Disability Awareness Week

The Honourable Jim Flaherty, Minister of Finance, issued the following statement recognizing Disability Awareness Week (May 26-June 1): "Disability Awareness Week offers Canadians an important opportunity to reflect on the varied and significant contributions that Canadians with disabilities make to our country each and every day, and the importance of helping to ensure that they and their families can participate to their fullest in the promise our country has to offer."

Over the next five weeks we will be discussing tax relief for those who have become disabled and their caregivers.

One in 5 Canadians aged 45+ provides care to seniors living with long-term health problems[1]? Because of the cost of hiring help, the range of services that fall into the gap that family members must fill are extensive. From meal preparation and household chores to time off for appointments with doctors and to deal with financial matters, the time commitment is great and cuts into economic activities for the caregiver, such as employment and self-employment.

In addition, the caregiver may require supports at home as a result: child care for the nuclear family, personal and respite care and resources for specialized nursing care if publicly-provided home care is unavailable or inadequate.

The physical and psychological toll on family caregivers is also huge: up to 75% will develop psychological illnesses; 15 to 32% suffer from depression. These are significant numbers. As our population ages, disability-related caregiving for family members will increase.

In this series, we’ll discuss the tax supports available when you give care in the family to someone who is disabled from two points of view: the return of the disabled person and that of the supporting individual who gives care.

The Disabled Person’s Return

The objective in preparing a tax return for the disabled is first to properly report all the income sources that may come your way, and to keep an eye on tax efficiency.

Similar to retirement income planning, the opportunity is to layer voluntary income withdrawals from private plans to meet spending needs into the unpredictable and often frustrating receipt of income from government sources like EI, CPP and Workers’ Compensation.

Because the adjudication periods can be long and prone to appeals, these sources can come in lump sums, which bump up marginal tax rates and affect how much is received for various refundable and non-refundable tax credits. In addition, some of the amounts may need to be repaid as a result of any overlaps. Finally, the amounts that can be claimed by supporting individuals will change, too, as net income levels fluctuate.

For all of these reasons, it’s necessary to look at the income for a disabled person over several tax years in the year of change to average down the taxes payable. You may wish to seek professional help from a DFA–Tax Services Specialist.

NEXT TIME: Tapping Into the CPP Disability Benefits

Excerpted from Jacks on Tax, by Evelyn Jacks. © All rights reserved.