Through our discussions with clients and others, we have come to the conclusion that there may be significant tax breaks that many are missing. If you have a hard time taking care of yourself, due to medical reasons, you may be eligible for additional tax credits. Seniors, children, and anyone with a disability can apply for the Disability Tax Credit.

Contact or visit the Canada Revenue Agency (CRA) and ask for the guidebook called “Information Concerning People With Disabilities”. It contains the Disability Tax Credit Certificate form T2201. A qualified practitioner detailing the nature of your disability must certify this form. This is a requirement for you to be eligible to claim additional tax credits on your income tax return. The guidebook also specifies the eligible medical expenses that can be claimed on your tax return. There is a self-assessment questionnaire to determine if you are eligible. For additional information you can visit the CRA website at www.cra.gc.ca/disability.

The T2201 form has two parts: the person with the disability fills out Part A, and Part B needs to be completed by a qualified practitioner (doctor, optometrist, audiologist, physiologist, and so on). Basically, it is a questionnaire that describes the disabilities and their severity. The applicant must have an impairment in physical or mental functions that is diagnosed as severe and prolonged.

The certificate can be submitted at any time throughout the year, and, once approved, you do not have to re-apply unless specified by the CRA. In fact, you can request the CRA to re-assess previous years if your disability had occurred in the past. The reassessment may cover several years, 1999-2005 for instance, in which case you may receive a substantial refund cheque. It is recommended to get approved early and save time when filing your tax return.

Once your certificate has been approved by the CRA you become eligible for the Disability Tax Credit amount, worth $6,596 in 2005, plus additional medical expenses.
Maybe it’s not you, but a loved one who has the disability. If they are unable to apply on their own, you can apply as their representative. If you have an elderly parent who has minimal income and is dependent on you, there may be an option to transfer some tax credits onto your tax return.

Coping with a disability is difficult enough, not only from an emotional but also a financial standpoint. Don’t miss out on the little tax breaks. It all adds up and for qualified applicants the money is there for the asking. If you or anyone you know is disabled, this is a tax credit well worth investigating.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.