Important, important note: This post was written in March 2011. Some information may have changed since then and this is an overview that was current in March 2011.
Dear Diary: Today is the first guest blogger on my blog and it is from @Omum22 over at Twitter (www.twitter.com/OMum22).
Before you read her introduction, I want to tell you she is wickedly funny, clever and studied American history which means I have someone to talk to about Watergate.
Here’s what she writes about herself:
Deanne Shoyer has been a tax consultant since 1990 (obviously a child tax prodigy). She qualified as tax professional in the UK via the Association of Taxation Technicians and the Institute of Taxation. She relocated from the UK to Toronto in 1996. The tax thing pays the mortgage but she would really like to be a historian when she grows up. Her greatest accomplishments are her 5 year-old twin boys who are both on the autism spectrum.
Now on to the tax goodies, written by Deanne Shoyer, aka OMum22
“I work in the tax field as a consultant with a background in international tax, so this isn’t my area of specialty. Accordingly, please view this as personal information that I’m sharing with you as a fellow ASD parent, rather than something that’s endorsed by my employer. This summary is NOT exhaustive It highlights information I found beneficial but had to dig around to find. If anyone has questions about their particular circumstances, I’d be happy to provide you with some general guidance.
If you have an ASD child then your starting point in relation to tax issues should be RC4064. Print it off, read it and keep it handy:
RC4064 is a booklet produced by the Canada Revenue Agency (CRA) that’s a useful summary of the tax information you should be aware of when either yourself or your dependent has a disability. For tax purposes I’m going to refer to ASD as a disability – you may not agree with the applicability of that term to people with ASD but this isn’t philosophy, it’s tax, and I’m trying to provide you with information so that you pay no more than you have to!
- Disability Tax Credit (DTC)
Rather than go into the DTC in mind-numbing detail I’ve focused below on a few key issues:
- Who qualifies? If your ASD child is non-verbal or echolalic, they should have no problem qualifying for the DTC. If your dependent has Aspergers, because communication is typically not affected in the case of Aspies, qualifying for the DTC can be a challenge. In this situation you need to consider:
- Whether you can argue they are markedly restricted in the “mental functions necessary for everyday life”.
- If not, is the Aspie significantly restricted in their vision? If yes, then they should qualify for the DTC.
- If neither of the above applies then the Aspie could still qualify if you can argue that they are significantly restricted in one of the following areas – feeding, hearing, dressing, walking or bowel/bladder function.
- The terms “markedly restricted” and “significantly restricted” are both defined (see Form T2201).
- Once certified by a medical practitioner, send the completed form to your tax office. No need to wait until tax time.
- Don’t be afraid to push back. If CRA responds that the DTC eligibility criteria haven’t been met, you can always ask for that decision to be reviewed. Call the person from the tax office that signed the letter and enquire about how to appeal their decision. In addition, if you’ve been turned down for the DTC once, it doesn’t mean that you can’t reapply if circumstances change.
- ASD is a lifetime disorder so, regardless of the date of diagnosis, if an individual qualifies for the DTC, they qualify from birth. If you have only been claiming the DTC from the date of diagnosis, complete the T2201 again and resubmit requesting approval for the claim from the year of birth. You should then amend your tax returns and claim the DTC in those earlier years which should generate a tax refund. CRA are obliged to accept refund claims going back 6 years but as an administrative concession will typically accept refund claims going back 10 years. You amend your return using this form:
- Who claims the DTC? If you are a married couple with an ASD child who qualified for the DTC, the credit can be transferred to either of you. If both of you have sufficient income to pay tax then it likely doesn’t matter which one of you claims the DTC as it’s a credit, not a deduction. In the case of separated/divorced spouses, see page 25 of the RC4064 booklet for guidance regarding which spouse should claim the credit.
- Child care expenses
- The DTC for individuals under the age of 18 is a higher amount, unless their parents are also claiming a deduction for child care expenses relating to that child.
- If your child qualifies for the DTC then you can claim a deduction for a higher amount of child care expenses – up to $10,000.
- The spouse with the lower net income claims child care expenses but there are exceptions to this rule. See Form T778 for further guidance.
- Children’s fitness amount – you may be able to claim a higher credit for these expenses if your child qualifies for the DTC.
- Medical expenses
The RC4064 booklet provides a full listing of qualifying medical expenses that you can claim a credit for. One expense that I wanted to highlight relates to respite care. Further detail is provided in the booklet but you should be able to claim a medical expense credit for respite expenses provided you can get a letter from your doctor confirming that:
- The child has an impairment in physical or mental functions
- The child needs equipment, facilities or personnel available in the establishment that they attend for respite care
- The establishment is a special school, institution or ‘other place’
I have the letter I drafted for the boys’ pediatrician so contact me if you would like a copy.
Typically the spouse with the lower net income should claim the medical expenses for the entire family. If both of you have net income exceeding $67,500 then either of you can claim as the tax benefit will be the same.
- Child disability benefit
Acronym overload alert:
Once CRA has approved your claim for the DTC then CRA will automatically calculate the Child Disability Benefit (CDB) you are entitled to, but only if you have already completed the paperwork to claim the Canada Child Tax Benefit (CCTB). You would have filled out the forms for the CCTB in order to receive the Universal Child Care Benefit of $100 a month for children under the age of 6. In the case of the Child Disability Benefit, CRA’s systems only calculate 3 years worth of CDB – if you want them to calculate the benefit retroactively for a period that exceeds 3 years then you need to request this in writing. For example, you have a 5 year old who was diagnosed with ASD at the age of 4. You completed the T2201 indicating that he met the eligibility criteria for the DTC from birth and CRA has approved your application. Provided you have previously applied for the CCTB then CRA will automatically calculate the CDB you are entitled to receive and pay you a lump sum catch-up payment for the last 3 years. In order to obtain the CDB you were entitled to for the first two years of your child’s life, you will need to send your tax office a written request asking them to calculate your entitlement to the benefit for that period.”