Tax Tips and Financial Resources for People with Parkinson’s and Carepartners
With tax season fast approaching, it is important for people with Parkinson’s and their families to be equipped with an understanding of all the financial resources that may be available to them. Financial hardship disproportionately affects people with disabilities, due to factors such as unemployment, and increased medical and home modification expenses (PHAC, 2014). For many Canadians, the COVID-19 pandemic has added further stress on their financial health.
Though many Canadians believe the economy is still weakening, experts say that conditions are slowly improving (CBOC, 2020). While Canada is recovering, Parkinson Society BC is here to remind you that you are not alone. We are here to provide you with practical, accessible information and resources to help you manage your finances during these uncertain times.
Note: information provided in this article is intended to be used for general information only, and should not replace consultation with a personal finance or tax professional.
Tax Benefits for People with Disabilities
Disability Tax Credit
The non-refundable disability tax credit (DTC) helps people with disabilities or their carepartners reduce the amount of income tax they have to pay. The purpose of the DTC is to encourage equity by accounting for the unavoidable expenses that people with disabilities face. In 2019, the maximum disability amount was $8,416.
You may qualify for the DTC if you experience severe and prolonged physical or mental impairments which affect you at least 90% of the time. These impairments must also have lasted for a continuous period of 12 months or longer. It is important to note that eligibility for the DTC is not simply based on a disease diagnosis. Rather, symptoms and impairments on a person’s ability to effectively complete basic daily activities — such as walking, communication, or feeding and dressing oneself — will be considered.
To apply for the DTC, individuals must complete Part A of Form T2201, the Disability Tax Credit Certificate, and have a medical practitioner fill out Part B. The form must then be submitted either electronically through CRA My Account, or mailed to your tax centre. The CRA will assess your application and send you a notice of determination with their decision, including instructions on how to claim the disability amount on your tax return, if applicable. If you qualify for the DTC and could have claimed it in the past but did not, you may also re-submit prior tax returns for adjustment.
Medical Expense Tax Credit and Disability Supports Deduction
The medical expense tax credit (METC) is available for medical expenses prescribed by a doctor and paid for in the current tax year. Your claim may need to be supported by certain documents, including original receipts, prescriptions, certification in writing, or a Form T2201. Do not send these documents with your tax return, but be sure to keep them on hand in case the CRA asks to see them later.
You can only claim the part of an eligible expense for which you have not been, or will not be, reimbursed. If you pay a deductible on private insurance, that amount can be claimed, plus the monthly premiums you pay for the insurance (with the exception of MSP), together with the non-reimbursed portions of the expenses.
Home Accessibility Tax Credit
The non-refundable home accessibility tax credit (HATC) allows qualifying individuals to claim up to $10,000 per year in eligible expenses. Qualifying renovations must allow you to gain greater access or increased mobility within your home, or a relative’s home if you live there. For instance, this could include a wheelchair ramp, walk-in bathtubs or showers, or grip bars. Eligible expenses must be supported by documentation such as agreements, invoices, and receipts. Renovations can be made for someone who is at least 65 years of age, or otherwise eligible for the DTC.
Canada Caregiver Credit
The Canada caregiver credit (CCC) is a non-refundable tax credit that may be available to an individual who supports a spouse, common-law partner, or a dependant with a physical or mental impairment.
The amount you can claim depends on your relationship to the person for whom you are claiming the CCC, your circumstances, the person’s net income, and whether other credits are being claimed for that person. For your spouse or common-law partner, or an eligible dependant above 18 years of age, you may be entitled to claim an amount of $2,230 in the calculation of lines 30300 or 30400, respectively. You could also claim an amount up to a maximum of $7,140 on line 30424.
Canada Workers Benefit
In 2019, the refundable Canada workers benefit (CWB) replaced the working income tax benefit (WITB). The CWB provides tax relief for eligible low-income individuals and families, as well as a disability supplement for individuals who have an approved Form T2201 on file.
