Author: Milburn

Could It Happen In B.C.?

There is an outrageous story out of Quebec and Prince Edward Island about the clawback of funds saved by family members for their disabled children. The mean spirited governments in question should hang their heads in shame over what they are doing.

You should read the CBC Story before finishing this post.

The issues in question are about the governments denying disability benefits to individuals even though the savings are invested in a Hensen Trust or a Registered Disability Savings Plan (RDSP). Most provinces (including B.C.) set strict limits on the amount of savings that a person can possess before the government will cease disability payments. The payments resume only after the savings amount falls below the threshold.  In B.C. the limit is $5,000 with some exceptions. The important difference is that in B.C., Hensen Trusts and RDSP payments are generally (with some reasonable exceptions) exempt from triggering clawbacks.

It pains me greatly to say this government did something right, but on this issue they are ahead of many other provinces.  In fact B.C. was the first provincial government to announce after the RDSP launch that they would exempt payments from the plan from causing a clawback.

The answer to the title of this post is unfortunately; Yes this could happen in B.C. The disability benefits are subject to government policy and could change at any time. We must remain vigilant.

New Medical Expense Tax Category

A new medical expense category for the 2014 tax year is the “Personalized Therapy Plan”. In a nutshell this is what you can use to claim expenses paid to your Behaviour Consultant (BC).

In years past, I recommended that you tailor invoices for your Behaviour Interventionists (BIs) and call the service rendered as “tutoring”. This advice still holds true, but for your BCs (who always write their own invoices) you can now file your medical expenses using this new category.

There are a few conditions to claim expenses as a “Personalized Therapy Plan”:

  • The plan has to be designed for someone who is eligible for the disability tax credit
  • The payment is made to someone who is in the business of providing such services to unrelated persons
  • The therapy has to be prescribed and supervised (in the case of a mental impairment) by a medical doctor or a psychologist
  • The plan has to be needed to access public funding for a specialized therapy (as in BC Autism Funding )

Tax Software Checkup

Did your tax software give you the credits and deductions that you planned? It’s not always that obvious, especially for people new to the world of disabilities.

To begin with, I have attached a table of who should claim the different credits and deductions. As you enter your data into your preferred tax software, check off each item that is applicable to you as you enter it.

Remember no matter what software you are using, you need to tell the program a few basic things about your family:

  • The disability status (i.e. T2201) of your child
  • Who will claim the disability amount transferred from a dependant
  • It’s best to complete both spousal returns at the same time to ensure all credits are accounted for and medical receipts assigned to the correct spouse (good software will assist in this task)
  • Who will claim child care, if at all (generally it will be the lower income spouse)

Once your taxes are complete, refer to the next checklist (Post Tax Checklist) to give your tax preparation a mini “audit”.

Attachments:

Which Spouse should claim or receive funds

Post Tax Checklist

Tax Software Face Off

Why should you use tax software? As the parent of a disabled child there are a lot of extra credits and deductions available to you. Not all of them are straightforward. Many of the credits interplay with other credits. For example, attendant care expenses and child care may reduce the disability tax credit supplement. The fitness tax credit and the children’s arts tax credit add $500 to the total as long as you spend at least $100 in either category. In addition there is the family tax cut (not a disability related item) which I understand has as many as 85 individual steps to follow. The days of doing your taxes on paper are quickly coming to an end.

I normally use the most popular tax program in Canada which is TurboTax. It has worked well for me and it’s easy to understand. This year however, for the first time some of the leading tax products are offering their software for free.

Foremost among them is H&R tax. Their online product is now free with no restrictions. I tried it out for comparison sake and whilst I found it worked, I had to make three passes through the data entry before it accepted everything I entered. It’s not quite up to the level of TurboTax in terms of user-friendliness, however you cannot get cheaper than free. Other free programs are available (click here for the full list).

I gave another free product, SimpleTax a run through and found it interesting. It’s a pay by donation product ($0 if you wish). I don’t recommend this product especially for people filing disability claims for the first time. Many of the entries required a manual input of tax credits which may be slightly beyond the capabilities of first time filers.

For me, TurboTax is still the product to beat. It has a step by step procedure and offers extensive help for every entry point. You can buy it just about anywhere (I picked up my copy at Costco for about $28). The online version is $18, but you will pay extra for a spousal return. The CD version will process up to 8 returns.

The free software presents an ideal opportunity for some parents to test their tax capabilities. If you are nervous about your taxes and insist that an accountant do them for you, this is your chance to find out what you can do. Once the accountant completes your taxes, use some of the free software to do it yourself and compare the result. Maybe this will give you the confidence to take over next year.

The big question is how do you know if your chosen product has correctly processed all the disability related items?

Next week I will post a simple tax preparation checklist for you to follow to ensure you are getting your entitlements.

Family Caregiver Amount Update

The Family Caregiver Amount (FCA) is a tax credit for families caring for a child with mental or physical impairments. The credit for the 2014 tax year is $2,058 which equates to a tax savings of $308.

In previous tax years it was a requirement to obtain a doctor’s letter to confirm that the child is dependent on others for an indefinite duration. This is no longer a requirement if the child has an approved T2201 Disability Tax Credit Certificate from the Canada Revenue Agency for the specified time.

This is a most welcome and obvious solution.

For more detail refer to my page Other Tax Credits

Private School As A Medical Expense

Did you know that you may be able to claim the expenses for private school as a medical expense? If the school is required due to a physical or mental impairment, you may apply to the Canada Revenue Agency (CRA) to have the fees considered a medical expense.

Big Cajun Man of the Canadian Personal Finance Blog has a detailed article on how you may be able to claim these expenses.

I have copied his template letter to the CRA and added it to my files page.

Autism Support Network

A special “tip of the hat” goes out to the hard working volunteers of the Autism Support Network. The parent led organization previously known as The ABA Support Network has been re-branded to better reflect their role in British Columbia.

For years now, they have been tirelessly assisting parents new to the world of autism. The countless hours that they have spent on the phone have been completely unpaid and invaluable to families affected by autism.

