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Disability-Related
Federal Personal Income Tax Measures
Other
Personal Income Tax Measures
Persons with disabilities
or those who care for them benefit from a number of special enhancements
to other tax measures.
Home Buyers’ Plan
Persons with disabilities or their relatives may withdraw up to
$20,000 from a registered retirement savings plan (RRSP) on a tax-free
basis to buy a home that is more accessible for, or better suited
for the care of, an individual with a disability, even if the purchaser
is not a first-time home buyer. Amounts withdrawn under the Home
Buyers’ Plan are required to be repaid to the individual’s
RRSP over a period of 15 years.
RRSP/RRIF Rollovers for an Infirm Child
When the annuitant under a RRSP or registered retirement income
fund (RRIF) dies, the existing income tax rules generally provide
that the value of the RRSP or RRIF is included in computing the
deceased’s income for the year of death. However, preferential
tax treatment on RRSP or RRIF distributions made after death is
provided in certain cases, including where the proceeds are distributed
to a child or grandchild who was financially dependent on the deceased
annuitant by reason of physical or mental infirmity. In this case,
the RRSP or RRIF proceeds may be transferred without tax to the
RRSP of the child or may be used to purchase an immediate life annuity.
For 2005, a child or grandchild is considered to be financially
dependent if the child’s income for the year preceding the
year of death was below $14,498 (this threshold is indexed to inflation).
A child with income above this amount may also be considered to
be financially dependent, but only if the dependency can be demonstrated
based on the particular facts of the situation.
Education Amount
Students with disabilities can claim the full-time education amount
($400 per month) for each month of part-time study at a post-secondary
institution or occupational training program certified by the Minister
of Human Resources and Skills Development. Eligible students include
those who qualify for the DTC and those who cannot reasonably be
expected to be enrolled as a full-time student because of a certified
mental or physical impairment. In order to meet the part-time requirement,
the student’s program must be at least three weeks long and
involve at least 12 hours of coursework per month.
Registered Education Savings Plans
Generally, a student has to be registered full time at a qualifying
post-secondary institution in order to receive a payment out of
a registered education savings plan (RESP) to further his/her post-secondary
education. The full-time requirement is waived for students who
qualify for the DTC and those who cannot reasonably be expected
to be enrolled as a full-time student because of a certified mental
or physical impairment.
Lifelong Learning Plans
Under the Lifelong Learning Plan (LLP), participants can access
up to $10,000 in a calendar year, and up to a maximum of $20,000,
from their registered retirement savings plans (RRSPs). Withdrawals
can be made over four consecutive years. These funds are not subject
to tax upon withdrawal, as would usually be the case for RRSP withdrawals,
and remain untaxed as long as they are repaid to the RRSP over a
period of no more than 10 years after the conclusion of studies.
In general, this provision applies only to full-time students. However,
persons with disabilities are often unable to attend a post-secondary
institution on a full-time basis because of their disability. Consequently,
students who qualify for the DTC and those who cannot reasonably
be expected to be enrolled as a full-time student because of a certified
mental or physical impairment can be enrolled on a part-time basis
and participate in the LLP. The program in which the student is
enrolled must still be a qualifying educational program that normally
requires a student to spend 10 hours or more per week on courses
or work in the program.
Child Care Expense Deduction
The child care expense deduction (CCED) recognizes the child care
costs incurred by single parents and two-earner families in the
course of earning business or employment income, pursuing education
or performing research. The child care costs of couples may also
be recognized when one or both parents are pursuing education, or
when one parent is incapable of caring for children due to a mental
or physical infirmity. The infirmity needs to be certified in writing
by a medical doctor.
The CCED limit is more generous in respect of children who qualify
for the DTC ($10,000), and DTC-eligible children are considered
eligible for the purposes of the CCED at any age. For children who
do not qualify for the DTC, the limit is $7,000 for children under
7 years of age and $4,000 for other children.
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