Does your province affect your Disability Tax Credit amount?

We get asked this type of question all the time “how do federal and provincial Disability Tax Credits work?”

To claim the Disability Tax Credit (DTC), you must have paid (or expect to pay) income tax – you only get out what taxes you put in. Since there are separate federal and provincial income taxes, when you claim the DTC, you claim separate federal and provincial DTC amounts.

It’s important to note that the federal portion of the Disability Tax credit is worth the same in every province (except Quebec) while the provincial amounts differ. For example, in 2013, the federal portion of the Disability Tax Credit was worth $1,154.55, but the provincial portion varied. That is why the maximum worth of the Disability Tax Credit is approximately $1,700. Applied retroactively (up to 10 years), the Disability Tax Credit is worth up to $17,000.

So, the maximum Disability Tax Credit amount that you are eligible to claim depends on which province you reside in, the year you are claiming the DTC and also the amount of income tax you have paid or currently owe.
Let’s illustrate this with an example. Sally, aged 28 from Ontario, was approved the DTC for 2013. The maximum DTC amount that anybody in Ontario can claim for that year is $1,545.17 (this includes federal and provincial Disability Tax Credit amounts).

In 2013, Sally had paid $1,550 in income tax ($1,100 in federal income tax and $450 provincial), so she could reasonably expect to receive the full $1,545.17 DTC amount refunded for the 2013 tax year.

Remember that the Disability Tax Credit is made up of a federal and a provincial portion. So Sally may be eligible to claim only a part of the federal and provincial portions of the DTC.

Since the 2013 federal portion of the Disability Tax Credit was worth $1,154.55, Sally could claim $1,100 and have a remainder of $54.55 unclaimed.

Breakdown:
$1,154.55 (Federal DTC) – $1,100 (Federal income tax) = $54.55 – this is Sally’s unclaimed federal DTC amount

She could also claim the entire provincial portion for the year ($390.62) with no problem because she had paid enough provincial income tax.

Breakdown:
$450 (Provincial income tax) – $390.17 (Provincial dtc) = $58.38 – this is the adjusted amount of provincial taxes that Sally paid after receiving a DTC refund

Sally also may not have to waste the unclaimed portion of her federal Disability Tax Credit. She can transfer her unclaimed credits to a sponsoring family member.

There are hundreds of combinations of factors that go into calculating the Disability Tax Credit amount that you are eligible to claim – province of residence is just one. Our seasoned experts can help you determine what DTC amount you are eligible for, and how to best maximize the Disability Tax Credit.

To learn more about how to determine your Disability Tax Credit amount, click here.

Or schedule to speak with us directly so we can help you determine your eligible DTC amounts.