They continue to expand their reach in B.C. with new parent support groups opening every month as well as focused topic meetings hosted in various communities. Other initiatives include expanding the role of ABA Therapy in schools, recruiting therapists and advocating for families in need.

They have merged with the Autism Education Society and have now achieved charitable status. Please give their website a visit and join their organization (it’s free!)

Well done and congratulations on your re-launch.

Cineplex Movies

Cineplex Odeon in partnership with Autism Speaks have created a sensory friendly experience for the ASD community.

The screenings feature increased lighting levels, decreased volume and a designated calm area.

The price of admission for each person is the child admission price ($8.99).  Cineplex has also confirmed that you may use this special pricing in conjunction with the Access 2 Card. This card gives free (or discounted rate) entry to a support person.

Venues for the Access 2 card include 95% of the theaters in Canada and many recreational attractions in BC. The cost is $20 and is valid for 5 years.

The first showing of the Sensory Friendly movie is this Saturday (Feb 14) in Langley at 10:30 showing The SpongeBob Movie: Sponge Out of Water.

See you at the movies!

My RDSP Report Card

In 2012 I switched my child’s RDSP from BMO to TD Waterhouse. I was fed up with the limited investment options at BMO and their outrageous pricing.

I decided that my investment choices would follow the recommendations of the Canadian Couch Potato using TD e-Series funds.

How have things worked out so far?  Well, I’m pleased to say that the account has done very well with a rate of return for 2014 of 10.34%.  I don’t think this will repeated every year, but it’s a very good start.

I love the simplicity of the plan.

  • I make a contribution once a year
  • The government will advise you by letter of the contribution that will attract the maximum grant and bond.
  • Wait for the government to add their contribution.
  • Re-balance the account to the original asset allocation.
  • That’s it.  You are done for the year.

To make the switch refer to my post RDSP – Change of Financial Institution

Disclaimer:  I am not affiliated with any financial institution. I believe you should get the best deal possible, but the prime objective should be to open an RDSP and if you are more comfortable at a different bank, then by all means go there.

Why Your Autistic Teenager Should File A Tax Return

We discussed in previous posts why the Registered Disability Savings Plan (RDSP) is the best way to save for your child’s future. The key element to the plan is the government grants and bonds (free money!) which is added to the account. The amount added is dependant on the family income.

If the beneficiary of the RDSP is over the age of 18 then the “family net income” used to calculate the government grants/bonds is that of the beneficiary and his/her spouse. The income that will determine the grant and bond is based on the income tax return from the second preceding year. (Example: Contribution made in 2009 – net income based on the taxable year of 2007.)

In other words, to ensure your child receives the maximum entitled grant and bond he/she should file taxes starting at age 17 (even though his income may be low or even non-existent) so that the grant and bond will be based on his/her low income status.

What To Do With An Unwanted RESP

Some of us opened an RESP for our child only to later realize they will not be attending post secondary education. It’s tempting to simply collapse the RESP but there is now a better option.

For the last couple of years an option to rollover some of the funds from an RESP to an RDSP has existed. To do this one of the following conditions must be met:

  • The individual has a severe and prolonged condition which will prevent him/her from attending post secondary education
  • The RESP itself must be at least 10 years old and the beneficiaries at least 21 years and not pursuing further education or
  • The RESP itself must have been in existence for 35 years

Once one of the above conditions has been met, the rollover will happen as follows:

  • The contributions will be returned to the subscriber (i.e. the parent) on a tax free basis
  • The savings bonds and grants will be returned to the government
  • The investment income will be transferred to the RDSP
  • The transfer will count toward the lifetime contribution limit of the RDSP
  • It will not attract a matching government grant
  • The funds will be taxable on withdrawal from the RDSP in the hands of the beneficiary

What does this mean for you?

  • If you have set up an RESP don’t panic as you are not going to lose your money
  • Don’t be in a rush to collapse the RESP as you may yet find a way to use the account.

RDSP with TD Waterhouse

Thanks to the Big Cajun Man at the Canadian Personal Finance Blog for the latest update regarding TD Waterhouse.

Holders of an RDSP account can now trade online using WebBroker . Previously we had to conduct all trades over the phone, so this is a big step forward. The complete article can be found here.

For those of you who don’t have other TD accounts, you will still have to deliver a cheque for your RDSP contributions.  For more information about how I handled my child’s RDSP account visit RDSP – Change of Financial Institution.

Disability Tax Credit: Please Do It Yourself

Here is another article from the Big Cajun Man, author of The Canadian Personal Finance Blog entitled Disability Tax Credit: Please Do It Yourself .

It is a good reminder to all to stay away from the online “Disability Experts” who want to take your money and leave you with no value added.

T2201 Guide Version 2 Released

Those of you about to file a T2201 (Disability Tax Credit Certificate) for the first time would be well advised to review the T2201 Guide.  It outlines some of the errors that parents and their doctors make as well as answering many frequently asked questions.

Version 2 includes a sample “Impact Statement” written by one of our keen parents. It provides guidance for doctors who are struggling for words or possibly a complete statement for the medical professional. It should not be copied, but it provides a starting point for a parent who needs to describe their child’s disability.

The pdf can be downloaded from my Files page.

Rollover Funds From RRSP to RDSP

A rollover of funds from a Registered Retirement Savings Plan (RRSP) to a Registered Disability Savings Plan (RDSP) is another option for estate planning although there are a few limitations that you need to be aware of.

A rollover is an indirect tax-deferred transfer of certain amounts to an RDSP beneficiary’s plan. Rollover amounts must originate from an RRSP, Registered Retirement Income Fund, or Registered Pension Plan of an RDSP beneficiary’s parent or grandparent. Such amounts may only be rolled over if the RDSP beneficiary was financially dependent upon the parent or grandparent at the time of the parent or grandparent’s death because of a mental or physical infirmity.

