Thursday, 25 August 2011

A Horror Story re: The Disability Tax Credit

I had a client whom I spoke to regarding the disability tax credit last year. I encouraged her to apply for it and provided her with the form. When she came into do her taxes this past year, she excitedly told me that she and her daughter were both approved for the tax credit and should receive a payment soon. When she provided me with her approval letter, I congratulated her on the amount of taxes that she was going to get back. She shook her head and said “Yeah but I have to give 30% of that to <<<<insert company name here>>>>”. She had been approached by a company that said they can help her with the claim. She decided to go with them rather then trying to do it on her own I was horrified to know that there are companies out there ‘assisting’ individuals in getting approved for the disability tax credit and then taking such a large chunk of their money!!!!

I don’t know how these companies have got names and addresses of individuals who ‘may qualify for up to $XX, XXX of refunds’ but they are being directly targeted and end up giving away a large portion of their refunds!!!

There is a single form that has to be filled out by the applicant and their doctor or other qualified practitioner….and that’s it! If the government rejects the application then you can always call on a professional (like us) to assist you with your claim! But seriously give it a shot on your own first! If approved, the government is merely returning to you, your own money….why should you be giving upto a third of it away?????

I will be following up with more information regarding the Disability Tax Credit so check back soon!

In the meantime please note that you do NOT have to be receiving a disability pension or anything to qualify for this credit!!!!

The following is a non-exhaustive list of ailments that may qualify for the Disability Tax Credit:
- Amputation
- Anorexia nervosa
- Anxiety disorders
- Arthritis
- Asperger syndrome
- Asthma
- Autism
- Bipolar Disorder
- Blindness
- Car Accidents
- Cerebral Palsy
- Chronic fatigue syndrome
- Complex Regional Pain Syndrome
- Coronary artery disease
- Crohn's disease
- Eating Disorders
- Epilepsy
- Hypothyroidism
- Irritable Bowel Syndrome
- Learning Disability
- Mental Illness/Disability
- Mobility Issues
- Multiple Sclerosis (MS)
- Muscular Dystrophy (MD)
- Osteoarthritis
- Narcolepsy
- Parkinson's disease
- Post traumatic stress disorder
- Spinal Cord Injury (SCI)
- Traumatic Brain Injury (TBI)

If you have any questions do feel free to contact us!

Tax Free Savings Account (TFSA)

The following is an article I wrote, that was published in the Hamilton Mountain News on March 11, 2010.

TFSA-Tax Free Savings Account: another investment option

At this time of year, there is always a panicked flurry of financial activity for individuals. This is in no small part due to the looming Income Tax deadline (April 30 for individuals) combined with the RRSP Contribution deadline of March 1. While developing your financial plans this year, do not overlook the TFSA.

The TFSA was introduced in the 2008 Federal Budget. As of January 1, 2009 any Canadian resident (excluding trusts) over 18 years of age and having a valid social insurance number is eligible to open a TFSA and could contribute upto $5,000 per year. Although contributions do not generate a tax deduction (like the RRSP), the growth of the contributed dollars is tax free! Other benefits of the TFSA are that in future years, the maximum contribution limit will increase (it will be indexed to inflation) and unused contribution room can be carried forward.

What does this mean to you?

First of all, there are numerous investment options available to the TFSA holder. As you may be aware, different investments have different tax implications. By saving money in the TFSA you are free to invest without worrying about tax on interest income, capital gains, dividend income etc. Keep in mind that currently, even the smallest amount of interest earned in your regular bank savings account is taxable.

The fact that unused contribution room can be carried forward means that you never have to worry about losing the contribution room. if you contribute $200 this year, you will have $9,800 ($5,000 - $200 + $5,000) of available contribution room next year and so on. This can truly be advantageous for individuals saving up for a house, a car or someone who comes into a larger sum of money. Also, if planned wisely, the TFSA can be a useful tool for seniors needing to unwind their RRSPs by the age of 71.

Funds can be withdrawn from a TFSA with no tax consequences. Not only is the growth tax-free, withdrawals and income earned in the TFSA, will not affect your Old Age Security (OAS) Benefits, Guaranteed Income Supplement (GIS), Employment Insurance (EI) Benefits, the Canada Child Tax Benefit (CCTB) , the Goods and Services Tax Credit (GSTC), the Working Income Tax Benefit (WITB) or the age amount. Eligible withdrawals are also added back to your contribution room.

Overall, the benefits of the TFSA can be quite significant to the Canadian taxpayer. More information is available through the Canada Revenue Agency website, your financial advisor or your financial institution.

If opening a TFSA account, make sure to get all the details on the costs and specifics associated with the accounts. This may include administrative charges, transaction charges, investment restrictions etc.