Did You Buy A New Home?

First time home buyers can claim a $5,000 tax credit, but what if this is not your first home?

  • Do you have a family member who qualifies for the Disability Tax Credit?
  • Is the new home more accessible to the individual or
  • Is it better suited to their needs?

If so, you qualify for the Home Buyers Amount even if this is not your first home. The $5,000 tax credit translates into $750 in your pocket.  Not bad eh?

For more information consult CRA – Home Buyers’ Amount

What if I purchased a home previously and forgot to claim it?

No problem!  That’s what the form T1-ADJ form is for.  It’s a simple one page form that my 8 year old could fill out.

 

 

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.

Home Accessibility Tax Credit

Did you have home renovations during 2016 to:

  • Allow a qualified individual to gain access to, or to be mobile or functional within your dwelling, or
  • Reduce the risk of harm to the individual within the dwelling or in gaining access to the dwelling?

If so, you may be eligible to claim a tax credit (15%) on up to $10,000 worth of renovations. For more detailed information consult CRA – Line 398 Home Accessibility Expenses

Who is a qualified individual?

An individual who is eligible for the Disability Tax Credit (DTC) for 2016.

Who can claim this tax credit?

  • A qualified individual, or
  • An eligible individual (for our purposes, someone who is entitled to claim the disability amount for the qualifying individual)

What is an eligible dwelling?

A housing unit that is owned by the qualifying individual or by the eligible individual.

Eligible Expenses

  • Expenses are outlays made or incurred during the year that are directly attributed to a qualifying renovation and must be for work performed and/or goods acquired in the tax year.
  • For work performed by yourself, you may claim materials, plans, rentals and permits. You may not however claim your own labour or tools as expenses.
  • For work performed by a family member, the expenses are not eligible unless the person is registered for GST/HST.

What are some examples of work are applicable to a child with autism?

  • A fence to contain a child with elopement issues
  • Modifications to the structure to contain a violent or aggressive individual
  • Floors that may lessen the risk of injury

What can’t be claimed?

  • Maintenance
  • Appliances
  • Financing
  • Home entertainment systems
  • Renovations meant to increase the value of the home

Can you double dip?

YES! For those who qualify for renovation costs as a medical expense, both the Home Accessibility Tax Credit and the Medical Expense Tax Credit may be claimed for the same expense. Keep in mind however that the Medical Expense is only for those with mobility issues.

Can you triple dip?

Sure, why not? If you acquired the home for the benefit of a related person who is eligible for the DTC you may be able to claim $5,000 via the Home Buyers Amount even if it is not your first home. The stipulation is the home must be purchased to allow the person with the disability to live in a home that is more accessible or better suited to the needs of that person. Refer to CRA – Home Buyers Amount for more information.

Fitness and Arts Tax Credit

Sadly 2016 is the last tax year that we will be able to claim the Fitness and Arts Tax Credit. They were popular tax credits among parents with disabled children as there was a supplemental credit of $500 for children eligible for the Disability Tax Credit.

Fitness Tax Credit

The maximum eligible amount that may be claimed for 2016 has been reduced to $500 (down from $1,000). The supplemental $500 figure remains intact.

For those who have not claimed this credit before, the amount is increased by $500 as long as at least $100 claimed.  In other words, if you have $200 worth of eligible receipts, the claimed amount would be $700. Most tax software will automatically add the $500 supplement as long as you have indicated that a T2201 has been filed.

Arts Tax Credit

The maximum eligible amount for 2016 has been reduced to $250 (down from $500). The $500 supplement remains intact and works the same as for the Fitness Tax Credit.

The Future

Both of these tax credits will be eliminated for 2017 and sadly the $500 supplement will disappear at the same time.  The Federal Government has not announced any changes that will make up for this loss.

It is true that for most kids there will be an increased amount through the new Canada Child Benefit. This is fine for a typical kid, but there is nothing now to recognize the high barriers that we have getting our children into sports and arts classes.

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.

Federal Budget 2016

I just finished reading through the 2016 Federal Budget and quite frankly they could have done better. I expected a little something for our disabled kids and unfortunately there is nothing positive.

What did we get? Nothing! In fact the government is actually reducing some of the benefits for our kids.

The Fitness Tax Credit and Arts Tax Credit will be cut in half for 2016 and eliminated for future years. Where this really hurts our kids is that we have been able to add $500 to the total as long as we spent $100. This was in recognition of the fact that our kids have high barriers to sports and arts program and frequently need supervision or training to participate. Now our kids are just like the others (as if!).

I’m disappointed with our new Prime Minister. Yes, the previous government definitely had its problems, but at least it was friendly towards persons with disabilities. Some of the enhancements on their watch included:

  • The Registered Disability Saving Plan (RDSP)
  • The Family Caregiver Amount
  • The Fitness Tax Credit with enhancements for disabilities
  • The Arts Tax Credit with enhancements for disabilities

I expected better from this government. Do they not care about the most vulnerable people in our society?

Are you annoyed? Let your local Federal Member of Parliament know about it.

Beyond that, Medicare for Autism Now (MFAN) has an initiative calling for ABA treatment to be universally accessible and covered under Medicare. This is a time sensitive issue and if you want your voice heard, go to their website and see how you can participate.