To apply for the credit and supplement, you must complete Schedule 6 in your tax package or certified tax software. Enter the amount from line 42 of Schedule 6 on line 45300 of your income tax return, and file your return with the CRA (if you prepared your return on paper, include your completed Schedule 6 with your return). The maximum payment for the CWB is $1,355 for single individuals and $2,335 for families. The maximum payment for the disability supplement is $700 for both single individuals and families.
Budgeting and Saving Resources
Registered Disability Savings Plan
The registered disability savings plan (RDSP) is intended to help DTC-eligible individuals save for long-term financial security. Similar to RRSP plans, an RDSP is a tax-deferred savings plan. Contributions can be made until the end of the year in which the beneficiary turns 59 years of age. For every $1 put in an RDSP account, the federal government can (if your family income is below $97,069) match it with up to $3 (the Canada Disability Savings Grant). Additionally, for people living on a low-income (less than $31,711), the federal government will put in $1000 each year for 20 years (Canada Disability Savings Bond). Visit www.rdsp.com to learn more about how this plan may benefit you or someone you love.
Canada Pension Plan Disability Benefits
The Canada Pension Plan (CPP) provides disability benefits in some circumstances. If the symptoms of Parkinson’s disease are contributing to your decision to retire early, you should consider applying for CPP disability benefits instead of an early CPP retirement pension. To qualify for the CPP disability benefit, you must be under age 65, meet the minimum qualifying period, and have a severe and prolonged disability. Additionally, in order to be eligible for CPP disability benefits, you have to prove that your medical condition prevents you from doing any paid work.
CPP disability benefits typically provide more income than an early CPP retirement pension. The monthly amount of the disability benefit is based on the contributions made to the CPP prior to your application.
Personal and Professional Budgeting Tools
During these uncertain times, identifying a concrete budget that categorizes ‘needs’ versus ‘wants’ is a useful way to manage your finances – after evaluating your spending, consider redirecting any extra money into an emergency fund equivalent to 3-4 months’ worth of expenses (FCAC, 2020).
The Financial Consumer Agency of Canada (FCAC) offers an online Budget Planner to help you get started on creating and managing your budget on an easy-to-use platform. They also offer many other resources on budgeting, savings, debt management, and interactive tools to help you maintain good financial health during these challenging times.
Another practical option to ease financial concerns is to reach out to financial professionals and institutions. A financial advisor may be able to help you protect and grow your savings while managing the costs associated with Parkinson’s.
COVID-19 has caused many financial institutions to offer forms of financial relief to their clients, such as deferring mortgage or credit card payments, lowering credit card and loan interest rates, or taking out a home equity line of credit. While these choices could be beneficial, it is important to fully understand the conditions and long-term implications of each. Contact your financial institution to explore your options further.
Finally, take advantage of valuable free online resources for people with Parkinson’s. PSBC has many educational and exercise webinars, free legal services (for PD related concerns), counselling, and a large collection of accessible resources on various topics, including finances. Visit our website to view all our upcoming events and resources, as well as other organization’s events and programs, at www.parkinson.bc.ca/events.
Additional Resources
Disability Tax Information | https://bit.ly/disabilitytaxinfo
Financial Wellbeing | https://bit.ly/canadafinancialresources
Free Tax Clinics | https://bit.ly/taxclinics
Sources
Conference Board of Canada (2020). COVID-19 and Uncertainty to Flatten the Curve of Economic Recovery. Retrieved from https://bit.ly/3p2AzP2
Financial Consumer Agency of Canada (2019). Setting up an emergency fund. Retrieved from https://bit.ly/32mTgDn
Public Health Agency of Canada (2014). Mapping Connections. Retrieved from https://bit.ly/3p7HaYK
This content was published in the Winter 2020 edition of our quarterly magazine, Viewpoints. The content was accurate as of this publication date.