Disability Tax Credit Tax Tip Videos – Part 1 | The NBA
We launched our first short video series to tackle some common tax-related questions people have about the Disability Tax Credit. It’s important to note that these answers are generalized to cover common questions. But specific questions regarding your individual tax circumstances cannot be answered without more details. Please consult your financial advisors or if you are a client, call in to our tax department with your case ID.
Each video is captioned and transcribed for accessibility.
Tax Tip Video 1: Applying for the Disability Tax Credit – Should I wait until income tax time to claim the Disability Tax Credit?
Answer: No, you don’t need to wait until tax time to file your claim for the DTC (Disability Tax Credit).
You also don’t need to wait until tax time to request that the CRA (Canada Revenue Agency) apply it to your previous tax returns. Even though it’s a tax credit, it can be claimed or applied for at any point during the year.
One thing that you do want to keep in mind is to not try and claim it (The DTC) on your return until after you’ve been approved. So for example, next year, when filing for your 2017 tax return, you don’t want to try and claim the DTC on that return until the CRA has approved you. That could cause a delay in the CRA processing your return.
Tax Tip Video 2: Will I have to pay taxes on the money I receive from the Disability Tax Credit?
Answer: The refund generated from the Disability Tax Credit is an income tax refund, so you will not have to pay tax on it.
However, claims for multiple and prior years involves the Canada Revenue Agency paying some interest on that amount. The interest amount will have to be declared as income on your next year’s return, but it wouldn’t amount to much.
For example, the average interest amount on a $10,000 refund claimed through the Disability Tax Credit is $406.00. An amount that size would not have a huge impact on your next year’s return.
Tax Tip Video 3: Does the Disability Tax Credit affect ODSP eligibility (or similar provincial programs)?
Answer: Eligibility for the Disability Tax Credit will not affect your eligibility for ODSP (Ontario Disability Support Program) or other government programs. The Disability Tax Credit is a non-refundable tax credit claimed on your returns from the Canada Revenue Agency. And ODSP, is more like income support and replacement.
Now, certain forms of income support do keep an eye out on your bank balance to ensure continued need. So if you were trying to apply for the Disability Tax Credit and are potentially expecting a large refund, that might have an effect based on the time you tried to apply for ODSP. However, we will work with you and your family to ensure that any funds you receive will have as little impact as possible.
Tax Tip Video 4: Do I qualify for the Disability Tax Credit without income?
Answer: No matter what your income level, you don’t have to worry about making too much or too little to qualify for the Disability Tax Credit.
Eligibility is based solely on how you’re affected by your medical condition and has nothing to do with your income. The refund generated from the Disability Tax Credit does relate to your income, but if you’re concerned it’s too low, there are other options available.
Family members who are supporting you can claim the transfer of the Disability Tax Credit on your behalf or there are other specific credits such as the Working Income Tax benefit which are geared for low-income Canadians and that credit comes with a disability supplement as well.
Tax Tip Video 5: What if I owe money to the CRA?
Answer: If you have a debt with the Canada Revenue Agency (CRA) or an associated program like GST or Canada Child Benefit (CCB), they will pay themselves back first out of your refund before issuing your return to you.
Additionally, if you have any debts where you’ve gone to court, they might have claims to your refund as well.
So, the order it will actually go is: The CRA will pay themselves first, then funds will be directed towards any of your creditors that involve court orders, and if there’s anything left after that you’ll get the remainder.
Hope that helped answer some questions about the Disability Tax Credit.
Please feel free to email communications [at] thenba.ca your questions and they may become a new DTC Tax Tip video!