Here are some reasons why it makes sense:

  • Funds from an RRSP willed directly into the hands of the beneficiary are first subject to full taxation before being passed on.
  • If the funds are under the direct control of the beneficiary, it will trigger a Persons with Disability (PWD) clawback effectively nullifying the gift.
  • A rollover to an RDSP is much easier to administer than a discretionary trust.
  • The rollover funds are transferred without triggering taxation. Inside the RDSP, the funds continue to accumulate tax free until the funds are withdrawn at which time they are subject to taxation in the hands of the beneficiary.
  • In the case of a grandparent this can be an effective way to pass on funds in a tax efficient manner without affecting the individual’s Disability Assistance payments.

There are a few limitations that you need to be aware of:

  • A rollover is subject to the maximum $200,000 lifetime contribution limit to an RDSP
  • A rollover will not attract a Canada Disability Savings Grant.
  • Once the plan has received the maximum contribution limit, no further Canada Savings Grants are possible.

Estate Planning – The Worst Thing A Grandparent Can Do

Grandparents and other extended family members often try to help their disabled grandkids by leaving them money in their wills. As noble as this is, it may be the worst possible thing to do. As I have mentioned in previous posts, Persons with Disability (PWD) benefits for a disabled adult are clawed back until assets (with some exclusions) are reduced to $5,000. The net result is that the child will have received nothing. This is not a satisfactory situation to say the least. The good news is that with a little planning we can achieve a very different result.

Some solutions include:

  • Grandparents leaving the money directly to the child’s parents so they can distribute the money in a fashion which will not trigger the PWD claw back.
  • The money can be willed to contribute directly to a Registered Disability Savings Plan (RDSP) for the child. Distributions from an RDSP are exempt from the PWD claw back. One downside is that there is a lifetime maximum contribution limit of $200,000. Additionally, if all the money is contributed in a lump sum, the plan will only receive the matching government grants for that year.
  • If the grandparents’ estate has a considerable amount of money for the child, perhaps a trust is in order. To set up a trust (which is exempt from the PWD claw back if constructed properly) a lawyer specializing in trusts should be consulted. A starting point would be to contact PLAN to learn about wills and trusts and get their recommendation for a lawyer.

My personal recommendation (especially for those of us with modest incomes) is for the grandparents to contribute to the child’s RDSP on a yearly basis while they are still alive. Doing this will ensure that:

  •     The government grants and bonds are maximized
  •     The money is passed to the child in a tax efficient manner
  •     The proceeds of the RDSP are exempt from the PWD clawback
  •     It ensures that the money will be used for the benefit of the child and no one else
  •     Unlike a trust, an RDSP is very easy to set up and manage. Please refer to RDSP.com for more detailed information.

Below I have given an example of how it might work for a Grandparent contributing to an RDSP.

  •     Assuming the family income is below approximately $85,000 and above $42,000
  •     The child is 4 years when contributions commence
  •     The Grandparents contribute $1,500 per year for 20 years for a total contribution of $30,000
  •     The funds are invested in a conservative manner earning 5.5% per year
  •     The net result is that when the child is 55 years old the account will be worth approximately $1,000,000!

That sounds like a much better result than having the government claw back the entire amount. If your child’s grandparents want to contribute to his/her future in a meaningful way you need to have this talk with them (you might also send them a link to this post).

Save A Million Bucks (without really trying)

The Registered Disability Savings Plan (RDSP) is more than just a long term savings plan. It should also be a key element of your estate planning.

In case you are dismissing the RDSP as irrelevant, please consider two samples scenarios.

Firstly, for a low income family opening an RDSP when their child is 4 years old and never contributing a single penny, the account could be worth $239,000 by the time their child is 60 years old!

Next, consider a middle income family ($37,000 to $85,000) contributing $1,500 per year for 20 years. By the time the individual is 60 years old, the account could be worth $1,300,000!

We are talking about serious money here. The RDSP.com website has an interesting calculator that you can use to see how your contributions and the government funds accumulate tax free to a sizable amount. It’s worth putting in your personal numbers to see what an RDSP can do for your child. Remember the earlier you start, the more time you have for the gains to accumulate.

It’s important to remember that the RDSP is a long term savings plan and will do very little for your short terms needs. There is a rule called the 10 year hold-back. It was slightly modified last year, but the basic idea is that if you take money out of the account within 10 years of receiving a grant or bond, the government will claw their contributions back. Just think of the plan as a long term investment for your child and you will be fine.

Grant Bond carry forward

When the RDSP was first introduced, the matching government grants were only given for contributions in that calendar year. That meant that if you missed the Dec 31 deadline, you were out of luck for that year.

Things have now changed. Since 2011, you are now allowed to carry forward unused grant and bond entitlements to future years. The carry forward period can only start after 2007 and lasts for 10 years. Considering the age of your child and the number of years since the disability commenced this can be a significant amount of money. The government will contribute up to $3,500 per year in grants and up to $1,000 in bonds. Refer to my page RDSP for more details.

For those of you who haven’t yet started an RDSP, there is a lot of money on the table and now is the perfect time to set up the account and collect all the government grants and bonds back-dated to 2008. Remember that the child must qualify for the Disability Tax Credit in order to open an RDSP.

A word of caution; don’t use this as an excuse to put off contributions to the RDSP. Firstly, you never know when or if the government might change the rules and secondly, the earlier you start, the more time you have to compound your returns.

If you have not yet educated yourself about the RDSP, please refer to my page RDSP or go to RDSP.com for a more detailed look at the plan.

 

The Single Best Investment for your Child

This is the first in a series of posts about the Registered Disability Savings Plan (RDSP).

If you are going to do only one thing for your child’s financial future, setting up an RDSP is it. This easy to setup account invests free government money for his/her future and protects future benefits in a way no other investment can.

Surprisingly the uptake on RDSP is abysmal. Only 14% of those eligible have an RDSP. Why do parents not take the first step to assure the financial future for their child?

