Jeff Green | Apr 12, 2007
Feature Article - April 5, 2007
Back toHomeLegalese - April 5, 2007
12 Tax Tips: Part 1
byHarry Beatty, Barrister & Solicitor, Baker Law
Legalese is a column of general information and opinion on legal topics by the lawyers of Rural Legal Services, Box 359, Sharbot Lake, ON, K0H2P0, 613-279-3252, or 1-888-777-8916. This column is not intended to provide legal advice. You should contact a lawyer to determine your legal rights and obligations.
[The following article was originally published in ARCH ALERT, the newsletter of ARCH: A Legal Resource Centre for Persons with Disabilities, a specialty legal clinic in Toronto.(Editor’s note: ARCH Disability Law Centre would like to thank Mr. Beatty for his contibution as guest co-author.)
1) Your 2006 income tax return must be postmarked or received by the Canada Revenue Agency (“CRA”) before midnight on April 30th, 2007. If you or your spouse or common-law partner is self-employed, the deadline for filing is extended to June 15th, 2007, but the deadline for paying any taxes that you may owe remains April 30th, 2007.
If you expect to get a refund, it is best to file early, so you receive the refund as soon as possible. If you get a letter telling you that your refund has been withheld because you were overpaid social assistance benefits by the Ontario Disability Support Program or Ontario Works, you should ask your local community legal clinic for advice.
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 help you to file your taxes electronically.
You may 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) CRA has undertaken to give persons who have visual impairments all of their personal tax information in the alternate format of their choice. You can choose to get the information in Braille, large print, e-text on a diskette or a CD, audio MP3 or audiocassette format.
You can telephone CRA to request personalized materials. After that CRA will automatically send them to you in the format that you asked for. The number to call is 1-800-959-8281. You can also get ordering information from the CRA web site at:www.cra.gc.ca/alternate
Unfortunately, if you want to get general tax forms and publications in an alternate format, CRA will not send them to you automatically even if you have asked for your personal tax information in that format. See Tax Tip #3 for information on how to order general forms and publications in an alternate format.
3) CRA's website gives general tax information for persons with disabilities. The address is: http://www.cra-arc.gc.ca/disability
That page has links to forms and publications, including a pamphlet called, "Medical and Disability-Related Information" (RC 4064) and CRA's Interpretation Bulletin IT-519R2, "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction (Consolidated)". The Interpretation Bulletin is somewhat helpful but it has not been updated since 2003 so it does not include information about more recent developments, such as the Disability Support Deduction.
CRA 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 Braille, large print, audiocassette or e-text, you can download some forms and instructions at: www.cra.gc.ca/alternate
For more information on other forms and publications that are available, you can download or order them from CRA's website at: www.cra.gc.ca or call the CRA General Enquiries number at 1-800-959-8281.
Persons who have simple returns and low incomes can get free help with completing their tax returns through the Community Volunteer Income Tax Program. For more information about this program, call the CRA's General Enquiries number above. There may also be an agency in your community that is hosting a tax clinic.
4) Even if your only income in 2006 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 subsidized childcare. To get the Canada Child Tax Benefit, Child Disability Benefit or the new Ontario Child Benefit you also have to file a return. If you are eligible for "refundable" tax credits, such as the GST credit or provincial sales and property tax credits, you can get a refund even if you do not pay or owe any income tax. Most persons with disabilities receiving Ontario Disability Support Program (ODSP) benefits are eligible for some tax credits of this type.
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 family's eligibility. Contact the program itself for further information on its eligibility requirements.
5) Changes were introduced in the 2005 Federal Budget which have the potential for making many persons eligible for the Disability Tax Credit (“DTC”) who did not meet the requirements before. Therefore, it is important for all persons with disabilities who are not receiving the DTC to review these changes to see if they now qualify, even if CRA has turned your application down in the past.
To have been eligible for the DTC for taxation years up to 2004, you must have had “a severe and prolonged mental or physical impairment” that caused you to be:
1) Blind or have partial vision,
2) Unable, or take an inordinate amount of time, to perform a basic activity of daily living, such as walking or “perceiving, thinking and remembering”, even with the use of assistive devices, medication, or therapy, or
3) unable to perform basic activities of daily living without life-sustaining therapy.
Under the 2005 changes, persons are eligible for the DTC if they have “one or more severe or prolonged impairments in physical or mental functions.” This change of wording puts more emphasis on the actual physical and mental limitations that the impairments cause.
Other important changes are that:
1) Persons are now eligible for the DTC if they have “significant” restrictions in two or more activities of daily living, where the effect of all of these restrictions together is equivalent to having a “marked” restriction in one activity of daily living,
2) With respect to psychiatric, intellectual and learning disabilities, the criteria formerly described as “perceiving, thinking and remembering” have been changed to “mental functions necessary for everyday life”, which include memory, adaptive functioning, and problem solving, goal setting and judgment, and
3) There are new rules about how to count the time spent in life-sustaining therapy, which include the time spent in determining and administering the amount of medication essential to the therapy e.g. insulin for persons with juvenile diabetes.
You apply for the DTC using Form T2201. This form must be filled out by a health professional qualified to practice in Ontario. Make sure that the health professional uses the current 2006 version of the form, which includes the changes just discussed.
A medical doctor can fill out the form for anyone who is applying for the DTC. In addition, the following medical professionals can fill out the form for persons who have certain types of impairments:
optometrists: impairments in vision
speech-language pathologists: impairments in speech
audiologists: impairments in hearing
occupational therapists: impairments in walking, feeding or dressing (and the cumulative effect of these impairments in activities)
physiotherapists: impairments in walking
psychologists: impairments in the mental functions necessary for everyday life
Parents can claim a supplement to the DTC if their child under 18 qualifies. However, child care or attendant care expenses that anyone is claiming for that child 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 relatives who are supporting you. See the General Income Tax and Benefit Guide 2006 (“Guide”) at Line 318 for further information on transferring the DTC.
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. (Of course, if the application is not approved the claim will be rejected.) [to be continued next week]