Technical Advisory Committee on Tax Measures for Persons with Disabilities
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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withdrawn under the Home Buyers’ Plan are required to be repaid to the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.