Tag: disability tax credit certificate

Multi-Generational Home Renovation Tax Credit

Do you have a disabled child who is aging out and want to keep them at home? Perhaps you are considering a basement suite or something similar? Help is now here!

Starting in the 2023 tax year, a new tax credit is being introduced to help families add a secondary unit to their home for the purpose of allowing an immediate or extended family member to live with them. The family member must be a senior or an adult (age 18 or older) with a disability. A disability is defined as qualifying for the Disability Tax Credit at any time during the year.

This new credit will provide 15% tax credit on expenses of up to $50,000 or in other words, up to a $7,500 tax refund.

The secondary suite must be for a related adult over the age of 65 or an adult with a disability, including a grandparent, parent, child, grandchild, sibling, aunt, uncle, niece, or nephew. The suite must be self-contained and include a separate entrance, bathroom, kitchen and sleeping area. The unit must be inhabited or reasonably expected to be inhabited within 12 months after the renovations are completed.

Appliances, repairs, maintenance, security, financing costs, housekeeping or other services do not qualify for the credit. If you do the work yourself, you may not claim the labour as a cost, but you may claim permits, building materials, fixtures, plans and equipment rentals. If a family member or friend performs the work, you may claim their labour as an expense only if they have a GST/HST number.

The tax credit may be claimed by a person who lives in the house within 12 months of completed renovation and is:

  • An eligible person (the senior or the adult with a disability) or,
  • A spouse of the eligible person or,
  • A qualifying relation of the eligible person, who owns the dwelling

Expenses claimed for the Multi-Generational Home Renovation Tax Credit may not also be claimed as a Home Accessibility Tax Credit or a Medical Expense Tax Credit.

Refer to the CRA site for more detailed information.

New Disability Tax Credit Documents

Two new documents are available on my website today.

The first is an updated “T2201 Guide” which explains how to apply for the Disability Tax Credit for children with autism. There have been numerous changes over the past year including a new form, an online application for the physician and an online tool to guide you prior to your doctor’s appointment. If you need to apply (or re-apply) for the Disability Tax Credit for your child, this document is a must read.

The second is a brand-new guide to maximizing your refund after getting Disability Tax Credit (DTC) approval. There are many misunderstandings about what can be claimed and back dated following DTC approval. This document will guide you through the process in an easy straight forward manner. The Post T2201 Guide can be downloaded directly or from my files page.

Happy Reading!

COVID-19 Special

This COVID update has been slow in coming. I wanted to do something other than tell you to wash your hands. Sadly, there is little to report.  MCFD as usual continues to underwhelm us.

They have refused to let the AFU funds transition to the next funding year except in limited cases . It is frustrating to lose out on therapy for your child because you cannot get a Consultant or BI to come into your home.

They have allowed the material funds to go as high as 35% of your annual funds. The deadline of 30 June 2020 for this allowance is quickly approaching.

Autism Funding may now be used for family counselling .

MCFD has some emergency funding available but good luck contacting your social worker.

What should you do if you are just starting out and are not yet receiving autism funds?

The wait time for Sunnyhill is increasing by the day. The latest estimate is 65 weeks from the BCANN website. Your actual wait will be much longer as the COVID-19 restrictions continue to add to the backlog.

I would strongly suggest booking a private assessment. The cost of waiting for a public assessment may be huge in terms of loss of time critical therapy and lost autism funding (i.e. no assessment – no autism funding). Please check with other families in your community or Facebook groups for the best practitioners in your area. The Autism Support Network has a superb Parent Facebook group where you can ask these and many other questions.

AutismBC has a webinar “Waiting for Assessment” which has tons of great information. The cost is free! Sign up as a new member (this is also free!) to get notified of upcoming events.

The Autism Support Network has some outstanding YouTube videos  which are a must view for families with a new diagnosis.

What should you do if you are in receipt of autism funds?

Spend as much as you can on materials if you are unable to spend your funds on therapy due to COVID-19. The Autism Funding Program will allow you to purchase a computer or iPad once every 3 years. For detailed insight into what you may purchase using Autism Funding, consider joining the excellent AFU Families Facebook group.

