Feb 19, 2020
The Disability Tax Credit
Rob:
Hey folks! Today, Adam and I are chatting about the DTC, the Disability Tax Credit. I'm Rob Tétrault from robtetrault.com, Head of the Tétrault Wealth Advisory Group here at Canaccord Genuity Wealth Management. I should introduce my guest here today. Thrilled to have Adam Buss, Wealth and Estate Planning Specialist here at Canaccord Genuity Wealth Management. Adam, thanks for being here. The disability tax credit, how does it apply and what is it exactly?
Adam:
It's a non refundable tax credit for those who have a qualified disability. And it's basically meant to try to equalize the disadvantages and the added costs that an individual with a qualified disability may face. They've basically given them a little bit of money back on an annual basis.
Rob:
Okay, that would mean, for example, an adult with a disabled child, right?
Adam:
It could be an adult with a disabled child, an individual who's above 18 and has a qualified disability. Any of those things, and this is a tax credit that can kind of carry on for your lifetime if you're considered qualified,
Rob:
and the DTC is attached to that individual with the disability.
Adam:
It's attached to that social insurance number essentially.
Rob:
And when they are minor, their parents in theory could or would get the credit. And when they're an adult, potentially they would get the credit on their own.
Adam:
Yeah. Or even if they're an adult and they have somebody who needs to claim them as a financial dependent. That individual can claim that disability.
Rob:
Okay. there's a bunch of different ways a person can be eligible for the DTC, you must meet some of the following criteria. What would some of those be?
Adam:
You know, there is substantial criteria. It generally means that if you're blind. You have troubles with certain activities of daily living, and different restrictions. There's quite a lengthy list. Certainly recommend going to the CRA's website to look at the full definitions. But when in doubt, if you have any sort of disability that you think may be qualified, chat with your doctor, chat with your tax professional to see if you can get qualified for the disability tax credit. It's a huge advantage for your income tax return.
Rob:
And I see here that the disability, the impairment is a prolonged impairment. They're saying it needs to be for an expected continuous period of at least 12 months.
Adam:
It needs to be long term. I could break my leg and have a reduced lifestyle for the six months or whatever, but it's not long term. To qualify it needs to be something that affects your lifestyle and your life on a long-term basis.
Rob:
And it must be present substantially all the time, at least 90% of the time. Now the tax credit, does that just reduce your tax or does it reduce your income? And it's $8,000 per year?
Adam:
That's $8,000 per year, which I believe reduces your income. Again, I'm not an accountant. We always recommend reviewing these items with your tax professional to make sure that it's being properly applied to your situation.
Rob:
If you have the DTC, if you have the disability tax credit, then you could check out our other video on this, but you could automatically qualify for the RDSP, is that correct?
Adam:
qualifying through the disability tax credit is the prerequisite for qualifying for the RDSP, the registered disability savings plan, which you did a fantastic video on not that long ago that I recommend you check out.
Rob:
So the RDSP, the really neat thing about that one is, there’s a ton of grants and potential bonds, you put a few thousand dollars in... $2,500 a year, and the government will match you $3,500 a year, for example. It's a great savings vehicle.
Okay. if you do have the DTC, you're wanting to get the $8,000 tax credit, but you also qualify for the RDSP. make sure to talk to your advisor, a guy like me. And for that you can go to www.speaktorob.com and you can find out all about the wonderful ways to structure an RDSP, and how to actually build a portfolio for that.