Disabilities affect people in different ways, whether it’s getting out of bed or using the bathroom, walking, eating, talking, getting dressed, or even concentrating on a favorite pastime. A disability can be a prolonged physical or mental impairment and can affect quality of life, which means you need all the help you can to maintain and improve that quality of life and receive the benefits you deserve. That’s where the disability experts at Disability Credit Consultants of Canada (DCC) come in. We’re here to help you improve your quality of life and maximize the federal or provincial benefits you qualify for, one of the most important being a disability credit through the Canada Pension Plan (CPP).
We’ve helped thousands of adults and caregivers obtain the benefits they or a loved one qualify for, and we get the same question with each phone call or in-person visit: Are my benefits taxable? No one likes to pay taxes, so here’s the annoying part: Qualifying financial assistance or other benefits received from the federal or provincial government are subject to tax, but that can be offset to some extent using a disability credit. The taxes paid on these extra benefits can be taken out from your monthly CPP payment, or in a lump sum when you file your annual income tax return.
A Disability Credit’s Silver Lining
Many of the clients we serve – and many come back year after year thanks to our exceptional and personal customer service – are in desperate need of help, and need direction in maximizing the benefits they receive. This is often achieved by utilizing every tax option at their disposal. It’s critical to understand that tax credits can be realized any number of ways and aren’t just for the wealthy. Donations made to charitable organizations can be claimed on your taxes, along with certain work or medical expenses. We can’t stress enough to new and repeat clients this simple mantra: Apply for the Disability Credit through the federal or provincial governments!
Canada Revenue Agency manages the Disability Credit. It is a non-refundable tax credit that people with qualifying eligibility requirements can claim on their income tax once a year. What this the benefit? It reduces the amount of tax that has to be paid on your benefits because it brings down the amount of taxable benefits you’ve accumulated in the previous tax year.
At DCC, we understand that figuring out eligibility can be a problem, especially when a disabled person has been out of work for an extended period of time due to a physical or mental condition. The Canadian government states that qualifying for a disability credit means the following:
1. You have paid enough into the CPP during your work life since age 18. Regulations state that you need to have contributed enough to the CPP in four of the last six years, or three of the last six in a 25 year period before becoming disabled.
2. You are actually disabled which, sadly, not everyone who calls our offices seems to understand. To qualify for a disability credit, your disability – or the disability of someone you care for — is severe and prolonged, as decided upon by a medical adjudicator. DCC has a list of medical specialists we can refer you to in order to determine the legitimacy of a perceived disability.
In order to take advantage of this disability credit, you have to file Form T2201, “Disability Tax Credit Certificate,” with Canada Revenue Agency.