Some of our kids respond well to online schooling and therapy sessions and others not so much. If your child is high needs and requires in-person sessions the Autism Support Network has some guidelines to follow. For a more comprehensive guide to ABA sessions during the current pandemic, refer to the BC-ABA resources page.

Does your child qualify for the Disability Tax Credit?

If so, the federal government will be sending you an extra $600 . When will it arrive? Who knows, but we will be happy to receive it when it does come.

If your child does not qualify for the DTC, now is a good time as ever to get started on the process. Consult my file Autism and the T2201 for a detailed look at how to get started.

T2201 Guide Version 4 Released

Form T2201 is the linchpin for The Disability Tax Credit (DTC). I cannot begin to describe how important this form is to our families.  Unfortunately some new political realities are making it more difficult for families to apply.

A successful filing of the form T2201 will set your family up to apply for:

  • The Disability Tax Credit
  • The Child Disability Benefit
  • The Home Buyers Amount
  • Additional qualifying medical expenses
  • Home Accessibility Tax Credit and
  • Most importantly, the Registered Disability Savings Plan (RDSP)

It appears that the rejection rate is on the rise.  We have all seen the news stories of families being rejected for the DTC, even if they have previously qualified. At first I thought this was simply a few families who did not fully complete their forms, but it looks like it going well beyond that.

Does This Mean You Shouldn’t Apply?

No!

It does mean that you need to be even more careful about how the form is completed and how your case is presented.

As one of my favorite bloggers (Big Canjun Man at the Canadian Personal Finance Blog) likes to point out; “If you don’t apply, you will never get the Disability Tax Credit”.

The updated T2201 Guide is available for download here. There is some additional guidance how far back the disability can be back dated as well as how to deal with the changing political climate. I strongly recommend that you read the document completely before sending it to the government.  It is so much easier to deal with issues now rather than following a rejection.

Navigating services for your child with Autism is like juggling shape-shifting porcupines. It's not easy, and you encounter a lot of pricks.

 

Milburn’s Excellent Guide to Back Dating Disability Credits

So what are we talking about here?

Most of the federal tax credits that I describe on my website are based on the foundation of eligibility of the Disability Tax Credit (DTC). This is granted by the government after a successful filing of the T2201 form.

I will warn you that this is a long post.  If you are not interested in getting a substantial amount of money from the government, please stop reading now! On the other hand if you are like most humans and you like money, read on and I will provide you with some simple solutions.

Many people are unaware that the tax credits in question begin not on the day the DTC is granted, but rather the effective date, which may be many years in the past or ideally birth. Of course, as readers of my website, you obviously consulted my T2201 guide and ensured that birth was the effective date of the disability.  You did read the guide…right? If you were unaware of this, you can certainly re-apply for the DTC with updated information using the form T2201.

Once the DTC eligibility is in hand, many of the tax credits can be back dated to the effective date of the disability, but in most cases, you have to ask for it.

So, one by one, here are some of the tax credits that you can have back dated.  Please don’t dismiss this as too hard.  The process is very easy and can add up to a substantial amount of money. You can do it with only a couple of hours work and the payout can in some cases be worth tens of thousands of dollars of after tax money. Hey, I would love to get a job that pays $5,000 per hour.  Wouldn’t you?

The Disability Tax Credit

This is the only tax credit which can be back dated automatically on request.  The new T2201 form has an election (in other words…tick the box) to have the government automatically calculate the amount for you.  Why it is an election is beyond me.  Why wouldn’t someone want the the government to send them a pile of money?  The DTC is presently worth about $2,300. Multiply that by the years owing and that could turn into a lot of coin.

The Child Disability Benefit

Once you qualify for the DTC, the government will automatically calculate a back dated amount for the current and two previous tax years.  Prior to those years, you will have to make a request. To make this request is dead simple.  Write a letter to the Canada Revenue Agency (CRA) and ask that they back date this benefit to the effective date of the DTC.  It’s just that simple!

At over $2,700 per year for a low income household, this tax free benefit can add up dramatically.

