In 1996 a one-earner family with one child with a severe disability and an income of $30,000 obtained a tax reduction of $720 under the DTC. In 2007, taking into account measures in this budget and indexation, this same family will receive $1,739 from the Child Disability Benefit, and obtain a tax reduction of $1,728 under the DTC and DTC supplement for children, for a total of $3,467. For this family, federal assistance for children with disabilities will have increased almost fivefold between 1996 and 2007. This family will also receive assistance of $2,152 in 2007 through the base CCTB and NCB supplement.
Federal Assistance for Families With Children With Disabilities
(One-earner family earning $30,000—one child age 7 or over with a disability)1
dollars C4-3 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 1996 20072 Tax credit Tax credit
Child Disability Benefit
1 Additional CCTB benefit for children under 7 years of age not included. 2 Projection.
Federal Assistance for Families With Children With Disabilities (one-earner family earning $30,000—one child age 7 or over with a disability)1
The Canada Customs and Revenue Agency will start paying the Child Disability Benefit in March 2004, with retroactive effect to July 2003.
This new measure will increase financial assistance to families with disabled children by $50 million annually.
Tax Measures for Persons With Disabilities
The Government in recent years has significantly enhanced the tax measures that recognize that individuals with disabilities—and those who care for them—have a reduced ability to pay tax and face greater barriers to labour force participation.
The Government took action to enhance tax measures for persons with disabilities even before the budget was balanced. The table below summarizes actions taken in recent budgets in this regard. Many of the recent changes have been made in response to representations from Canadians, parliamentarians and groups representing persons with disabilities. Table 4.2
Some Recent Enhancements to Tax Measures for Persons With Disabilities
1995 2003
(dollars)
Increased DTC (credit amount) 4,233 6,279
Increased child care expense deduction limit
in respect of DTC eligible children 5,000 10,000
Introduced and increased DTC supplement
for DTC eligible children (credit amount) 01 3,663
Introduced and increased caregiver credit (credit amount) 02 3,663
Increased infirm dependant credit (credit amount) 1,583 3,663
1The credit amount for 2000, the year of introduction of the DTC supplement for children with disabilities,
was $2,941.
The following table presents a summary of key federal tax measures for persons with a disability.
Table 4.3
Tax Measures for Persons With Disabilities
Annual amount 2002 (estimates)
(millions of dollars)
Recognizing reduced ability to pay tax
Disability tax credit (DTC) 4001
Medical expense tax credit 580
Caregiver credit 48
Infirm dependant credit 10
Reducing barriers to labour force participation
Medical expense supplement for earners 52
Other tax measures2 small
Total 1,090
1Includes DTC supplement for children.
2Includes attendant care expense deduction and the child care expense deduction for DTC eligible children.
This budget adds to—and builds on—tax measures introduced in previous budgets to provide support to persons with disabilities.
RRSP/RRIF Rollovers for an Infirm Child
One of the most important concerns for parents caring for an infirm child is to ensure that the child will be properly provided for in the event of the parent’s death. A financially dependent infirm child is eligible to receive a tax- free rollover of a deceased parent’s registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) proceeds. In recognition of the special need for the ongoing care of financially dependent infirm children and to provide supporting parents with greater certainty in their estate planning, this budget proposes to increase the level of income used to determine the financial dependence of an infirm child for the purpose of these rules from $7,634 to $13,814, effective in 2003. As a result, more infirm children or grandchildren will be able to receive a tax-free rollover of a deceased parent’s or grandparent’s RRSP or RRIF proceeds.
Expanding the List of Eligible Expenses for the Medical Expense Tax Credit
The medical expense tax credit recognizes the effect of above-average specific medical and disability-related expenses on an individual’s ability to pay income tax. The list of expenses eligible for this credit is regularly reviewed and expanded in light of new technologies and other disability-specific or medically related developments. In order to better recognize specific disability-related costs, this budget proposes to expand the list of expenses eligible for the medical expense tax credit to include:
the cost of real-time captioning and other similar services used by persons with an impairment; and
the incremental cost of gluten-free food products for individuals with celiac disease who require a gluten-free diet.
These changes will be effective with the 2003 taxation year and are estimated to cost $20 million annually.
Ensuring the Effectiveness of the Disability Tax Credit
Through the DTC, the federal tax system gives recognition to the effect of a severe and prolonged mental or physical impairment on an individual’s ability to pay tax. The DTC provides $400 million annually to about 450,000 Canadians with a severe disability or to those who care for them. The Government has listened to the community of persons with disabilities, medical professionals and parliamentarians and determined that more needs to be done to ensure that the DTC effectively meets its intended purpose.