from the same handicap.

The requirements in 3 and 4 above were at issue in the Scott case. Firstly, the private school was not a school specializing in children with learning disabilities. Rather it was a private school which offered smaller classes and other services to a wide range of students. The fact that some of the services offered to the general student body were beneficial to the taxpayer’s son and other students with special needs was not sufficient to bring the private school within the ambit of the provision.

Next, the fact that a doctor had recommended this particular school to the taxpayer was also not sufficient. The rule requires a “certification” by a qualified person. A mere recommendation did not meet the criteria, which, according to the court, would have required a formal expert opinion specifying the condition and reasons why this particular school had the equipment or personnel to treat the patient.

CRA and the Air Miles Double-Standard

Whenever I use my frequent flier points, it always seems like I’m getting something for free. That’s the beauty of it, isn’t it? But of the course, like everything else, the CRA has to spoil it. The CRA believes there’s value to those points. Sure, there’s value, but does this view only hold true when it benefits the government?

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Using Points For Personal Purposes

Everyone loves a vacation. So when you use those travel points to fly for free, would you ever think that the CRA would tax you? Until recently, the CRA’s policy was indeed to tax an employee on the value of reward points used for personal purposes if the credit card charges to earn those points were made as an employee and reimbursed by the employer. So, let’s say you took a trip to Vancouver on business and charged the hotels, flight, meals etc. on your credit card. When you returned, you put in an expense report and were reimbursed for all those costs. In December, you decided to take a trip to Disney World with the kids, and used reward points to pay the airfare. Prior to 2009, the CRA would have asked you calculate the value of your points, then the portion of that value that related to the amount that was reimbursed by your employer, and then they would tax you on this amount. I kid you not!

Well, the CRA has since changed their policy. They came to the realization that they were being completely nutty (my word, not theirs 🙂 ) in asking employees to make such determinations. Starting in 2009, they no longer tax you in cases such as the one described above. As long as the credit card is yours, and the reimbursements are not in some way abusive to the point where you are really disguising some form of additional remuneration, then there will now be no taxable benefit on the use of your points. However, if you are spending money on a company credit card, where the employer controls the points, any use you make of them will be taxed in your hands, and your employer will be required to value the benefit as described above, and add it to your T4 as taxable employment income.

The Johnson Case – Points Used For Medical Travel

The above policies by the CRA shows how interested they are in the value of these reward programs – when there is tax to be collected. But what about when there is a deduction to be taken? Suddenly these valuable points become totally impossible to appraise.

In 2007, Mr. Johnson flew to Chicago from Thunder Bay in search of medical care. Travel costs can be eligible medical expenses, and Mr. Johnson claimed the value of his flight, even though it was paid with his Aeroplan points.

Given the CRA’s clear view that such points have value (when it suits their purpose), it is truly baffling to note that the Minister of National Revenue argued in Tax Court that “the value of the points that were used to obtain the ticket could not be determined, and therefore, that it could not be said that an amount was paid for the ticket”.

Really, CRA? Have you not read your own policies?

In the end, the judge decided that the points had a value, since they could be exchanged for something that had a price.

The taxpayer won his case and of course, the CRA policy  still exists (although far less onerous since 2009).

Free travel? Have you seen my credit card statement?