Medical Expenses

All those years of tutoring or therapy can now be claimed.  Use the T1-ADJ form to make the request.  It’s a simple one page form with no calculations required. Make sure you include receipts and invoices to back this up. Refer to https://asdfunding.com/medical-expenses/ for more information.

Attendant Care Expenses

A sub-section of Medical Expenses which may include hiring a nanny for your child. Refer to https://asdfunding.com/medical-expenses/ for more information.

Fitness and Arts Tax Credit

Even though the federal government has phased out it’s program, you can still claim expenses from years past using the T1-ADJ form.  Remember that for each year of DTC eligibility, the government will add $500 to the total just because you have a disabled child. Receipts are required if you have not already submitted them. Refer to https://asdfunding.com/other-tax-credits/ for more information.

Child Care Expenses

You did hang on to your receipts from years past, right?  If so, you can now claim up to $10,000 per child eligible for the DTC. Again the T1-ADJ form is the one to use. Refer to https://asdfunding.com/childcare/ for more information.

Canada Caregiver Amount

The Canada Caregiver Amount (which now incorporates the Family Caregiver Amount) can be back dated to 2012 (the inception of the credit) or the effective date of the DTC, whichever is later.  No receipts are required and again the T1-ADJ form is used. Refer to https://asdfunding.com/other-tax-credits/ for more information.

Home Buyers Amount

Normally this is for first time home buyers, but if you purchased a home for the benefit of someone who qualifies for the DTC, then you may be eligible for this $5,000 tax credit. The purchase must be made to allow this person to live in a home that is more accessible or better suited to their needs. Once again, use the T1-ADJ form. Refer to https://asdfunding.com/other-tax-credits/ for more information

Home Accessibility Tax Credit

If you had home renovations in 2016 for the benefit of someone who qualifies for the DTC, you may claim up to $10,000 of expenses.  Refer to this post for more information.  Once again use the T1-ADJ.

Receipts

Receipts must be supplied to back up your claims for the following credits/deductions:

  • Medical Expenses
  • Attendant Care Expenses
  • Fitness Tax Credit
  • Arts Tax Credit
  • Home Accessibility Tax Credit
  • Home Buyers Amount
  • Child Care Expenses

Normally when filing a tax return, you would not include receipts, but rather hold on to them in case CRA asks for them.  In this case as you are filing for past credits, you must include them in your letter.  Make sure that they are broken down by year and category.  It should go without saying, but if you don’t have the receipts, don’t claim the credit.

Registered Disability Savings Plan (RDSP)

OK, so this is a little bit different than the tax credits referred to above, but no less valuable. The RDSP grants and bonds from the government (read that as free money) can be back dated to the effective date of the DTC.  All you have to do, is open the RDSP.  The Disability Savings Bond (up to $1,000 per year) will automatically be back dated. To receive back dated Government Saving Grants, you will have to make appropriate contributions to the account.

That sounds like way too much work!

I agree! Two hours of work to receive thousands or even tens of thousands of dollars is completely unreasonable. Fortunately, Milburn has created an easier solution for you!

It turns out that you don’t actually have to use the form T1-ADJ.  You can just write a letter instead.  Too much work still?  No problem! I have created a template letter in docx format that you can download here and send to the CRA.  You’re welcome!

Anything Else?

For God’s sake don’t pay anyone to do this for you.  So called “Disability Agencies” will charge you an exorbitant amount to do what you can easily do yourself.  Don’t even call them for a quote, unless you enjoy being harassed to use their services.

What next?

Once you have completed all of the above, there are three very important steps that you must do:

  1. Firstly, congratulate yourself for being so clever.
  2. Secondly, go out and celebrate your good fortune.
  3. Thirdly, post your experience on whatever parent message board you are using.  Let other parents know how valuable this is and encourage them to do the same.