I have heard every possible excuse for not starting up an RDSP:

  • It’s too hard (Wrong! The paperwork may be lengthy, but grab a coffee and let the financial institution fill it out while you chill. Call ahead and book an appointment with an RDSP specialist)
  • It curtails future benefits that my child might receive (Wrong! The BC government has exempted disbursements from the RDSP from clawing back future benefits)
  • The investment options are very limited (Partly true, which is why I recommend TD Waterhouse for your account)
  • It doesn’t amount to that much money (Wrong! Properly structured the account can amount to well over a million dollars as your child approaches middle age)
  • It doesn’t provide the funding I need now (True, but why should that stop you from planning your child’s financial future?)

The Basics

The RDSP is similar to a Registered Education Savings Plan (RESP). A person contributes money to this registered plan, the government adds “free money” and it all accumulates tax free. There is something for everyone here. Families with modest incomes will qualify for a savings bond with no matching contributions. Families with higher incomes will enjoy matching grants within certain limits.

BC has exempted RDSP payouts from clawing back Persons with Disabilities (PWD) benefits further increasing the desirability of this plan.

There should be no excuse not to have a plan set up. Depending on family income the government will add funds through one or both of the following programs:

Canada Disability Savings Grant

When annual family net income is equal to or less than $87,123 the grant will contribute:

  •    $3 for every $1 contributed on the first $500.
  •    $2 for every $1 contributed on the next $1,000.

When annual net income is over $87,123, the grant will contribute:

  •    $1 for every $1 contributed up to $1,000.

The Grant can be received up to a maximum of $70,000 over a person’s lifetime and only until the beneficiary turns 50 years of age.

Canada Disability Savings Bond

When annual net income is $25,584 or less, the Canada Disability Savings Bond will provide $1,000 per year without any personal contribution. The Bond is pro-rated if your income is between $25,584 and $43,953.

The Bond was created to make the RDSP accessible to persons with disabilities whose family and friends are not in a position to make contributions. The Bond can be received up to a maximum of $20,000 over a person’s lifetime and only until the beneficiary turns 50 years of age.

Would you like a $150 gift to kickstart your RDSP?

If you are in receipt of provincial income assistance, you may be eligible for a one time gift of $150. Refer to Endowment 150 for more information.

Which Financial Institution should I use?

TD Waterhouse. If you want to know why, see my previous post RDSP – Change of Financial Institution

Autism and Divorce – The Ugly Truth

It is commonly said that 75% of marriages that have a child with autism will end in divorce. This may or may not be true but according to Mrs. Drysdale, the other 25% are simply waiting for the right moment.

I’m not pretending to be an expert in matters of marital separation as I have not been fortunate enough to go through such an ordeal. I found researching this post to be extraordinarily difficult as the rules are vague and can easily vary based on separation agreements and court rulings. The bottom line is that if you can work together to come up with a plan you will be much better off.

An autism diagnosis and a divorce are two of the most devastating financial events that can occur to a family. With some advance planning and cooperation from the two parents, the financial implications can be minimized.

There is an excellent article in the Financial Post about how to save money in a divorce. It is a short read, but very worthwhile.

The new Family Law Act came into effect last year and many of the terms you may be familiar with have changed. The Legal Services Society has a guide to the new act which you can find here.

This brief introduction to the financial arrangements of divorce and separation is no substitute for professional advice which I strongly recommend that you seek.

The broad tax implications

For divorces (and separations longer than 90 days) after April 1997 any child support payments are not deductible by the payer and don’t have to be claimed as income by the recipient. Spousal support payments on the other hand can be claimed as a deduction by the payer and must be claimed as income by the recipient.

To identify if a payment is child or spousal support, you must look to the court order or written agreement. Any payments which are not specifically designated for the sole support of the former spouse are to be considered child support.

In order to claim a spousal support deduction, the payer must first pay all of the child support payments. Any arrears in child support payments are added to the next year’s support payments and again these must be paid before any spousal support is claimed.

Taxation of payments to third parties

Examples of payments to third parties include property tax and insurance. It is important to structure these payments properly so as to minimize taxation. In order to deduct such payments, three conditions must be met:

  • There is an agreement or order specifying that these payments are to be made for the benefit of the recipient spouse.
  • The payer and recipient are living apart.
  • The written agreement or court order specifies that the payer may deduct these payments and the recipient will claim them as income.

When to notify CRA of the marital status change?

The Canada Revenue Agency (CRA) must be notified in the month following the change of marital status. If you are separated, CRA must be notified after 90 continuous days of separation. You can use the form RC65 to notify CRA.

Canada Child Tax Benefit (CCTB)

The CCTB will be recalculated based on the new family income and will be adjusted in the month following the marital breakup. The person who resides with the child and is responsible for his/her upbringing is the one who will receive the CCTB.

It’s important to remember that the CCTB is based on family income. After the breakup of a marriage it may be advantageous for the lower income person to receive the CCTB so as to maximize the monthly cheque. A well-crafted separation agreement or order or judgment should take this into account and designate the lower income parent to be the one to claim for the CCTB.

In a shared custody arrangement if the parents:

  • live in separate locations;
  • live with the child on an equal or near-equal basis; and
  • are primarily responsible for the child’s care and upbringing when living with the child.

then the CCTB will be apportioned on a 50/50 basis.

Remember that you must continue to file an income tax return every year in order to receive the CCTB even if you have no income.

Eligible Dependent Claim

You can claim the Amount for an Eligible Dependent (AED – also known as the “single parent exemption”) if you didn’t have a spouse or common-law partner living with you and you supported a dependent and you lived in the same home as the dependent. If a parent pays child support they become ineligible for the AED. Once again a properly written agreement will specify who may claim for this amount.

Only one person can claim for an eligible dependent. If you have shared custody and both make support payments for the dependent, only one person may claim for an eligible dependent. If you can’t agree who is to make this claim, then no one can claim it.

Child Care Expenses

Both separated parents can now claim child care expenses (assuming there is no other supporting person) up to the limit for that child ($10,000 if the child qualifies for the Disability Tax Credit). However there are some caveats:

  • The expenses must be for the period that the parent has custody of the child
  • That parent must pay the expenses
  • It still must be for the purposes of:
    • Earning employment income
    • Going to school
    • Running a business
  • If both parents use the same child care provider, they must pay separately and obtain receipts to reflect the period that they had custody.

