Ontario Disability Tax Credit Versus ODSP and Their Benefits

July 10, 2015 by dccinc

When you’re unable to work because of a serious injury, illness or other condition, it’s difficult to find reasons to be optimistic. First, there is the actual condition itself. Then there are expenses for medical treatment and physical therapy. On top of that, your income is greatly reduced, or in some cases, eliminated altogether. Without question, you and your family may struggle to make ends meet.

Fortunately, the Government of Canada has several programs to provide assistance to people just like you. For residents of Ontario, the first relevant program is the Ontario Disability Tax Credit, a program that can potentially put thousands of dollars back into your pocket through tax deductions. Then, there is the Ontario Disability Support Program (ODSP), an assistance scheme providing cash benefits to the physically disabled.

The Ontario Disability Support Program

The ODSP is a social assistance program managed by the Ministry of Community and Social Services. If you suffer from a physical or mental disability, you may qualify for both income and employment support:

  • Income Support – Those eligible receive cash benefits depending on their current income, family size and housing costs. Benefits come in the form of two allowances: one for basic needs, and another for shelter. The ODSP provides money you can use to cover essential expenses like rent, groceries and electricity.If eligible for income support, you may also be able to receive benefits in kind (things like medicine, dental coverage, optical care and physical therapy). Perhaps best of all, you can receive support even if you’re working. You just need to demonstrate that you are disabled, and that your income is below a certain threshold.
  • Employment Support – The ODSP is about more than helping you cover costs while disabled, it’s also about getting you back on your feet. The program provides free career counseling to recipients, and can even refer you to employers.While your priority is getting healthy and back to work as soon as possible, the ODSP can provide you and your family with thousands of dollars to cover essential bills. Just because you’re unable to work doesn’t mean that your finances should be ruined.
  • The Benefits of the Ontario Disability Tax Credit – If you’re out of work because of a condition that is both severe (inhibiting your ability to perform basic functions, or requiring frequent “life-sustaining therapy”) and prolonged (lasting or expected to last for 12 months or more) you may be eligible for the tax credit.

You also need to demonstrate that you were a taxpayer prior to becoming injured. The size of the Ontario Disability Tax Credit, which is a sum added to your annual tax return, is determined by three factors:

  • Appropriate Tax Rate Percentage – This is roughly the income tax rate paid by the average Canadian. Since 2012 it has been 15 percent.
  • Base Amount – This is a fixed number applicable to everyone receiving the Ontario Disability Tax Credit. It is adjusted annually, but was $7,766 in 2014.
  • Supplemental Amount – The supplemental amount is added onto the base amount, but only applies to those who are under the age of 18 at the time of tax filing. The supplemental amount is currently $4,530.When calculating your annual tax credit, multiply the tax rate percentage by the sum of the two amounts (provided you are eligible for both of them). In 2014, your benefit would have been: (.15) X (7,766 + 4,530) = $1,845.While that number may not seem particularly large, you can also apply to receive a tax credit for previous years, provided you have been disabled for the entire period you are applying for. Many families across Canada have been able to receive thousands of dollars through the Ontario Disability Tax Credit.

Are You Eligible for Both Programs?

Unfortunately, many disabled persons in Canada mistakenly believe that they can only benefit from one of these programs at a time, thereby missing out on potentially thousands of dollars. And at first glance, it does look like you can only benefit from one program.

On your Disability Tax Credit Application, you need to demonstrate that you have taxes payable. That means that, prior to becoming disabled, your income was high enough that you paid taxes to the Revenue Service of Canada. Most recipients of the ODSP have incomes too low to have taxes payable.

However, ODSP recipients can still receive the tax credit. How? By transferring it to a relative. If you are disabled and don’t have taxes payable, but have a relative who assists in providing the “basic necessities of everyday life” (whether it be care or financial support), your relative can receive the Canadian Disability Tax Credit.

If eligible for the ODSP, you most likely also qualify for the Registered Disability Savings Plan (RDSP). Also offered by the Revenue Service, this program provides beneficiaries with an annual savings bond worth $1,000 (with the interest rate indexed to inflation).

You can receive a bond every year until you’ve passed the threshold of $20,000, or reached the age of 50. By receiving the Disability Tax Credit, the ODSP and the RDSP, you can get help meeting daily expenses now, and ensure your financial security in the future.

Do You Need Help Filing for Benefits?

Maybe you receive income or employment support from the ODSP, and want to receive an Ontario Disability Tax Credit as well. Or maybe you received a tax credit last year, but have a long-term disability that you’d like to receive ODSP benefits for. However, you want to do so without losing your tax credit.

If you need advice on how to benefit from both programs, as well as assistance in submitting successful applications, call Disability Credit Canada. Our qualified social service experts specialize in helping people just like you. We can help you and your family get the benefits you need and deserve!

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