There are numerous tax credits provided by the Income Tax Act which is at the disposal of every taxpayer. It's just a matter of determining the applicability of these deductions to your unique situation. These are just some of the many tax-saving credits or deductions you might not have heard about.
Disability tax credit ("DTC")
The DTC can be transferred to a spouse or common-law partner if it is not needed by the disabled person to reduce his taxes to zero (subject to some restrictions). Also, the DTC is potentially reduced when you claim attendant care costs greater than $10,000 as a medical expense. As a general rule, where these attendant care costs exceed the limit it’s better to claim the full costs as a medical expense and forgo the DTC.
Medical expense tax credit
I won’t get into a long discussion about what qualifies as a medical expense, a comprehensive list is available through CRA's website (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/llwbl-eng.html). Individuals with disability can claim certain types of costs as medical expenses if these are related to care that they require to help them manage day to day. However, as I have mentioned earlier, claiming certain costs as a medical expense may preclude you from claiming the DTC.
Canada Revenue Agency had recently included the costs for service animals used to help manage severe diabetes and the designing of personalized therapy plans as eligible medical expenses.
Home accessibility tax credit
This year’s federal budget introduced a non-refundable tax credit available starting in 2016 that provides tax relief for a maximum of $10,000 annually on costs incurred to improve accessibility and reduce the risk of harm in your home if you’re a qualifying individual, which includes disabled individuals.
Starting in 2014, a new tax credit was introduced. You may be able to claim a maximum amount of $4,608 for 2015 for each dependant (increased to $6,701 in some cases). Each dependant must be 18 years or older, dependent on you due to a mental or physical impairment and had net income of less than $20,343 for 2015. If the dependant is a parent or grandparent, he or she had to have been 65 or older.
Children’s arts tax credit
You’re able to claim a tax credit for up to $500 of costs related to a enrolling a child in a prescribed artistic, cultural, recreational or developmental program. If the child is under 18 and is eligible for the DTC, you can claim an additional $500 if a minimum of $100 is paid for registration or membership fees for an artistic program that qualifies.
Tuition and textbook tax credits
Tax credits for tuition and textbooks differ for those who are in full-time attendance at school versus part-time students. A disabled student is entitled to claim the credits available to full-time students even if they are not attending school full time.
If a student is unable to use all or a portion of these credits, the student can transfer up to $5,000 to the student's spouse or common-law partner, the student's parent or grandparent or the student's spouse's or common-law partner's parent or grandparent. The student must complete and sign Form T2202 in order to make this designation. Although the form does not have to be filed with the return, it should be kept by the designated individual or student in case CRA requests for it in the future.
Most benefits provided by an employer are taxable to an employee. If you’re blind or are entitled to the DTC due to a mobility impairment then you won’t face tax on transportation that your employer provides for you to attend work. Alternatively, your employer can pay you a reasonable allowance to pay for transportation to get to work and it can be tax-free. A similar tax-free benefit is provided where your employer provides an attendant to assist in the performance of your work.
Starting in 2015, you can deduct up to $8,000 for child-care costs for each child age 6 or under, and $5,000 for each child aged 7 through 16 (and for disabled children older than 16). If your child is 16 or younger and qualifies for the DTC, the limit is increased to $11,000. It has to be noted that your total child-care deductions cannot exceed two-thirds of your salary or business income.
Disability supports deduction
This deduction is for those who pay for assistance in earning employment income or carrying on a business, attending school or carrying on grant-funded research. I won’t get into more detail here, but there are 17 potential infirmities and different types of assistance whose costs will qualify for this deduction.
Certain capital costs
Some costs that might otherwise not be deductible because they are capital expenditures can be deducted in full against business income or income from property. These are costs designed to assist those with infirmities (Braille elevator pads are an example).
Talk to us today, and we would certainly help you with your tax and filing needs.