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How to Transfer the Disability Tax Credit

August 13, 2013
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A person living with a disability may be cared for by a family member. The government of Canada recognizes the amount of time and expenses a family caregiver assumes. This is why there are some liberties that come with filing tax credits.

Two persons exchanging a file as a relay baton.
Motion bllur at the background.

The Disability Tax Credit can be transferred from a person with disability to his or her caretaker or caretakers. A portion of the tax savings or the entire amount can be transferred. After calculating taxable income, if the person living with a disability has a negative balance owed, the family caretaker can use what is remaining on his or her income tax forms.

There are advantages to doing this but filing a transfer also requires additional steps. If filing the T2201 form seemed complex, transferring the Disability Tax Credit may appear daunting.

To simplify this, use the following three steps. This process does not ensure the government of Canada will honour the transfer between the person living with a disability and family caregiver, but it is necessary for consideration.

Step One – Recognize Family Caregiver as “Supporting Person”

According to the government of Canada, a “supporting person” is usually a close family member. The person living with a disability is most likely identified as a dependent on this person’s tax forms. This person can be considered after the T2201 form has been successfully processed and the Disability Tax Credit Certificate granted. In order to see the DTC transfer through, both the disabled individual and caregiver must be residents of Canada.

Step Two- The Caregiver Tax Credit can go to One or More Supporting Persons

In some cases, such as divorce, two or more people may see themselves as supporting persons. It is possible to split the Disability Tax Credit among multiple caretakers. This can be done by making a note on income tax forms; it must include tax identification codes for the person living with a disability and a brief overview of the transfer request.

Step Three- Assume the Family Caretaker Role

Requesting all or part of someone’s Disability Tax Credit benefits means the family caregiver assumes the technicalities of the credit. The person living with a disability depends on the family caretaker for basic life needs. It is vital for this relationship to remain the same as long as disability tax benefits are being transferred or shared.

There are a lot of special rules and circumstances to consider before it is possible to share someone’s Disability Tax Credit. When considering how to approach this situation it is wise to consult professionals. Benefit professionals at the National Benefit Authority have seen numerous cases that involve transferring tax credits.

The National Benefit Authority is Canada’s largest Disability Tax Credit agency. They ensure claims are handled with individual attention and respect. With the NBA as a partner, it is possible to navigate the technicalities of the Disability Tax Credit and determine the best strategy for claiming benefits. Contact the agency today and receive more information about these services.

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