Real Life: Changes Required to Update the Disability Amount

Kareen Rekowski

It’s a lucrative non-refundable tax credit many people miss out on, particularly those who are younger. The Disability Tax Credit has a real dollar value of about $1300 on the federal return for 2021.  The provision, however, may not be claimable, if long term care home costs over $10,000 are claimed as medical expenses.  Advocates for those who have suffered catastrophic disabilities believe neither of these tax provisions adequately reflect the economic hardship the individual and families endures in these cases. A true story from Knowledge Bureau Faculty Member Kareen Rekowski follows:

Many disabled young adults aged 19-65 also reside in long term care and in our hospitals.  In 2009, my brother (age 37) survived an accident that has disabled him for life.  He sustained a traumatic brain injury (TBI) leaving him with cognitive impairments and physically disabled requiring the use of a wheelchair. 

Following the accident in 2009, I became power of attorney and caregiver for my brother.  I submitted Form T2201 Disability Tax Credit Certificate (DTC) to my brother’s doctor for completion.  Once I had the completed Form T2201, I kept a copy and mailed the original to CRA along with a copy of the power of attorney papers.  CRA initially approved the Disability Tax Credit (DTC) for tax years 2009-2014.  Upon approval of the DTC, I worked with a financial advisor to assist me in opening a Registered Disability Savings Plan (RDSP). 

In 2014, it was time to reapply for the DTC for my brother.  I submitted form T2201 to my brother’s doctor for completion as the application for the DTC needed to be extended to include future years.  The doctor had the form for many months but I wasn’t able to get it completed until 2015.  I received a letter from CRA stating the DTC was no longer in effect and the compounding effect was that my brother would no longer be eligible for the RDSP until CRA had an approved Form T2201 on file.  This was yet another blow for our family.

However, I delivered this letter to the doctor’s office and was then able to get the signed and completed DTC from the doctor for submission to the CRA, who then agreed my brother was eligible for the DTC for tax years 2015-2020, allowing for further contributions into his RDSP for the approved years.  It also allowed my brother to claim the DTC on his tax return and if not required to transfer it to other eligible supporting individuals. 

It can be quite challenging to find a medical doctor or nurse practitioner that can certify all areas on the form.  In 2020, when the DTC had to be resubmitted again, the doctor who had completed the previous forms was now retired.  The new doctor charged a fee for completion of Form T2201 which was a claimable medical expense for my brother. I was able to submit it electronically to CRA and fortunately, CRA approved my brother for the DTC for 2009 and all future years. 

In March 2020, my brother lost all of his private essential support staff as they were no longer allowed into the hospital due to COVID.  This has greatly impacted his mental and physical health while also impacting his family/caregivers. 

Since the accident, my brother has been residing in hospital while on a housing waitlist for people with acquired brain injury (ABI).  When his name was added to the housing waitlist 12 years ago, we were told he would not receive placement within his lifetime due to the high demand. 

In circumstances where there’s no appropriate supportive housing and the individual can’t return home with the required support needed; their only option is to remain in hospital or be placed in a long-term care facility, significantly altering quality of life.  The hospital required us to apply for long term care residency.  The long-term care facilities declined admission. 

Hospitals and long-term care facilities do not have adequately trained staff and are not equipped to support young adults with acquired brain injury (ABI) with the care or programming needed to support their quality of life.  

For my brother and others like him, who want to be contributing members of their community, those long-term solutions to live a productive life in dignity, will need to be funded privately. The rules behind the disability tax credit should be changed to better reflect those true costs and reimburse taxpayers and their supporting individuals for the cost of care in the absence of publicly funded solutions through the tax system.

What can advisors do?

Really get to know your clients and their needs.  Where there’s a disabled family member, ensure that all credits and deductions available are being used to the best advantage available for the family, including medical expenses and the disability amount.    Consider transferring the disability amount to a supporting individual if not needed to reduce the income of the disabled person.  Ask if an RDSP has been setup for qualifying individuals and are they taking full advantage of the grants and bonds available.

Most important:  ensure your clients have in place what they may need to protect themselves and their family in case of a disability or illness:  critical illness and life insurance, wage loss replacement benefits and the CPP benefits for disabled contributors.    For family members, access to the special benefits under the EI Program may be possible.

Kareen is a founding member and chairperson for their Renfrew ABI Working Group.  She has three designations with the Knowledge Bureau: MFA, DFA-Tax Services Specialist and RWM™.