If there is a separation and subsequent reconciliation, Form T778 Child Care Expenses Deduction will guide you through the amount you can claim.

Medical Expenses

Either party may continue to claim for medical expenses provided they made the payments for a supported person. The big difference is that while married or common-law couples can pool their medical expenses to lower the tax payable, divorced or separated parents must make individual claims.

Where possible, the family’s medical expenses should be claimed by the parent with the lower income in order to maximize the medical expense tax credit.

Tax Credits and Deductions

It should be specified in the separation agreement which parent will be claiming the available credits and deductions.

BC Autism Funding

There should be no great change as this amount is not taxable. As before, only one parent may be in charge of the funds from the AFU and this is unlikely to change after a separation or divorce.

Fitness and Arts Tax Credit

Each parent can claim the fitness amount and arts amount. However, the claims cannot be for the same expenditures and the combined claim per child for each program cannot exceed the $500 limitation.

Who gets the extra $500 for a disabled child? Either parent can claim this amount as long as another person has not already claimed the same fees.

Legal Fees

You can’t deduct legal fees used to obtain a divorce, establish or contest child custody, or to divide property.

Legal fees that are deductible include:

  • To obtain child or spousal support
  • Legal fees used to collect salary or wages
  • Fees to try to make child support payments non-taxable

Personal Residence Exemption

Prior to a marital separation, only one residence per family could be used for the “Principal Residence Exemption”. This is used to exempt the property from any capital gains tax during the years that it is designated as a principal residence. Following the separation, each parent is now entitled to their own “Principal Residence Exemption” but only after:

  • One year of living apart and
  • They are separated pursuant to a judicial order or written separation agreement

A significant delay to a separation could involve a nasty tax surprise for a separated couple who each own a primary residence.

Separation Agreement

This has been a far from comprehensive guide to divorce involving a child with autism. The key point to everything written above is that you must have a clear, well written separation agreement. It should designate which parent is entitled to the child tax credits and deductions available under the Income Tax Act. This can amount to a substantial amount of money and should certainly be considered when calculating child and parental support payments.

Emotions typically run very high during this period, but it is critical to remember that a well-crafted agreement will go a long way to relieving heartache and legal bills down the road. Cooperation, not confrontation will ultimately lead to a better financial outcome for all parties.

I have always encouraged parents of children with autism to be masters of their own financial domain. Dealing with the Autism Funds Unit, applying for tax credits and deductions and managing their child’s therapy is certainly within the grasp of most people. Divorce is a different beast altogether and good professional advice is essential. At the very least, you should have a reputable lawyer draft the separation agreement. In very complicated cases you may need to enlist the services of an accountant.

I would strongly encourage any of you to share your personal experiences and tips in the comment section below.

The ONE Thing You Must Do

Join a parent support group. No really! You thought I was going to write about the AFU, taxes or some such thing didn’t you?

The benefits of joining a local parent support group are numerous and yes, financially beneficial.

Firstly, support groups will understand what you are going through better than any of your extended family. Only someone who has been there will understand the stresses that you are experiencing. As a guy, it pains me greatly to admit that sometimes it helps to talk about it.

OK, what about the money? You can learn many things from other parents in your community. Things such as:

  • Who are the good Behaviour Consultants in your town
  • Who is going to rip you off
  • What does the local Child Development Centre offer (this one varies dramatically across the regions)
  • What schools are supportive of ASD kids
  • What kind of school aides you can expect
  • What BI’s are good and available (yes parents do share this information)

Additionally if parents share the same Behaviour Consultant and live nearby, they can potentially save on travel costs.

I have benefited greatly over the years with the support offered by other parents in my community. My child has excellent aides some of whom we never would have found if not for the connections in our town.

OK then, which support group should you join? There are quite a few out there and I wouldn’t presume to know all of them. You should however vet the groups so their philosophy matches your own. Some are dedicated to Bio-medical treatments only while others are geared to more evidence based treatments such as ABA Therapy.

Two groups to check out are the Autism Society of BC or the ABA Support Network to see if they have a support group in your community. If there are no groups available, this is your opportunity to give back to the community by starting one.  Contact either of the before mentioned organizations for assistance in setting one up.

 

Pub Night for an “AU-SOME” Cause

The second annual ABA Support Network Pub Night for an “AU-SOME” Cause is coming up on March 1.  Last year’s event was a great time and some people walked away with incredible bargains from the silent auction, door prizes, games and raffles.  This year there will be even more items to bid on including:

  • Beer and wine (all good stuff)
  • iPad mini
  • Photography booth and art packages
  • Restaurant and casino gift certificates
  • and many more items

The same incredible band will be back for this year’s event.  If you want a fun evening and a chance to connect with some amazing people, this is an evening for you.

Hope to see you there!  Buy your tickets online here

Displaying pub night flyer mar 1.JPG

You are invited to attend:

Pub Night for an “AU-SOME” Cause

 

Saturday, March 1, 2014 from 7:00 PM – 10:00 PM

The ABA Support Network is a non-profit organization that provides autism education, information and parent support.

We are proud to be holding our 2nd annual Pub Night for an “AU-SOME”Cause at the award winning Central City Brewing Co!

This evening promises to bring together a fantastic group of parents and supporters in the autism community for an evening of fabulous food, award winning beer and good times!

There will be a silent auction, souvenir photos, door prizes, raffle draws, and more!

$28 ticket includes a selection of fabulous appetizers, plus a pint of award winning craft beer, highball or glass of wine.

If you have a business that is interested in donating an item for the silent auction, please contact Dione at dione@abasupportnetwork.com or at 604-817-1526.  Your generosity will be recognized at the event and on our website.
Central City Brewing Co Ltd

13450 102 Avenue

Surrey, BC V3T 5X3

GST/HST Relief – Budget 2014

Our pleas and lobbying efforts have now paid off.  Behaviour Consultant services will finally be exempt from GST/HST according to the budget release notes.

