Disability Tax Credit Application Process for ALS or Lou Gehrig’s Disease

January 18, 2014 by dccinc

The Disability Tax Credit offers individuals and families affected by Amyotrophic Lateral Sclerosis (also known by its abbreviated names ALS or Lou Gehrig’s Disease) financial assistance from the mounting monetary burdens the disease can incur. Those who successfully meet the disability tax credit requirements could be granted over $10,000 over a ten-year span or approximately $20,000 if the affected individual is a child. For more information, read our Child Disability Tax Credit Guide.

Instituted by the Canada Revenue Agency, the Disability Tax Credit (DTC) provides a non-refundable tax credit to any Canadian citizen who has experienced or is expected to experience a significant physical or mental impairment for at least 12 months. A qualified practitioner, such as a licensed doctor, occupational therapist, audiologist or psychologist, must certify that the impairment is both severe and prolonged.

ALS is one of the many disabilities covered under the DTC. Also called Lou Gehrig’s Disease after the Hall of Fame New York Yankee baseball player who was also afflicted with the disease, ALS currently affects between 2,500 to 3,000 Canadians, according to the ALS Society of Canada. An estimated 80% of those afflicted by the disease die within two to five years of diagnosis. A small minority of around 10% of those affected live for ten years or more.

The Importance of the Disability Tax Credit Application

Applying for the Disability Tax Credit is a critical component of establishing long-term financial viability for those affected by ALS. The DTC not only provides tax relief in and of itself, but also opens the door for individuals to apply for the Registered Disabilities Savings Plan, which enables families to save even more money over the course of several years.

Similar in design to a retirement or pension plan, the RDSP allows qualifying individuals to contribute up to $200,000 that will be matched by federal or provincial governments. The Canada Disability Savings Grant (CDSG) is also available through the RDSP and can save affected families an additional $3,500 per year. Thus, the Disability Tax Credit is a critically important tool to ensure financial solvency and growth for individuals with ALS or other disabilities.

Applying for the Disability Tax Credit

The process for obtaining the DTC is fairly easy and straightforward:

  • First, interested individuals must request Tax Form T2201 Disability Tax Credit Certificate from the Canada Revenue Agency’s website. The Disability Tax Credit Application is contained therein.
  • Once form T2201 is obtained, two parts of the application must be completed. The part that can be completed by the applying individual or representative is Part A – Disability Tax Credit Certificate. This part of the form requires the applicant to fill out his or her basic information such as name, date of birth and Social Insurance Number. If another person is filling out the application for an afflicted individual, another section detailing how the applicant’s disability affects his or her daily life must also be completed.
  • Then the second part of the application must be filled out by a practitioner qualified to assess the applicant’s disability. All licensed doctors are qualified to analyze the applicant’s eligibility, regardless of the type of disability. However, specific physical disabilities can also be assessed by doctors specializing in those fields – for example, a licensed optometrist would be qualified to assess visual impairment and a licensed audiologist would be qualified to assess hearing impairment.

After the licensed doctor has completed and signed Tax Form T2201, the applicant or representative then sends the Disability Tax Credit Application back in to the CRA and awaits approval. If the certificate is approved, disabled individuals can then enjoy the financial benefits the DTC provides for a maximum of 10 years. In full, the disability tax credit amount totals $1,600 per year. If used for the full ten years allowed, the maximum potential savings caps off at $13,000 for adults.

As ALS most often appears in its onset form in individuals between the ages of 40 and 70, there may be some people affected by the disease who have already retired and don’t have any taxable income and thus don’t feel that they would benefit at all from the Disability Tax Credit. Even if the affected individual himself doesn’t have any income, however, the DTC can still be of great use to the individual’s caregiver.

The T2201 Tax Form allows for individuals to transfer any or all of the money given from the disability tax credit to anyone they would like. A caregiver could potentially receive the tax credit and receive substantial financial relief for tending to the applicant’s condition.

Additional Disability Tax Credits Available for Caregivers

Caregivers can also claim additional tax credits under line 316 of their tax return. To claim this credit, the caregiver must meet the following criteria:

  • He or she must be caring for an individual 18 years or older
  • He or she cannot be the parent or legal guardian of the affected
  • He or she must completed Form T2201, Disability Tax Credit Certificate
  • The disabled must have established residence at the caregiver’s address
  • And the tax credit is unavailable to anyone who has already claimed a tax credit such as the Infirm Dependent Credit

For the 2013 tax year, the Canada Revenue Agency stated the disability tax credit amount was $7,546 for disabled persons over 18 years of age. Additional child disability tax credits may be available for caregivers, although ALS rarely afflicts individuals under the age of 20.

The Importance of the Disability Tax Credit in Securing a Stable Financial Future

There are numerous taxation credits available for individuals and families trying to live with ALS. The Disability Tax Credit provides tax relief in the form of a $1,600 deduction and can save individuals $10,000 if used for the full ten years allowed. Applying for the DTC also allows for entry into the Registered Disabilities Savings Plan, which can earn applicants $200,000 more over the course of their lifetime. No money can ever alleviate the suffering ALS causes, but the Disability Tax Credit can at least lessen the financial burden surrounding the disease.

Suffering from ALS? Call us now to get help with your disability tax credit application!

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