Bill C-462 – Dead on Arrival

Tweet For those of you unaware Bill C-462 the Disability Tax Credit Promoters Restrictions Act ,was passed into law and received Royal Assent (2014-05-29) . Limits are needed for DTC Consultation Firms (link to CBC article on the act) This Disability Tax Credit Promoters Restrictions Act summary This enactment restricts the amount of fees that can…

via Bill C-462 : Protecting Disabled Canadians or a Paper Tiger ? — Canadian Personal Finance Blog

The New Disability Tax Credit Certificate

Last year Canada Revenue Agency (CRA) held consultations across the country regarding the Disability Tax Credit (DTC) program. The welcome changes involve a simplified Disability Tax Credit Certificate Form T2201 and the method of claiming adjustments to the Disability Amount for previous years.

Some highlights include:

  • The form is reduced from 12 pages to 6
  • Detailed instructions are now moved to the Form RC4064 – Disability Related Information
  • Added a new section to allow for adjustment for previous tax years
  • Added more space for “Effects of Impairments”
  • Added a gentle hint for each mandatory section by labeling it “Mandatory“
  • Shortened some sections for clarity
  • For each type of impairment, CRA has added who may certify that section

All these changes are most welcome and will simplify the process for new applicants. The basic premise of DTC application has not changed and advice from other parents who have completed the process remains largely intact.

My detailed T2201 Guide has now been amended. I strongly recommend that you download and read this guide prior to making your initial application.

Tax Changes for 2015

There are a few minor tax changes for the 2015 tax year that parents with ASD kids need to be aware of. Some of the changes are cosmetic and others may have a more substantial impact on your family finances.

Some of the changes include:

  • The Family Caregiver Amount for children under the age of 18, is now claimed on line 367 of your tax return. This tax credit is $2,093 for 2015.
  • The Fitness Tax Credit used to be a non-refundable tax credit, but starting with the 2015 tax year becomes a refundable tax credit. In essence, this means your tax payable for the year can be reduced below zero. Unlike previous years, you may now claim up to $1,000 and if your child is eligible for the Disability Tax Credit (DTC) and provided you spend at least $100, you may add an additional $500 to the total. If you are using tax software (highly recommended), it will automatically add the $500 as long as it knows your child qualifies for the DTC.
  • The Child Tax Credit (this is the base tax credit for all children) has been replaced with an enhanced Universal Child Care Benefit (UCCB) which gives a new benefit of $720 per year for children ages 6 to 17. It’s important to note that this is taxable, so be ready for a tax bill (or a decreased tax refund).
  • For those of you with disabled teenagers, a gentle reminder that you should file tax returns on their behalf starting for the year that they turn 17 (and every year thereafter). This is vitally important for their Registered Disability Savings Plan (RDSP) grants and bonds when they turn 19. The Canada Revenue Agency (CRA) considers the amount of income 2 years prior to the current tax year to calculate government contributions.
  • The Disability Tax Credit for 2015 is $7,899 and the disability supplement for persons under the age of 18 is $4,607. As in previous years, the supplement may be reduced if someone claimed Child Care or Attendant Care expenses. I strongly suggest that you use tax software for this calculation.
  • There are some changes to the T2201 Disability Tax Credit Certificate and how to claim for previous years. I will be expanding on this subject next week.

Time to Re-apply for the Disability Tax Credit Certificate

Let me preface this post with a thank you to Milburn Drysdale at ASDFunding.com (or Autism Funding in BC for Dummies) his documentation is what we based most of this work on, and if anyone asks you, they should check out his site before you read anything over here about Registered Disability Savings Plans for Disability Tax Credits. I’d…

Source: Time to Re-apply for the Disability Tax Credit Certificate

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

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.

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.

Autism and the T2201

I have received many questions over the years about the T2201 Disability Tax Credit Certificate, some obvious and others not so much.  For a parent new to autism, it can be an intimidating process.

I’ve put together a package with information that parents need to know before completing the T2201 form.  For those of you that don’t know, the T2201 form is how you apply for disability status with the federal government. Approval for the Disability Tax Credit (DTC) leads to many tax breaks for parents of disabled children.

The PDF file can be obtained from the link T2201 Guide or from the Files page.

It should be compared against the latest T2201 form which can be downloaded here.