Ten Tax Tips

By Harry Beatty

Once again, it is tax time! Returns for the 1998 taxation year should be filed by April 30, 1999. Although the following 10 tips will provide you with some suggestions as to how to complete your income tax return, this is general advice only. If you have questions, consult Revenue Canada, or your own tax advisor.

Tip 1 - Obtain disability-related information from Revenue Canada.

Revenue Canada has three publications you should get: "Information Concerning People with Disabilities 1998"; "Disability Tax Credit and You"; and "Interpretation Bulletin IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction." These are available in alternate formats. Revenue Canada accommodates persons with communication disabilities through specialized telephone lines and alternate-format materials, as explained in "Information Concerning People with Disabilities 1998" or in the General Income Tax Guide.

Tip 2 - File a return even if your income is non-taxable.

If your main source of income is social assistance or workers’ compensation, you should still file a tax return, even though this income is non-taxable. By filing a tax return, you become eligible to claim the GST/HST credit and refundable provincial tax credits in some provinces. ("Refundable" means that you can get money back even if you do not pay or owe income tax.) You also need to file a tax return to claim the new Canada Child Benefit, and to qualify for some provincial programs for persons with disabilities.

Tip 3 - Discuss eligibility for the Disability Tax Credit (Disability Amount) with your doctor or other health professional.

The Disability Tax Credit (Disability Amount) may be claimed by persons with disabilities, or their spouses or other supporting relatives. It is a non-refundable credit, so it can only be used to reduce tax which would otherwise be payable.

To be eligible for the DTC, you must be blind or be unable, or take an excessive amount of time, to perform a basic activity of daily living, even with the use of aids, medication or therapy. Revenue Canada has tightened up eligibility for the DTC significantly in recent years, so it is important to have the application form (T2201) filled out carefully and completely. Besides medical doctors, other health professionals who can complete the T2201 form are optometrists, audiologists, psychologists and occupational therapists.

Tip 4 - In claiming a transfer of the Disability Tax Credit from a spouse or dependant, take only his or her taxable income into account.

If your spouse or relative with a disability qualifies for the DTC but cannot benefit from it because he or she pays or owes no income tax, you may be able to make the DTC claim as a supporting relative subject to certain restrictions. This is called a "transfer" of the DTC claim by Revenue Canada. If you are claiming a transfer of the DTC, it is only the taxable income of your relative which reduces the claim. Social assistance or workers’ compensation payments do not reduce the DTC transfer, although they do affect other tax claims, such as the "amount for infirm dependants."

Tip 5 - Consider claiming the caregiver amount if an adult dependant lives with you.

There are new rules permitting you to claim a caregiver amount if an adult dependent relative in certain defined classes lives with you. To make this claim, the relative must be "mentally or physically infirm," unless he or she is your parent or grandparent over 65. The relative’s income, whether taxable or non-taxable, affects this claim but does not eliminate it unless it is over $13,853.

Tip 6 - Consider whether or not disability-related items are claimable as medical expenses.

A range of disability-related items are claimable as medical expenses, including home modifications for accessibility, moving expenses in moving to an accessible home, 20 per cent of the cost of a van adapted for use by a person in a wheelchair to a maximum of $5,000 (and the cost of the modifications themselves), guide and hearing-ear dog expenses, sign-language interpreter fees, and 50 per cent of the cost of an air conditioner prescribed by a health professional. A new permitted claim in 1998 is the cost of training you receive as a caregiver for a relative who lives with you.

Remember, however, that the tax relief you obtain through a medical expense claim is much less than the original expense - it’s not full reimbursement. Consult the Revenue Canada publications to see what claims are permitted.

Tip 7 - Claim attendant service expenses as work-related if possible.

In the income tax system, attendant services may be claimed only by those who are medically eligible for the Disability Tax Credit. There are two types of attendant service claims: a work-related claim and a medical expense claim. The work-related claim is for attendant service expenses which you incurred yourself to enable you to be employed or self-employed. According to Revenue Canada, this can include attendant services actually provided in the home so long as the purpose is to enable you to work, such as someone helping you to get ready for work in the morning. If you are working, you should consider whether your attendant service expenses are work related, as this claim is a deduction rather than a credit, and is worth more to you.

Attendant service expenses which are not work-related can be claimed as medical expenses by you or by a supporting relative. If more than $10,000 is claimed as a medical expense, however, the DTC cannot be claimed.

Tip 8 - Claim the tuition and education amounts if you are a part-time or full-time student with a disability.

For the 1998 taxation year, the education amount has been increased to $200 per month. While this claim is ordinarily only available to full-time students, part-time students may qualify if they are only able to attend part-time because of a disability. This claim is made use the Education Credit Certificate form (T2202).

Tip 9 - Child care expense claims can be increased if the child, or a parent, has a disability.

There are child care expense rules which take account of the disability of a child, or of a parent. If the child has a disability and is over age seven, a higher claim may be made than if the child did not have a disability. For this purpose, "child" includes a son or daughter over 18.

If a parent has a disability which prevents him or her from caring for a child, either temporarily or long-term, then the higher-income parent may be able to claim child care expenses (ordinarily, this claim is limited to the lower-income parent). Obtain the Child Care Expenses Deduction form (T778) for more information.

Tip 10 - You can still make claims back to the 1985 taxation year.

If you failed to make claims in the past, you can still make claims back to the 1985 taxation year, as explained in the General Income Tax Guide. Retroactive claims are scrutinized carefully by Revenue Canada, but should be made if clearly allowed by the rules.

(Harry Beatty, a staff lawyer at ARCH: A Legal Resource Centre for Persons with Disabilities, writes an annual detailed guide to income tax for persons with disabilities. For more information, call (416) 482-8255 (TTY: (416) 482-1254).)