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Disability-Related Federal Personal Income Tax Measures

Benefits Delivered Through the Tax System

Refundable Medical Expense Supplement
The supplement improves work incentives for Canadians with disabilities and others with above-average medical expenses by helping to offset the loss of disability-related support when they enter the paid labour force. It provides assistance for above-average disability and medical expenses to low-income working Canadians. For 2005, the maximum supplement is the lesser of $571 and 25 percent of the medical expense tax credit and the disability supports deduction claims. The credit is available to workers with earnings above $2,857. To target assistance to those with low incomes, the credit is reduced by five percent of family income in excess of $21,663. Individuals claiming the refundable supplement may also claim the non-refundable medical expense tax credit and/or the disability supports deduction. This supplement was introduced in the 1997 budget and is fully indexed to inflation.

Child Disability Benefit
In recognition of the special needs of low- and modest-income families with a child with a disability, the 2003 budget introduced the Child Disability Benefit (CDB). The CDB is a supplement of the Canada Child Tax Benefit (CCTB), and is paid for children who meet the eligibility criteria for the DTC. For the July 2005 to June 2006 benefit year, eligible recipients receive their annual CDB entitlement of up to $1,681 per qualified child as part of their monthly CCTB issuance.

The full $1,681 CDB is provided for each eligible child to families with net income below the amount at which the National Child Benefit (NCB) supplement is fully phased out ($35,595 in July 2005 for families having three or fewer children). Beyond that income level, the CDB is reduced based on family income at the same rates as the NCB supplement.

For example, for the 2005-2006 benefit year, the CDB will be reduced to zero as net family income reaches $49,374 for a family caring for one disabled child. The CDB amount and income thresholds are indexed to inflation.

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