One of the requirements set by the government to qualify for an RDSP is that the disabled person must be receiving the Disability Tax Credit (DTC). This tax credit is full of it’s own financial benefits and is the first step to ensuring that your loved one is taken care of now and when you are no longer able to.
Disability Tax Credit
The DTC ultimately helps to reduce the amount of income tax that your loved one may have to pay. The tax credit is non-refundable and is meant to provide some relief for unavoidable expenses brought on by disability costs that other taxpayers do not have to endure.The tax credit is also transferable if the qualifying person does not have high enough income, based on certain requirements.
Does My Loved One Qualify For The Disability Tax Credit?
The DTC is available to people of all ages that have been medically diagnosed with a disability. In order to qualify, you must submit the Form T2201, Disability Tax Credit Certificate. Once the Canada Revenue Agency has approved the application, you can then apply the tax credit to your taxes for the year you wish to claim.
Depending on the circumstances, the credit can be backdated for up to 10 years prior to the approval of the application. For example, if your loved one was diagnosed with a disability when he/she was born but did begin receiving the DTC until later on in life, they may be refunded for up to 10 years of tax credit since it is considered a “from-birth” disability.
While it may be relatively simple for some people to be approved for the DTC, it can be challenging for others. Our team can help guide you through the process of applying and receiving the DTC as well as helping you set up a Registered Disability Savings Plan (RDSP) once you have been approved. Contact us to start the process today and ensure that your loved one receives all the tax credits they deserve!