Jeff Green | Mar 24, 2005
Legalese 12 tax tips March 2005
LegaleseMarch, 2005LAND O' LAKES NewsWeb Home
Contact UsThis column is not intended to provide legal advice. You should contact a lawyer to determine your legal rights and obligations.
Twelve Tax Tips for Your 2004 Return
By Heidi Lazar-Meyn, Staff Lawyer and Cara Wilkie, Student-at-Law
[The following article was originally published in the March 1, 2005 edition of ARCH ALERT, the newsletter of ARCH: A Legal Resource Centre for Persons with Disabilities, a specialty legal clinic in Toronto. Part 2 will appear next week]
The news for tax year 2004 is Bill C-33, which if passed will change the Income Tax Act. The Bill includes the new Disability Supports Deduction (DSD), and will change the rules for the medical expenses tax credit. It is expected that the Bill will become law for the 2004 tax year, assuming that the current minority Liberal government stays in power.
1. Your 2004 income tax return must be postmarked or received by Canada Revenue Agency (CRA) before midnight on 2 May 2005 because 30 April falls on a Saturday. If you or your spouse or common-law partner is self-employed, the deadline for filing is extended to 15 June 2005, but the deadline for paying any taxes that you may owe remains 2 May.
If you expect to get a refund, it is best to file early, so you receive the refund as soon as possible. If you receive social assistance payments, and you get a letter saying that CRA is keeping your tax refund or GST rebate because of an overpayment, see the advice in the ODSP Update article in this issue of ARCH Alert. [i.e. contact Rural Legal Services at the numbers above]
You are able to file your tax return many different ways, including by filing a paper return. If you prepare your taxes yourself using a computer program, you can file it over the Internet. Some tax preparers also can assist you to file your taxes electronically. You may also be able to telefile your return by entering the information on a touchtone telephone. If you are unable to use a touchtone telephone because of a disability, you can get help in telefiling from CRA by calling 1.800.714.7257.
2. CRAs website gives tax information for persons with disabilities. The address is http://www.cra-arc.gc.ca/disability. From there you can download a pamphlet called, Information Concerning People With Disabilities and CRAs Interpretation Bulletin IT-519R2, "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction (Consolidated).
CRAs website also has other documents that may help you in preparing your taxes. The General Income Tax and Benefit Guide is available for pick-up at most post offices and CRA will mail it to you if you call 1.800.959.2221. If you prefer an alternate format, such as large print, audiocassette or e-text, you can download some forms and instructions at www.cra.gc.ca/alternate or you can order them by calling 1.800.267.1267.
For more information on other forms and publications that are available, you can download or order them from CRAs website, www.cra.gc.ca, or call the General Enquiries number at 1.800.959.8281.
3. Persons who have simple returns and low incomes can get free help with completing their tax returns. For further information on the Community Volunteer Income Tax Program, call CRA's General Inquiries line at 1.800.959.8281. [in northern Frontenac call Northern Frontenac Services Corporation at 279-3151 and in northern Lennox and Addington call Land o Lakes Community Services at 336-8934]
4. Even if your only income in 2004 was not taxable, you may want to file a return to prove that you are eligible for certain programs, such as the Guaranteed Income Supplement for seniors, or subsidised childcare. To get the Canada Child Tax Benefit or Child Disability Benefit you also have to file a return. If you are eligible for refundable tax credits, such as the GST credit or some provincial tax credits, you can get a refund even if you do not pay or owe any income tax.
For some of these programs it is necessary that both you and your spouse or common-law partner file a tax return to prove your familys eligibility. Contact the program itself for further information on its eligibility requirements.
5. You may be eligible to take the new Disability Supports Deduction (DSD), using Form T929. The DSD will be available to anyone with a disability, even if that person is not eligible for the Disability Tax Credit (DTC), which is discussed in more detail later in this article. The DSD will allow taxpayers with disabilities to deduct the cost of listed expenses that they incurred in the year to work, go to school or do research.
As Bill C-33 is presently written:
- Persons with speech or hearing impairments will be able to deduct the cost of sign-language interpretation services or real time captioning services.
They also will be able to deduct the cost of teletypewriters, telephone ringing indicators or electronic speech synthesizers, if prescribed by a medical practitioner.
- Persons who are blind will be able to deduct the cost of synthetic speech systems, Braille printers, large-print on-screen devices and optical scanners, if prescribed by a medical practitioner. Bill C-33 does not specify the degree of visual impairment that a person must have to qualify for the DSD.
Also, if a medical practitioner certifies in writing that the expenses are necessary due to the impairment,
- Persons with a mental or physical impairment will be able to deduct the cost of note-taking services;
- Persons with a physical impairment will be able to deduct the cost of voice recognition software;
- Persons with a learning disability or a mental impairment will be able to deduct the cost of tutoring services, if the tutor does it as a business, and is not related to the taxpayer; and
- Persons with a perceptual disability will be able to deduct the cost of talking textbooks used at a secondary school in Canada or at a designated educational institution.