Economic Action Plan 2014 proposes to expand health-related tax relief under the GST/HST and income tax systems to better reflect the health care needs of Canadians.

The Government is committed to ensuring that the tax system reflects the evolving nature of the health care system and the health care needs of Canadians. Economic Action Plan 2014 proposes measures that will expand health-related tax relief by:

  • Providing further tax recognition for costs associated with eligible specially designed medical therapies and training by:

    • Expanding the current GST/HST exemption for training that is specially designed to help individuals cope with a disorder or disability to also exempt services of designing such training, such as developing a training plan.
    • Including amounts paid for the design of an individualized therapy plan as an eligible expense for income tax purposes under the Medical Expense Tax Credit.

The exemption will be effective after budget day, but you can expect there to be a few delays as the government publishes a GST update information sheet and Behaviour Consultants take time to confer with their accountants.

As more information becomes available, I will publish further updates.

Finally, one small win for us!

 

 

Special Presentation – What Can My AFU Funds Do?

The ABA Support Network is hosting a presentation that is very relevant to those us managing an ABA program using only the $22,000 or $6,000 available from the AFU. 

It’s a challenging proposition and we are lucky to have some very respected Behaviour Consultants donate their time and energy to help us understand how to manage our programs under very limited budgets.

The following is from the ABA Support Network website:

Special Presentation – based on feedback from many parents, we are going to talk about the challenges of running quality treatment programs with limited funding from the government.  What do families do that don’t have money over and above the $22,000 or $6,000 per year?
Topic:                 What Can My AFU Funds Do?
When:                 Tuesday Feb, 11  7-9pm
Where:                Surrey Sport and Leisure Center, Arena Side Upstairs Meeting Room
(16555 Fraser Hwy, Surrey, BC V4N 0E9)

At this presentation, you will hear from a panel of BCBAs, and their experience with what you can expect from both over-6 and under-6 funding from the Ministry.  Topics to be discussed include:
1.  Quality vs. Quantity — sample ABA programs of different funding models.
2.  Home vs. school — how to ensure that your child is receiving the best support and supervision with the funds you have available to you.
3.  Collaboration — other resources which can be used to help pay for collaboration with other professionals, such as SLP and OT.
4.  Goal setting — what to consider when setting goals with your consultant.
5.  The ethical perspective of your BCBA — ethical considerations for your BCBA providing consultation on a limited budget.
6.  Tips and troubleshooting  — ideas to help use the funding creatively and maintaining a great team.
We will also end with a Q & A, and invite parents to share their feedback.
please rsvp to tamara_desilva@Hotmail.com

Material Funding Secrets Revealed – Part 3

We know about material funding and why we want to use it.  Now we need to smooth the process.

Remember the basic steps:

If the item in question is on the ineligible list or you think you are likely to be turned down, make an initial request and wait for the rejection from the AFU clerk.  It’s only when you appeal the decision that it will go up the food chain to someone with more authority. The sooner you initially apply, the sooner you will be rejected and the sooner you can start the appeal process. Again this is a completely bizarre procedure, but here are a few things you can do on the appeal to smooth the way:

  • Have a professional (Behaviour Consultant and/or Doctor) write a letter justifying why your child needs this piece of equipment or supplies
  • Make sure your reasoning is sound and related to the autism program

To file an appeal simply write (or email) the AFU citing the rejection and outlining your reasons why it should be allowed. Cite any relevant research and include details you feel are appropriate.

The AFU stipulates that the reimbursement forms must be received within 6 months of the date of purchase to be considered.  It’s OK for them to drag their feet and delay payment, but heaven forbid you should save your paperwork and send it all in together for the entire funding year.

It’s very easy to completely lose track of your funding with all the forms, letters and receipts coming and going.  I highly recommend that you have a tracking system in place to see how much of your funding you have left.  Please don’t leave anything on the table.  Your tracking system could be a spreadsheet or simply a piece of paper. Whatever it is, make sure you use it every time.

If you have been turned down for an item and your friend had it approved, you might consider asking them (nicely!) if you can quote their experience to the AFU.

A few other points to consider:

  • The purchase date must be within the funding year (i.e. starting the month following your child’s birthday)
  • Send in original receipts and make copies for your records
  • Save at least a few months of receipts and send them in together to lessen the paperwork (keeping in mind that the reimbursement forms must be received within 6 months of the date of purchase)

That’s the end of the 3 part series on material funding.  We would all like to hear your experiences by posting in the comments section.  Anything that you can pass on would be greatly appreciated by other parents.

Material Funding Secrets Revealed – Part 2

The previous post outlined the absurd policies of the Autism Funds Unit (AFU) when it comes to material funding.  There are only two logical explanations for such bizarre rules:

  • The government bureaucracy is trying to justify its existence and maintain a large workforce or
  • They are trying to ensure that you don’t spend your funds which are then returned to the government and undoubtedly used for bonuses for the department heads who underspend their budgets.

OK, so why bother using material funding at all?  Most people will easily fill their yearly funding allowance with behaviour intervention for their child.

One reason is if you are on a shoestring budget and simply have no money left for autism therapy, then you must somehow manage the yearly autism funds to cover intervention, training and materials.

The majority of us spend well in excess of the available autism funds.  In this case you are better off to claim the maximum allowable ($1,200 or $4,400) for material funding.  The reason is that funds spent out of your pocket for intervention can be used as a medical expense on your annual income tax.  This could result in a refund as much as 20% of the total depending on your income level.  Money spent on material goods in support of an autism therapy program are ineligible as a medical expense (Yes, this has been tested in the Tax Court of Canada).

