If you are one of the millions of Canadians currently out of work due to a severe, long-term injury or physical or mental condition, you may be eligible for a disability tax credit. According to the Revenue Service of Canada, eligible persons can receive a credit of up to $1,845 annually.
The tax credit is treated as a deduction, meaning that you are exempt from paying as much in taxes as you would be if healthy. The disability tax credit contains two main components: eligibility and calculation of the size of the credit.
- Are You Eligible? – In order to receive a credit you must prove that you suffer from a condition that is both severe and prolonged (has lasted or is expected to last for a period of 12 months or longer). Both stipulations must be demonstrated in writing by a doctor licensed to practice medicine in Canada.In addition, you must prove that you have paid a minimum amount into the Canadian Pension Fund since entering the workforce. In short, you need to have contributed enough to the CPP in at least four of the past six years, or enough over a 25-year period that includes three of the last six years before you became disabled. Find out more about your eligibility for disability tax credit here.
- How Much are You Eligible For? – The amount that an individual can receive is determined by a formula: the appropriate tax rate percentage multiplied by the sum of the base amount and supplemental amount. The base amount applies to all disabled persons, while the supplemental amount applies only to those disabled who are under the age of 18.
If you are currently out of work due to a physical or mental condition and think you may qualify for the disability tax credit, give us a call at Disability Credit Canada.