Under the new DSD, you can deduct the amount that you pay for full-time attendant care to an adult who is not your spouse or common-law partner, if a medical practitioner certifies that you need the care. If you pay for part-time attendant care, you can deduct the amount under the DSD if you also are eligible for the DTC. If you do not claim this expense under the DSD, or you are paying for attendant care for your spouse, common-law partner or a dependent family member, you may be able to deduct all or part of its cost as a medical or childcare expense.
If you have a choice of claiming an expense under the DSD or as a medical expense, it usually will be better to claim it under the DSD but you should check whether this applies to your situation.
Twelve Tax Tips for Your 2004 Return Part 2
By Heidi Lazar-Meyn, Staff Lawyer and
Cara Wilkie, Student-at-Law
6. If passed, Bill C-33 will also change how you can claim medical expenses. You will be able to take the full medical expense tax credit for your dependent children born in 1987 or later, yourself, and your spouse or common-law partner. For adult dependent children and other related dependants, you can claim a percentage of their medical expenses to a maximum of $5,000. This claim is adjusted based on their net income for the year.
The medical expenses that you can claim are those that you have not been reimbursed for. Examples of expenses that you can claim include amounts paid to adapt a vehicle used to transport a person who uses a wheelchair, premiums for private health insurance, the additional cost associated with the purchase of gluten-free products as prescribed by a physician or payments for someone to learn to care for a dependent relative with a disability in their household.
You can claim all of your eligible medical expenses, even if you paid them outside of Canada. Also, you can claim medical expenses for any 12-month period that ends in 2004 so if you had medical expenses that you did not claim on your 2003 return it may not be too late.
You may also be eligible to claim the Refundable Medical Expense Supplement. To be eligible for it you must have a low income and high medical expenses. Additionally, you must have reported income from working on your 2004 return.
7. You can apply for the DTC using form T2201. (CRA confusingly calls the DTC the Disability Amount in its other instructions and forms.) If you apply for the DTC when you file your return CRA may take a long time to process the return. You may be able to avoid this delay by applying for the DTC before you file your tax return. You can claim the DTC on your return even if you are waiting for CRA to approve your application.
To be eligible for the DTC you must be:
- Blind or have partial vision;
- Unable, or take an inordinate amount of time, to perform a basic activity of daily living, such as walking, even with the use of assistive devices, medication, or therapy, or
- Unable to perform basic activities of daily living without life-sustaining therapy.
People who are younger than 18 at the end of the tax year can claim a supplement to the DTC. However, child care or attendant care expenses that anyone is claiming for that person may reduce the credit.
The DTC is a non-refundable credit so if your income is low you may not be able to use all of the credit yourself. If this is the case, you may be able to transfer all or part of the DTC to your spouse or common-law partner. The DTC also can be transferred to certain supporting people, which they can claim as a Disability Amount Transferred from a Dependant. See the General Income Tax Guide for further information on transferring the DTC.
8. The Amount for Infirm Dependants Age 18 or Over is a credit for your, or your spouse or common law partners, relative if they were mentally or physically infirm, were born in 1986 or earlier, and were dependent on you for support. The dependent individuals income is used in determining the amount of the credit that you are entitled to claim.
9. If an adult dependent relative lives with you, you may be able to claim a caregiver amount. The relative must have a mental or physical impairment, unless he or she is at least 65, and is your parent or grandparent, or the parent or grandparent of your spouse or common-law partner. You cannot claim the caregiver amount if the relative had net income of more than $16,705 in 2004.
10. If you were enrolled in a qualifying educational program in 2004 you can claim the amounts you paid for tuition and an education amount for each month of study. If you attended part-time and can claim the DTC, or a medical practitioner certifies on Form T2202 that you could not be expected to attend full-time because of a mental or physical impairment, you can claim the full-time education amount instead of the part-time amount.
11. Dont forget to take any provincial or territorial tax credits or deductions to which you are entitled. Page 5 of CRAs pamphlet Information Concerning People with Disabilities, mentioned in Tip #2, lists ten of these.
If you had a spouse or common-law partner at the end of 2004, only one of you can claim the Ontario sales and property tax credits for both of you. However, if you and your spouse or common-law partner occupied separate principal residences in Ontario for medical, educational or business reasons, CRA will consider you involuntarily separated for the property and sales tax credit purposes. If you were involuntarily separated on December 31, 2004, each of you can claim the property and sales tax credits.
12. As of this year, CRA will not allow you to change your tax return for a year that is more than 10 years ago. Make sure to change any income tax returns as soon as possible to take advantage of credits or deductions that you missed when you filed. You now can ask for the change safely over the Internet, as well as by mail.
For specific information concerning your own tax return, you should contact CRA or your tax advisor.