So what can you use your funds for?  It’s a bit of a challenge to spend your entitlement, but here are some ideas:

  • Flash cards
  • Reinforcement toys
  • General supplies such as pens, pencils, paper, binders, clips, staples
  • Printers
  • Printer supplies
  • One computer or iPad or Touch Screen device every three years
  • CDs or DVDs relating to the therapy program
  • Travel to and from autism intervention (round trip greater than 80 kms) or training
  • Autism conferences
  • Computer programs (remember to justify their use) such as Microsoft Office or autism specific programs
  • iPad apps (again justify their use)
  • Arts and crafts
  • Books
  • Membership for the Canucks Autism Network

If you know of any other items that can be claimed, please let us know in the comments section.

There is no reason why your purchases must be made in Canada.  With all the high priced help in the Autism Funds Unit, I’m sure they can calculate exchange rates.

Nothing in the AFU guidance indicates that the purchase must be a new product.  As long as you have a proper receipt, I see no reason that the purchase can’t be “pre-owned”.

Next post:

  • Tips for managing material funding

Material Funding Secrets Revealed – Part 1

Most of us are aware that 20% of our child’s autism funding can be used for materials. It sounds simple on paper, but try following the next example.

A pencil is required for your child’s therapy. The steps you will follow are:

  • Price the pencil out at a store of your choice
  • Hire a Behaviour Consultant at the going rate ($100/hour?) to complete the Justification for Equipment and Supplies Form (CF0908)
  • Send the form to the Autism Funds Unit (AFU) and wait for approval
  • The AFU recommends that you receive approval before purchasing the pencil
  • After a long delay, you will receive approval in the mail to purchase said product
  • You will then purchase the pencil!
  • The next step is to send the original receipt (no fax or email here!) to the AFU along with the Reimbursement for Autism Expenses form (CF0926)
  • After a long delay, you will then receive a cheque from the government to cover the expense of the pencil (assuming the delays didn’t mean you purchased the pencil outside of the funding year!)

Another issue that drives parents nuts, is the inconsistency of material approval. One parent might be approved for an item one year and another rejected the next.

So what can you use the 20% of funding for? The following list is taken from A Parent’s Handbook: Your Guide to Autism Programs.

  • Training within B.C.
  • Travel costs to access autism intervention or training within B.C. (round trip greater than 80 kms)
  • Equipment, as necessary for effective intervention, outlined in a Justification for Equipment (JFE) Form, from a professional/specialist—pre-approval suggested

What are the ineligible items? Again the list is from A Parent’s Handbook: Your Guide to Autism Programs

  • Home repairs, renovations, swimming pools, hot tubs, trampolines, playground equipment
  • Household items, including appliances
  • General recreation and sports enrolment fees
  • Sports/fitness equipment, including bicycles
  • Electronics, including televisions, CD players, stereos, MP3 players, game systems, video games, tracking devices, and cellular phones/palm pilots (Is there anyone left on this planet that still uses a Palm Pilot?)
  • Non-ASD specific CDs, DVDs, and videos
  • Musical instruments (purchase or rental)
  • Vitamins, medical supplies, incontinence supplies, orthotics
  • Clothing, helmets
  • Food (however, small reinforcers for Applied Behaviour Analysis therapy may be eligible)

The following are examples of services that are not eligible:

  • Child care
  • Respite
  • General recreation lessons such as swimming and karate
  • Medical services
  • Services provided out of province

From my discussions with many parents, I can tell you that that the ineligible list is incomplete and conversely I have talked with some parents who received approval for ineligible items. As well, just because you had a Behaviour Consultant recommend certain materials, does not mean that it will be paid.

Next posts:

  • Why should you bother with material funding?
  • Tips to make material funding easier

TD1 – Reduce Your Income Tax Deductions

What is a TD1?

This form will assist your employer to determine the amount of tax to withhold from your pay. This form is mandatory for new employees and should be updated when there is a change in your circumstances.  As the parent of a disabled child qualifying for the Disability Tax Credit you will elect to have these tax credits reduce your regular income tax withheld.  The alternative is to effectively give an interest free loan to the government as you wait to have these amounts refunded after you file your income tax return.

Where do I get these forms?

They will either be supplied by your employer or you can download them at TD1 Forms for 2014

What should I claim?

Firstly under Line 2 you will claim $2,255 for each child and $2,058 for your infirm child. The latter refers to the Family Caregiver Amount that you will claim on your tax return.

On line 12 you will claim $7,766 for 2014. This is for the “Disability Amount Transferred from a Dependent”. You could claim the disability supplement but this will be reduced if you claim child care or attendant expenses.  Best to be safe and leave it at $7,766. Likewise on the provincial TD1BC form you would similarly claim $7,402 on Line 11.

Prepare Your Own Therapy Invoices And Save $$$

Who creates the invoices for the therapy provided for your child? The Behaviour Consultants (or agency) will generally submit an invoice on a monthly basis for the Autism Funds Unit (AFU) or direct payment from you. But what about your Behaviour Interventionists (BI’s)? You should take on the responsibility of making the monthly invoice. Why?

  • It gives you more control over the type of services rendered (more on that below)
  • If you leave it to your BI’s, they will get it wrong
  • You will be more aware of the hours that are being billed
  • It will reduce fraud
  • You need to closely track how funds are dispersed

I have my therapists complete a hand written time sheet which are collected at the month end and used to create the invoices that will be submitted to the AFU or held for tax purposes. I track the AFU funds on a spreadsheet or hand written table to ensure funds are available and set aside for that therapist. It sucks away team morale if the BI’s aren’t paid because you weren’t paying attention to how much was in the account.

You must pay particular attention to the “services rendered”. Firstly the AFU has specific terms they want used. Do you think they are going to pay for a particular day if the BI enters the service rendered as “Bike riding with little Johnny”? I think not! For a more detailed discussion of terms that should be used for the AFU invoice refer to the ACT Autism Manual for BC Chap 5.

After the AFU funds are used, you need to think about taxes. Services that can be claimed include:

  • Tutoring
  • Child Care
  • Attendant Care

Therapists who construct the invoices themselves have no awareness of your tax situation and will screw it up by entering services such as:

  • Overlaps
  • Team Meetings
  • Training
  • Travel
  • Materials expenses

All of the above services are ineligible for tax purposes and hence the need for you to control the invoices.

