News From the Front Archives
Topics / Categories
Recent News
Webinar - Definition of Accident with OV Law Presenter, Charles Jung
Definition of an accident- upcoming OCTOBER 2025 Webinar- A Comprehensive Guide to Long-Term Disability Claims in Ontario
This Guide was created for Canadians who are planning to apply or who have applied for Short-Term Disability (STD) or Long-Term Disability (LTD) benefits.
NEWS FROM THE FRONT
Welcome to the Ontario Rehab Alliance's blog, newsletters and eblast listings. We do our best to share industry updates, advocacy updates, local events, workshops, and mores as soon as we have the information.
Members - be sure to login in order to view the hidden, member-only eblasts, newsletters, and posts.
.
.
Why Would Someone With No Income Apply For the Disability Tax Credit?
Posted on Sep. 4, 2024 / Advocacy, Hudson Wealth and Trust - Blog, Long-Term Disability, Disability Tax Credit / Subscribe 0
Written By: Daniel Carroll, Financial Planner and Disability Finance Specialist™ at Hudson Wealth and Trust Planning Group
I had a call this morning with an advisor to a new client who is close to settling his claim with the insurer. This advisor is a friend of the client’s family and a Chartered Accountant. When I asked him if our mutual client had a Disability Tax Credit (DTC) in place, the accountant asked, “Why would he? He has no income, and he’s never going to work again.”
I almost spit my coffee all over my keyboard.
In further conversation with the accountant, he seemed quite competent and well-versed in many complex tax matters, but he clearly has no (or very limited) experience in the world of disability. It’s not his fault. Most financial professionals never get exposed to this space, and if they do, it’s for one client. As such, they do not become well-versed in the finer details of what it takes to properly service Canadians living with disability.
With that in mind, I thought I should highlight some key considerations that illustrate why just about every person living with a disability should apply for the DTC.
- Transfer to a Supporting Individual: The Disability Tax Credit can be transferred to a supporting family member if the person with the disability has no taxable income. This allows a caregiver or family member who supports the individual financially to reduce their own tax liability.
- Retroactive Refunds: If the person becomes eligible for the DTC, they may receive retroactive tax benefits for up to 10 previous years. They could receive refunds if they had taxable income in any of those years.
- Access to Other Benefits and Programs: Eligibility for the DTC can also serve as a gateway to other federal, provincial, or territorial programs and benefits designed for individuals with disabilities, such as the Registered Disability Savings Plan (RDSP) and additional provincial credits and benefits.
- Future Income Considerations: If the person without current income becomes employed or receives other types of taxable income in the future, having the DTC already in place can help reduce their future tax liabilities.
- Medical Expense Claims: Having the DTC approved might make it easier to claim certain medical expenses that can reduce tax liabilities in future years, depending on the person's financial and medical situation.
A further absolutely essential consideration is that the RDSP provides several benefits not only from the perspective of savings but also tax. RDSPs facilitate the rollover of assets held in a parent’s or grandparent’s RRSP. Depending on the deceased's income, this could mean 100% more money is bequeathed to the disabled person.
I recently prepared an estate plan and a financial forecast for another client in a similar situation – i.e. she is not likely to return to work. The difference in having her DTC in place and employing the proper strategy will lead to her having approximately $600,000 more in her RDSP at age 60 than without this strategy.
There’s a reason why anyone living with a disability should have a DISABILITY FINANCE SPECIALIST™ on their team.
About the Author
Daniel Carroll is a Financial Planner and Disability Finance Specialist™ at Hudson Wealth and Trust Planning Group. He has over 20 years of experience in financial analysis and planning, most of which he spent working with survivors of Motor Vehicle Accidents and their families. He is also an advocate for change at all levels of government to improve support for people living with disability.
0 Comments