So how would this work for you? For starters, you may want to claim funds from the AFU to the $22,000 (or $6,000) limit. Once those funds are exhausted and both parents are working (and hence eligible to claim child care expenses) you will create invoices listing “Child Care” as the service provided. Remember you can claim up to $10,000 (assuming the child qualifies for the Disability Tax Credit). This is a tax deduction and will usually provide the best tax refund. After these limits are reached you can then assign the rest of the therapy as “Tutoring” which is a medical expense.

If you have a live in domestic helper, the same principles apply. Firstly use the $10,000 child care expenses and then apply the rest to “Attendant Care” which will be added to the medical expenses.

Are you starting to see why you should create your own invoices and receipts? It’s your money and no one better than yourself understands what you should be claiming. Remember that each invoice should be matched with a proper receipt with the required information.

Now you could ask your BI’s to make their own invoices using certain rules, but I guarantee they will screw it up. You will then expend twice the effort to correct their mistakes. It’s much easier to do it right the first time.

I have provided some examples in my Files page of invoices you can create. It can be hand written in table format (keep it neat!) or constructed using a spreadsheet (my personal favourite).

Autism Assistance Dogs – What you need to know

A guest post from one of our parents whose child didn’t qualify for a support dog, but ultimately found a way.  Thanks Pam  for sharing your experience with us.

In British Columbia, in order for a person with a disability to have public access rights with a service dog, the dog should be trained by a member organization of Assistance Dogs International (“ADI”) (http://www.assistancedogsinternational.org). British Columbia is in the process of enacting a new service dog act (http://www.bccpd.bc.ca/gada.htm) which will confirm this policy. The present legislation, being the existing Guide Animal Act (http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_96177_01), does allow the Minister to issue a certificate for a dog, however in practice such certificates are generally issued only to dogs trained by ADI organizations.

The only ADI-certified organization training dogs for persons with autism in British Columbia is Autism Support Dogs (http://www.autismsupportdogs.org), which is affiliated with BC & Alberta Guide Dog Services. Unfortunately they are often not taking applications, as they have very long waiting lists, and their criteria is very narrow. In general, when taking applications, they provide dogs to moderately to severely autistic children between 4 and 10 years of age who have a tendency to bolt in public places, among other requirements.

The ADI website lists all nine ADI certified organizations in Canada. Pacific Assistance Dogs is another BC organization, however they do not yet train autism dogs.

Another Canadian ADI certified organization deserves mention – the Lion’s Foundation of Canada, whose website is at http://www.dogguides.com.

The Lion’s Foundation trains dogs in six different program areas – vision, hearing, diabetic alert, service (mobility), seizure response, and… Autism. Their autism program is much more flexible than the BC program. High anxiety in an autistic child combined with a belief by the family and the organization that a dog may help is generally enough to qualify (assuming other factors are met – more information is on the website). The following are notable factors of the Lion’s Foundation’s program, which is in Oakville, Ontario:

  • They serve all of Canada;
  • At present (November, 2013), they estimate their waiting list from the time of first application to be approximately 12 months, however they look for a good match between the family and dog, so dogs may be placed earlier or later;
  • One or both parents go for training for 12 days or so, which training happens 6-8 weeks after a match is made between the family and a dog;
  • Accommodation is at their training facility – accommodations and meals are provided;
  • Air travel to and from Oakville is provided;
  • Once the dog is back home, a trainer visits after a month or so to address any problems;
  • If the family wants the child to take the dog to school, the trainer will return a second time to train the school once the dog has settled in and been with the child for about 6-12 months, depending on the situation. The trainer will be at the school during the child and dog’s first day there;
  • Labrador Retrievers and Golden Retrievers are generally used – there are also Standard Poodles available for families with allergies;
  • The child must be between 3 and 18 years of age, however when the dog eventually retires they will replace the dog (and continue to do so), even if the ‘child’ is then over 18, providing the organization and family believe that there continues to be a benefit to the person in having a service dog; and
  • There is NO cost to the families, though of course donations are gratefully accepted.

The situation in Canada with public access rights is very different in most provinces from that in the United States, where federal law provides public access rights to disabled persons with service dogs who are trained by any organization, or even self-trained. These dogs can easily cost $10,000 to $25,000 or more, and a disabled BC resident who has one and brings it to BC would not automatically be entitled to public access rights with such a dog in BC, even if it was trained by a very reputable organization (and there are many) unless the organization is an ADI certified organization, which most aren’t. There are also organizations in Canada who purport to train service dogs. Unless the organization is listed as an ADI member or can provide some other certification from the Minister that a particular dog they have trained is certified for use in BC, then you should assume that a disabled person with such a dog does not have public access rights with the dog.

One more important link is that of the BC government Q&A regarding guide/service dogs http://www.pssg.gov.bc.ca/guideanimal/q-a.htm

Bend Over…The AFU does it again

A lot of people were excited that Direct Funding was returning albeit with many caveats such as:

  • Only for those kids 12 and up
  • Only for those who have been on invoice funding for 2 years
  • Only for those families who are organized enough to apply at least 60 days prior to the beginning of the funding year
  • Only for those who set up a separate bank account
  • Only for those people who are willing to submit to an audit several years after the funds have been disbursed. If you fail the audit you will have to repay the expenses.
  • Only for those who can hang on to all the original invoices and receipts and submit them after the funding year
  • Only AFU funds may be deposited into the account and funds may only be used for eligible expenses. If you have 67 cents left in your account at the end of the funding year, you are not allowed to top up the funds by 33 cents so you can buy a #&*%@! pencil. Instead the funds will be deducted from next years funding because you didn’t use them!

What really has my blood boiling is that they now require parents to pay a professional accountant to complete an “Account Confirmation Form”. As if we are not financially stretched enough, we now have to hire an accountant at God knows how many hundreds of dollars per hour to do this paperwork. This is on top of providing the original payment invoices and receipts to the AFU!

One thing is for sure. It’s not about the kids when it comes to the AFU!